Filed Pursuant to Rule 424(b)(3)
                                                 Registration File No. 333-87134


                                  I-TRAX, INC.


                   PROSPECTUS SUPPLEMENT DATED AUGUST 20, 2002
                        TO PROSPECTUS DATED JULY 12, 2002

         The prospectus of I-trax,  Inc. dated July 12, 2002 is  supplemented to
include  certain  information  from the quarterly  report on Form 10-QSB for the
quarter ended June 30, 2002 filed with the Securities and Exchange Commission by
I-trax,  Inc. on August 14, 2002.  Our  consolidated  financial  statements  and
related  notes for the three and six  months  ended  June 30,  2002,  as well as
management's   discussion  and  analysis  of  financial  condition  and  results
operations, is included in this supplement.


                                      S-1




                          I-TRAX, INC. AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (UNAUDITED)

                                                            ASSETS
                                                                                        June 30,           December 31,
                                                                                          2002                 2001
                                                                                     ---------------     ----------------
                                                                                                        
Current assets:
     Cash                                                                                 $   83,389          $ 1,029,208
     Accounts receivables, net                                                               497,022                   --
     Prepaid expenses                                                                         49,474               99,245
     Other current assets                                                                      4,800                1,915
     Note receivable                                                                          15,000               72,437
                                                                                     ---------------     ----------------
       Total current assets                                                                  649,685            1,202,805
                                                                                     ---------------     ----------------

Office equipment, furniture and leasehold improvements, net                                  474,849              279,635
Goodwill                                                                                   9,536,001            2,224,726
Intangible assets, net                                                                     4,302,647                   --
Debt issuance costs, net                                                                     345,650                   --
Security deposits                                                                             35,071               66,896
                                                                                     ---------------     ----------------

       Total assets                                                                     $ 15,343,903          $ 3,774,062
                                                                                     ===============     ================

                                             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Accounts payable                                                                    $   742,773           $  619,612
     Accrued expenses                                                                        526,152              276,750
     Credit line payable                                                                     300,000                   --
     Due to officers                                                                         674,598              739,598
     Capital lease payable                                                                    75,533               42,878
     Deferred revenue                                                                        365,393              148,830
                                                                                     ---------------     ----------------
       Total current liabilities                                                           2,684,449            1,827,668
                                                                                     ---------------     ----------------

Capital lease obligation, net of current portion                                              55,900               55,901
Promissory notes and debenture payable, net of discount                                    1,591,191              312,327
                                                                                     ---------------     ----------------

       Total liabilities                                                                   4,331,540            2,195,896
                                                                                     ---------------     ----------------


Commitments and contingencies (Note 8)

Stockholders' equity
     Preferred stock - $.001 par value, 2,000,000 shares authorized,
       -0- issued and outstanding                                                                 --                   --
     Common stock - $.001 par value, 100,000,000 shares authorized,
       46,956,452 and 34,939,466 issued and outstanding, respectively                         46,956               34,939
     Additional paid in capital                                                           37,684,245           22,964,778
     Accumulated deficit                                                                 (26,718,838)         (21,421,551)
                                                                                     ---------------     ----------------
       Total stockholders' equity                                                         11,012,363            1,578,166
                                                                                     ---------------     ----------------

       Total liabilities and stockholders' equity                                       $ 15,343,903          $ 3,774,062
                                                                                     ===============     ================

                                See accompanying notes to financial statements (unaudited).


                                                           S-2






                                            I-TRAX, INC. AND SUBSIDIARIES
                                              STATEMENTS OF OPERATIONS
                                  FOR THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
                                                     (UNAUDITED)



                                                                               Three months          Three months
                                                                                  ended                 ended
                                                                                 June 30,              June 30,
                                                                                   2002                  2001
                                                                             ----------------      ----------------
                                                                                                  
Revenue
     Technology licenses                                                          $   135,000           $   270,470
     Services                                                                         463,660                    --
                                                                             ----------------      ----------------
Total revenue                                                                         598,660               270,470
                                                                             ----------------      ----------------

Operating expenses:
     Cost of revenue                                                                  365,153                20,578
     General and administrative                                                     1,376,290             1,516,827
     Research and development                                                         103,320               123,059
     Depreciation and amortization                                                    627,535               179,517
     Marketing and advertising                                                        156,636                39,229
                                                                             ----------------      ----------------
Total operating expenses                                                            2,628,934             1,879,210
                                                                             ----------------      ----------------

Operating loss                                                                     (2,030,274)           (1,608,740)
                                                                             ----------------      ----------------

Other income (expenses):
     Miscellaneous income                                                                  --                    --
     Amortization of debt and conversion costs                                        (54,576)             (869,168)
     Interest income                                                                       --                15,322
     Interest expense                                                                (237,639)             (146,748)
                                                                             ----------------      ----------------
Total other income (expenses)                                                        (292,215)           (1,000,594)
                                                                             ----------------      ----------------


(Loss) before provision for income taxes                                           (2,322,489)           (2,609,334)
                                                                             ----------------      ----------------

Provision for income taxes                                                                 --                    --
                                                                             ----------------      ----------------

Net (loss)                                                                       $ (2,322,489)         $ (2,609,334)
                                                                             ================      ================

Loss per common share:

Basic and diluted                                                                  $     (.04)           $     (.11)
                                                                             ================      ================

Weighted average number of shares outstanding:                                     46,535,820            23,821,568
                                                                             ================      ================


                             See accompanying notes to financial statements (unaudited).


                                                        S-3






                                            I-TRAX, INC. AND SUBSIDIARIES
                                              STATEMENTS OF OPERATIONS
                                   FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                                     (UNAUDITED)



                                                                             Six months ended      Six months ended
                                                                                 June 30,              June 30,
                                                                                   2002                  2001
                                                                             -----------------     -----------------
                                                                                                  
Revenue
     Technology licenses                                                          $   179,500           $   460,410
     Services                                                                         825,517                    --
                                                                             ----------------      ----------------
Total revenue                                                                       1,005,017               460,410
                                                                             ----------------      ----------------

Operating expenses:
     Cost of revenue                                                                  627,318                36,124
     General and administrative                                                     2,778,108             3,095,749
     Research and development                                                         222,820               350,323
     Acquired in process research and development                                          --             1,642,860
     Depreciation and amortization                                                    847,522               281,817
     Marketing and advertising                                                        327,092               105,366
                                                                             ----------------      ----------------
Total operating expenses                                                            4,802,860             5,512,239
                                                                             ----------------      ----------------

Operating loss                                                                     (3,797,843)           (5,051,829)
                                                                             ----------------      ----------------

Other income (expenses):
     Miscellaneous income                                                                  --                 6,636
     Amortization of debt and conversion costs                                        (90,960)             (869,168)
     Interest income                                                                       --                17,483
     Interest expense                                                              (1,408,484)             (429,681)
                                                                             ----------------      ----------------
Total other income (expenses)                                                      (1,499,444)           (1,274,730)
                                                                             ----------------      ----------------


(Loss) before provision for income taxes                                           (5,297,287)           (6,326,559)
                                                                             ----------------      ----------------

Provision for income taxes                                                                 --                    --
                                                                             ----------------      ----------------

Net (loss)                                                                       $ (5,297,287)         $ (6,326,559)
                                                                             ================      ================

Loss per common share:

Basic and diluted                                                                  $     (.12)           $     (.28)
                                                                             ================      ================

Weighted average number of shares outstanding:                                     43,911,518            22,609,279
                                                                             ================      ================


                             See accompanying notes to financial statements (unaudited).

                                                        S-4






                                                I-TRAX, INC. AND SUBSIDIARIES
                                              STATEMENT OF STOCKHOLDERS' EQUITY
                                           FOR THE SIX MONTHS ENDED JUNE 30, 2002
                                                         (UNAUDITED)

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

                                                                                               
Balances at December 31, 2001                  34,939,466        $ 34,939     $ 22,964,778   $ (21,421,551)    $  1,578,166

Fair market value of detachable warrants
   issued in connection with debenture and
   beneficial conversion value                         --              --        2,000,000              --        2,000,000

Issuance of Common Stock and granting of
   options in connection with the
   acquisition of WellComm Group, Inc.          7,440,000           7,440       10,472,560              --       10,480,000

Issuance of Common Stock and warrants as
   consideration for finder fee                   111,000             111          391,297              --          391,408

Sale of Common Stock, net of $7,150 in costs    2,637,500           2,638        1,940,838              --        1,943,476

Issuance of Common Stock and warrants as
   consideration for services rendered             75,000              75          126,525              --          126,600

Issuance of Common Stock in connection with
   exercise of warrants (see Note 6)            1,753,486           1,753           (1,753)             --               --

Mark-to-market of options granted to
   officers in lieu of canceling note and
   pledge agreement during 2001                        --              --         (210,000)             --         (210,000)

Net loss for the six months ended June 30,
   2002                                                --              --               --      (5,297,287)      (5,297,287)
                                             ------------    ------------  ---------------   -------------   --------------

Balances at June 30, 2002                      46,956,452       $  46,956     $ 37,684,245   $ (26,718,838)    $ 11,012,363
                                             ============    ============  ===============   =============   ==============


                                 See accompanying notes to financial statements (unaudited).

                                                            S-5







                                            I-TRAX, INC. AND SUBSIDIARIES
                                              STATEMENTS OF CASH FLOWS
                                   FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                                     (UNAUDITED)

                                                                                  Six months         Six months
                                                                                     ended              ended
                                                                                 June 30, 2002      June 30, 2001
                                                                                ----------------   ----------------
                                                                                               
Operating activities:
     Net loss                                                                     $  (5,297,287)     $  (6,326,559)
     Adjustments to reconcile net loss to net cash used for operating
      activities:
         Accretion of discount on notes payable charged to interest
          expense                                                                       247,065            384,696
         Beneficial conversion value of debenture                                     1,031,800                 --
         Depreciation and amortization                                                  847,522            358,257
         Amortization of debt and conversion costs                                       90,960                 --
         Issuance of securities for services, net of marked to market
            adjustments                                                                 (83,400)           907,409
         Write-off of in progress research and development acquired
            in iSummit Partners, LLC acquisition                                             --          1,642,860
     Decrease (increase) in:
       Accounts receivable                                                              (19,275)            69,314
       Prepaid expenses                                                                  82,923             21,038
       Other current assets                                                             (20,525)             4,581
     (Decrease) increase in:
       Accounts payable                                                                  59,668            207,027
       Accrued expenses                                                                  56,609            480,063
       Deferred revenue                                                                 216,563           (188,922)
                                                                                ---------------    ---------------
Net cash used for operating activities                                               (2,787,377)        (2,440,236)
                                                                                ---------------    ---------------

Investing activities:
     Proceeds from partial repayment of note receivable                                  52,500                 --
     Deposit on acquisition of intellectual property                                                      (100,000)
     Cash used to acquire property and equipment                                        (12,866)                --
     Proceeds from partial release of security deposit                                   31,825             53,388
     Net cash to acquire WellComm Group, Inc.                                        (2,045,065)                --
                                                                                ---------------    ---------------
Net cash used for investing activities                                               (1,973,606)           (46,612)
                                                                                ---------------    ---------------

Financing activities:
     Principal payments on capital leases                                               (38,312)           (17,120)
        Proceed from credit line payable                                                125,000                 --
     Proceeds from issuance of promissory notes                                              --            692,809
     Repayment to related party                                                         (65,000)         (480,000)
     Proceeds from related parties                                                           --            855,000
     Proceeds from issuance of convertible promissory notes                                                270,000
     Proceeds from sale of Common Stock                                               1,943,476          1,100,000
     Costs in connection with issuance of debenture                                    (150,000)                --
     Proceeds from issuance of debenture and warrants                                 2,000,000                 --
                                                                                ---------------    ---------------

Net cash provided by financing activities                                             3,815,164          2,420,689
                                                                                ---------------    ---------------

Net decrease in cash                                                                   (945,819)           (66,159)

Cash and cash equivalents at beginning of period                                      1,029,208            132,806
                                                                                ---------------    ---------------

Cash and cash equivalents at end of period                                          $    83,389        $    66,647
                                                                                ===============    ===============
Supplemental disclosure of non-cash flow information:
     Cash paid during the period for:
       Interest                                                                      $    6,099        $     3,908
                                                                                ===============    ===============
       Income taxes                                                                  $       --        $        --
                                                                                ===============    ===============

                                           (Continued on following page.)


                                                        S-6





                                            I-TRAX, INC. AND SUBSIDIARIES
                                              STATEMENTS OF CASH FLOWS
                                   FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
                                                     (UNAUDITED)

                                           (Continued from previous page.)

                                                                                Six months           Six months
                                                                                   ended                ended
                                                                               June 30, 2002        June 30, 2001
                                                                              ----------------     ----------------
                                                                                                
Schedule of non-cash investing activities:
     Issuance of 3,368,000 shares of Common Stock in connection with
       acquisition of MyFamilyMD                                                    $      --         $  5,254,080
                                                                              ===============      ===============

     Issuance of 7,440,000 shares of Common Stock and granting of 560,000
       in connection with acquisition of WellComm Group, Inc.                    $ 10,480,000           $       --
                                                                              ===============      ===============

Issuance of Common Stock and stock options for finder fee                         $   391,408           $       --
                                                                              ===============      ===============

Schedule of non-cash financing activities:
     Issuance of Common Stock in connection with conversion of
       convertible promissory notes                                                 $      --         $  2,551,784
                                                                              ===============      ===============

     Issuance of Common Stock in connection with conversion of advances
       form officers                                                                $      --          $   416,112
                                                                              ===============      ===============

                             See accompanying notes to financial statements (unaudited).

                                                        S-7




                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1--ORGANIZATION

I-trax,  Inc.  (the  "Company")  was  incorporated  in the State of  Delaware on
September  15,  2000.  On  February  5, 2001,  the  Company  and  I-trax  Health
Management  Solutions,  Inc.  (formerly  known  as  I-Trax.com,  Inc.)  ("Health
Management")  completed a holding  company  reorganization.  The holding company
reorganization  was  accomplished  through a merger under  Delaware  law. At the
effective  time  of  the  reorganization,  all  of the  stockholders  of  Health
Management became the stockholders of the Company and Health Management became a
wholly owned subsidiary of the Company.  The Company's common stock is quoted on
the Over-the-Counter Bulletin Board under the symbol "IMTX."

As of June 30,  2002,  the  Company  had one  wholly  owned  subsidiary,  Health
Management, and two single member limited liability companies, iSummit Partners,
LLC and WellComm  Group,  LLC. The Company  acquired  iSummit  Partners,  LLC in
February  2001.  iSummit  Partners,  LLC does not  conduct  any  operations  but
maintains  ownership  of  certain  intellectual  property.  The  Company  formed
WellComm Group, LLC to conduct the activities of WellComm Group, Inc., which the
Company acquired on February 6, 2002 as further described in Note 3. The Company
conducts its operation through Health Management and WellComm Group, LLC.

NOTE 2--INTERIM RESULTS AND BASIS OF PRESENTATION

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern,  which  contemplates  continuity  of
operations,  realization of assets, and liquidation of liabilities in the normal
course of business.  However,  as of June 30, 2002,  the  Company's  accumulated
deficit was $26,718,838 and its working  capital  deficiency was $2,034,764.  In
addition,  the Company has had negative cash flows from operations of $4,900,000
and $4,600,000 for the years ended December 31, 2001 and 2000, respectively, and
$2,800,000 for the six months ended June 30, 2002. As a result of these factors,
the auditor's  report on the December 31, 2001 financial  statements  included a
paragraph  indicating  that  there was  substantial  doubt  about the  Company's
ability to continue as a going concern.

We expect that in the near future additional cash will be required to fund these
deficits and enable us to continue the  development of our core products to meet
customer demand,  liquidate our short-term liabilities and continue to implement
our  marketing  strategy.  The  Company  has,  is and will  continue  to explore
opportunities  to  obtain  funds to meet the  projected  shortfall.  First,  the
Company is  intensifying  its sales  efforts to continue  to grow its  revenues.
Second, the Company has engaged  investment  professionals to assist the Company
in raising capital through debt or equity sales. Third, the Company is exploring
extending existing credit facilities and establishing new credit facilities with
present and new banks. And fourth,  the Company's  principal  executive officers
are  prepared to fund any  shortfalls  by lending  funds to the  Company,  as is
disclosed in Note 11.

The Company's  continuation  as a going concern is dependent  upon the Company's
ability  to  successfully  close new sales  contracts  and  negotiate  financing
arrangements either through equity transactions or debt agreements.  Although no
assurances  can be given,  the Company is reasonably  confident  that it will be
able to continue to operate as a going concern.

                                       S-8



                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 2--INTERIM RESULTS AND BASIS OF PRESENTATION (Cont'd)

The accompanying unaudited financial statements have been prepared in accordance
with generally  accepted  accounting  principles in the United States of America
for interim financial information, the instructions to Form 10-QSB and Items 303
and 310(B) of  Regulation  S-B.  In the  opinion of  management,  the  unaudited
financial  statements  have  been  prepared  on the  same  basis  as the  annual
financial  statements  and reflect all  adjustments,  which  include only normal
recurring adjustments,  necessary to present fairly the financial position as of
June 30, 2002 and the results of the operations and cash flows for the three and
six months ended June 30,  2002.  The results for the three and six months ended
June 30, 2002 are not  necessarily  indicative of the results to be expected for
any subsequent  quarter or the entire fiscal year ending  December 31, 2002. The
balance  sheet at December 31, 2001 has been derived from the audited  financial
statements at that date.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
in the United States of America have been  condensed or omitted  pursuant to the
Securities and Exchange Commission's rules and regulations.

Loss per common  share is computed  pursuant to Financial  Accounting  Standards
Board, "SFAS No. 128," "Earnings Per Share." Basic loss per share is computed as
net income  (loss)  available  to common  shareholders  divided by the  weighted
average  number of common shares  outstanding  for the period.  Diluted loss per
share  reflects  the  potential  dilution  that could occur from  common  shares
issuable through stock options,  warrants,  and convertible debt. As of June 30,
2002 and 2001, 10,190,256 and 5,092,727,  respectively, of options, warrants and
shares  issuable upon  conversion of certain debt were excluded from the diluted
loss per share computation, as their effect would be anti-dilutive.

These  unaudited  financial  statements  should be read in conjunction  with the
Company's  audited  financial  statements  and notes  thereto for the year ended
December  31, 2001 as included  in the  Company's  report on Form 10-KSB for the
fiscal year ended December 31, 2001 filed on April 4, 2002.

NOTE 3--ACQUISITION OF WELLCOMM GROUP, INC.

On February  6, 2002,  the Company  acquired  all of the issued and  outstanding
common stock of WellComm Group, Inc.  ("WellComm"),  as stipulated in the Merger
Agreement  dated January 28, 2002, as amended,  by issuing  7,440,000  shares of
Common  Stock,  granting  560,000  options to acquire  Common Stock at a nominal
price and paying  $2,175,056  in cash.  In addition,  the Company  issued 80,000
shares of Common Stock to an employee for  introducing  the Company to WellComm.
The aggregate acquisition price amounted to approximately $12,660,000. The value
of the Common Stock issued and stock options granted was determined based on the
average market price of the Company's Common Stock immediately  before and after
the  acquisition  was agreed to and announced.  The  acquisition  was a two-step
reorganization  pursuant to the Merger  Agreement by and among the  Company,  WC
Acquisition,  Inc., an Illinois corporation and a wholly owned subsidiary of the
Company ("Acquisition"),  WellComm, and WellComm's two largest shareholders. The
initial step of the reorganization  transaction involved a merger of Acquisition
with and into  WellComm,  in which merger  WellComm  continued as the  surviving
corporation.  The  second  step of the  reorganization  transaction  involved  a
statutory  merger of WellComm  with and into the  Company,  in which  merger the
Company continued as the surviving  corporation.  For accounting  purposes,  the
effective date of the acquisition is January 31, 2002.

The Company agreed to deliver to the WellComm shareholders additional contingent
merger  consideration  either  in  cash  or  in  Common  Stock.  The  additional
contingent  merger  consideration  will  equal  to 10% of  revenues  that may be
generated  by sales of new  services to an  existing  WellComm  client  during a
12-month  period  beginning on the date such new services begin to be delivered.
Such new services must commence by February 5, 2003, but have not been commenced
as of June 30, 2002. Any  additional  shares  distributed  will be recognized as
compensation expense in the period earned.

                                      S-9


                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 3--ACQUISITION OF WELLCOMM GROUP, INC. (cont'd)

WellComm is a disease  management  company that offers a wide array of expertise
including a nurse contact center  specializing  in disease  management,  triage,
health information  survey,  and research services for the healthcare  industry.
The  Company  acquired  WellComm in order to enhance  its  portfolio  of product
offerings by combining  technology and services.  The Company  expects to reduce
costs through economies of scale.

The  financial  statements  include the  operations of WellComm from February 1,
2002 forward.  The purchase price has been based on the estimated fair values of
the assets  acquired and liabilities  assumed.  The Company is in the process of
obtaining third-party  valuations of certain intangible assets and therefore the
following allocation of the purchase price is preliminary.

Of the total purchase price, the Company has initially  allocated  approximately
$1,370,000  to  non-compete  covenants,  $3,680,000  to customer  relationships,
$290,000 to net assets acquired with the remainder of  approximately  $7,320,000
assigned to goodwill. Non-compete covenants will be amortized on a straight-line
basis over a four-year life and customer  relationships will be amortized over a
three-year life.

The following table  summarizes the estimated fair values of the assets acquired
and liabilities assumed at the acquisition date.

          Current assets                             $   614,000
          Property and equipment                         190,000
          Intangible assets                            5,050,000
          Goodwill                                     7,320,000
                                                 ---------------
          Total assets acquired                     $ 13,174,000
                                                 ===============

          Current liabilities                        $   485,000
          Long term debt                                  29,000
                                                 ---------------
          Total liabilities assumed                      514,000
                                                 ---------------
          Net assets acquired                       $ 12,660,000
                                                 ===============

The  following  unaudited  pro forma  results of  operations of the Company give
effect to the  acquisition of WellComm as though the transaction had occurred on
January 1 of each period.




                                                  Three months                  Six months ended
                                                 ended June 30,                     June 30,
                                                      2001                 2002                 2001
                                               -----------------      ----------------     ----------------
                                                                                       
   Sales                                            $   2,491,291          $  1,258,819         $  3,359,436
                                                =================      ================     ================
   Expenses                                         $   3,958,973          $  6,540,376         $  8,313,700
                                                =================      ================     ================
   Net loss                                         $  (1,467,682)        $  (5,281,557)       $  (4,954,264)
                                                =================      ================     ================
   Earnings per share:                                $      (.04)           $     (.11)          $     (.16)
                                                =================      ================     ================
   Weighted average shares outstanding:
     Basic and Diluted                                 29,429,040            46,956,482           30,609,279
                                                =================      ================     ================



                                      S-10


                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 4--ACQUISITION OF ISUMMIT PARTNERS, LLC

Effective  February 7, 2001, the Company acquired iSummit  Partners,  LLC, doing
business as MyFamilyMD,  by issuing a total of 4,222,500  shares of Common Stock
to the  owners of  iSummit in  exchange  for all of the  issued and  outstanding
limited  liability  company  membership  interests  of iSummit.  For purposes of
recording the acquisition, of the total 4,222,500 shares, the Company originally
recorded   3,368,000   shares   (valued  at  $1.56  per  share  or   $5,254,080)
(non-contingent) as consideration.  Furthermore,  of the total 4,222,500 shares,
854,500  shares would have been  released to the former  owners of iSummit,  and
recorded  as an expense  for  accounting  purposes,  upon the  Company  reaching
certain revenue targets generated by iSummit's products.  Contemporaneously with
recording  3,368,000  shares,  the Company recorded goodwill of $3,590,341 after
allocating  $1,642,860 to  in-progress  research and  development  (representing
undeveloped software) and $20,879 to tangible assets. The allocation of purchase
price was prepared based on a formal valuation by an independent appraiser.

Effective  December  31,  2001,  1,289,184  of the total  4,222,500  shares were
canceled  because of unexpected  costs the Company  incurred in building out the
technology  it had  acquired  from  iSummit.  iSummit is a passive  wholly owned
entity of the Company,  which holds certain intellectual property of the Company
and it does not engage in any operations.  For accounting purposes,  the Company
has reversed  464,592 of the total shares  surrendered  with a recorded value of
$724,764,  since the remaining  854,500 shares were  contingently  issuable upon
meeting certain revenue targets, which were missed and therefore not recorded.

The Company has amortized goodwill through December 31, 2001. Accordingly,  from
February 7, 2001 (date of  acquisition)  through  December 31, 2001, the Company
recorded amortization expense of $640,851.

The following  summary  table sets forth the pro-forma  statements of operations
for the three and six  months  ended  June 30,  2001 as if the  acquisition  was
consummated at January 1, 2001.



                                                          Three months       Six months
                                                              ended             ended
                                                          June 30, 2001     June 30, 2001
                                                         ----------------  ----------------

                                                                         
       Total revenue                                          $  270,470       $   460,410
                                                         ===============   ===============

       Total expenses                                        $ 2,929,804      $  6,836,969
                                                         ===============   ===============

       Net loss                                             $ (2,659,334)     $ (6,376,559)
                                                         ===============   ===============

       Pro forma basic and diluted net loss per share          $    (.11)       $     (.26)
                                                         ===============   ===============

       Weighted average number of shares outstanding          22,851,084        23,821,568
                                                         ===============   ===============



NOTE 5--CREDIT LINE

The Company, by virtue of acquiring WellComm, assumed a revolving line of credit
that allows the Company to borrow up to  $308,108.  Sums  outstanding  under the
line of credit bear  interest at 0.5% over the National  Prime Rate, as reported
by the Wall Street Journal and are payable  monthly.  The line of credit expires
in August 2002 and it is  collateralized  by WellComm's  assets.  As of June 30,
2002, $300,000 was outstanding under the line of credit.

                                      S-11

                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 6--PROMISSORY NOTES PAYABLE

On March 2, 2001 the Company  entered  into an Amended and  Restated  Promissory
Note and Warrant  Purchase  Agreement  with Psilos  Group  Partners,  L.P.,  its
affiliates and a venture  capital fund managed by the Company's  Chief Executive
Officer (collectively, the "Psilos Investor Group") pursuant to which the Psilos
Investor  Group agreed to loan the Company up to $1,000,000.  As  consideration,
the Company  granted the Psilos  Investor Group  detachable  warrants to acquire
Common Stock at $0.10 per share. The loan bears interest at 8% per annum, with a
default  rate of 12% per  annum,  and is due five years  from  original  date of
issuance. As of December 31, 2001, the Psilos Investor Group funded an aggregate
of $692,809 of the $1,000,000 and received warrants to purchase 1,823,473 shares
of Common Stock.  These warrants were exercised during the first quarter of 2002
the  Company  issued an  aggregate  1,753,486  shares of  Common  Stock  (net of
exercise price).

The  Company  valued  the  issued  detachable  warrants  at  $459,854  using the
Black-Scholes  pricing model,  thereby allocating a portion of the proceeds from
the debt to the  warrants  utilizing  the  relevant  fair  value of the debt and
warrants to the actual  proceeds  from the debt.  This amount was  recorded as a
discount to the related  promissory  notes and netted  against the related debt.
Furthermore,  the  discount  is being  accreted to  interest  expenses  over the
five-year term of the underlying  promissory  notes.  For the three months ended
June 30, 2002 and 2001, the amount accreted to interest  expense was $22,677 and
$22,677,  respectively.  For the six months  ended June 30,  2002 and 2001,  the
amount accreted to interest expense was $45,354 and $34,016, respectively.


NOTE 7--CONVERTIBLE DEBENTURE

The Company funded the cash portion of WellComm's acquisition price by selling a
6% convertible senior debenture in the aggregate  principal amount of $2,000,000
(the  "Debenture") to Palladin  Opportunity Fund LLC ("Palladin")  pursuant to a
Purchase Agreement dated February 4, 2002.  Pursuant to the Purchase  Agreement,
the Company  also issued a warrant to Palladin to purchase an aggregate of up to
1,538,461 shares of Common Stock (the "Warrant").  The outstanding principal and
any  accrued  interest  under the  Debenture  are  payable  in full on or before
February 3, 2004.  Palladin can also convert the  outstanding  principal and any
accrued interest at any time into Common Stock at an initial conversion price of
$1.00 per share.  The initial  conversion  price is subject to "reset" as of the
date that is 12 months and 18 months  after the issue  date  (each such date,  a
"Reset Date").  With respect to each Reset Date, the conversion  price will only
be reduced if the  average of closing bid prices for the Common  Stock  during a
period of 20  consecutive  trading  days  ending on the date  which  immediately
precedes the applicable  Reset Date is less than the then applicable  conversion
price,  in which case,  the reset  conversion  price will be reset to equal such
average.  The Warrant  entitles  Palladin to  purchase  shares of the  Company's
common stock at the price of $1.10 per share.

Pursuant to the Purchase Agreement, Palladin also received an option to purchase
an additional 6% convertible  senior  debenture in the face amount of $1,000,000
and receive an  additional  warrant to purchase  an  aggregate  of up to 769,230
shares of Common  Stock.  Finally,  pursuant  to a related  registration  rights
agreement,  the Company  registered all of the shares of Common Stock underlying
the Debenture and the Warrant in a  registration  statement on Form SB-2,  which
was declared effective by the Securities and Exchange Commission in July 2002.

                                      S-12

                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 7--CONVERTIBLE DEBENTURE (cont'd)

The  Company  valued the  Warrant at $968,200  using the  Black-Scholes  pricing
model, thereby allocating a portion of the proceeds from the debt to the Warrant
using the relevant  fair value of the debt and  warrants to the actual  proceeds
from the Debenture. The Company recorded $968,200 as a discount to the Debenture
and this  amount  will be  accreted  to  interest  expense  over the life of the
Debenture.  The Company also recorded  $1,031,800 charge to interest expense for
the  beneficial  conversion  value of the  Debenture  since  the  Debenture  was
convertible   immediately  upon  issuance.   The  beneficial   conversion  value
represents the  difference  between the fair market value of the Common Stock on
the date the Debenture was sold and the amount of proceeds characterized as debt
divided by the number of shares the face  amount of the  Debenture  ($2,000,000)
would be  convertible  into  (2,000,000  shares).  Lastly,  in  connection  with
facilitating  the transaction with Palladin,  the Company  recorded  $416,610 of
debt issuance costs  comprised of $130,000,  31,000 shares of Common Stock and a
warrant  to  acquire  200,000  shares of  Common  Stock at $1.00 per share to an
unrelated party.  These costs are amortized over the life of the Debenture.  For
the three and six months ended June 30, 2002,  amortization  expense amounted to
$54,576 and $70,960, respectively.


NOTE 8--COMMITMENTS AND CONTINGENCIES

Nature of Business

The Company is subject to risks and uncertainties  common to growing  technology
companies,  including rapid  technological  developments,  reliance on continued
development  and  acceptance  of  the  Internet  and  health  care  applications
utilizing the Internet, intense competition and a limited operating history.

Threatened Litigation

In 1998, a former Chief  Executive  Officer,  stockholder and creditor of Health
Management  (the  "Plaintiff")  commenced  an action in New Jersey  state  court
against, among others, the present Chief Executive Officer of Health Management.
Health  Management is  identified  in the caption as a defendant.  The complaint
alleges breach of contract,  breach of fiduciary duty, breach of the covenant of
good faith and fair  dealing,  securities  fraud,  common  law fraud,  negligent
misrepresentation and racketeering activity. See Nazir Memon v. Frank Martin, et
al,  CAM-L-04026-98.  The  allegations  in this action  reference  circumstances
relating to Health  Management's  prior line of business of  physician  practice
management. In 1999, the court entered two orders dismissing the action "without
prejudice" for procedural reasons.  Furthermore, in 1999 the Plaintiff filed for
bankruptcy protection. As part of the bankruptcy proceedings, the Plaintiff, the
present Chief Executive Officer and Health Management entered into a stipulation
limiting the period within which the  Plaintiff can bring a new action  alleging
Plaintiff's claims.  Plaintiff sought to reactivate his prior state court action
in January  2001  (within the  stipulated  period),  rather than  commence a new
action.  The stipulated time period for commencing a new action has expired.  By
Opinion-Letter/Order dated August 22, 2001, the New Jersey Superior Court, Civil
Division,  ruled that Plaintiff was barred from reactivating the civil action by
the  bankruptcy  stipulation.  The  Plaintiff  is appealing  the Civil  Division
Opinion-Letter/Order and the appeal is pending. As of June 30, 2002, the Company
made no accrual for accounting  purposes because the Plaintiff's success in this
matter is not deemed  probable  nor could the Company  reasonably  estimate  any
adverse effect based on the current facts.


                                      S-13

                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 9--STOCKHOLDERS' EQUITY

Equity Compensation Plans and Non-Plan Stock Options

The  Company has two equity  compensation  plans  adopted in 2000 and 2001.  The
purpose of the plans is to provide the opportunity for grants of incentive stock
options,  nonqualified  stock options and  restricted  stock to employees of the
Company and its  subsidiaries,  certain  consultants  and  advisors  who perform
services for The Company or its  subsidiaries  and  non-employee  members of The
Company's  Board of Directors.  The 2001 plan has several  additional  features,
including,  a salary  investment  option grant  program  that  permits  eligible
employees to reduce their salary  voluntarily  as payment of  two-thirds  of the
fair  market  value of the  underlying  stock  subject to the  option,  with the
remaining  one-third of the fair market value payable as the exercise  price for
the option  and,  if  specifically  implemented,  automatic  grant  program  for
non-employee members of the Board of Directors at periodic intervals.

There are 3,000,000  shares of Common Stock  authorized  under the 2000 plan and
6,000,000  shares of Common Stock  authorized under the 2001 plan. The number of
available  shares subject to the 2001 plan increases  automatically on the first
day of each year  beginning  with the year 2002 by an amount equal to the lesser
of (a) three percent (3%) of the shares of Common Stock then outstanding and (b)
1,000,000 shares.  The 2002 increase raised the number of shares available under
the 2001 plan from 5,000,000 to 6,000,000.

The maximum  aggregate  number of shares of Common  Stock that can be granted to
any  individual  during any calendar year is 350,000  shares under the 2000 plan
and 400,000 shares and under the 2001 plan.

         2000 Plan Grants

Through June 30, 2002, the Board has granted an aggregate of 2,617,223  options,
with  exercise  prices  ranging from $1.00 to $2.00 per share  (depending on the
fair  market  value of the  stock on the date of  grant).  No  grants  were made
pursuant to this plan during the quarter.

         2001 Plan Grants

Through June 30, 2002,  the Board has granted an aggregate of 3,545,132  options
under 2001 plan.  During the quarter  ended June 30, 2002,  the Company  granted
80,000  options to employees at fair market  value.  Exercise  prices of options
outstanding  under 2001 Plan range from $0.55 to $1.25 (depending on fair market
value of the stock on the date of grant).

         Non-Plan Stock Option Grants

Through June 30, 2002,  the Company has granted an aggregate of 855,000  options
outside of any stock  option plan with  exercise  prices  ranging  from $0.55 to
$2.00  per share  (depending  on fair  market  value of the stock on the date of
grant). No such grants were made during the quarter ended June 30, 2002.

                                      S-14

                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 9--STOCKHOLDERS' EQUITY (cont'd)

Issuance of Common Stock and Warrants

In connection with signing of their employment  agreements,  the Company's Chief
Executive  Officer and a current member of the Company's Office of the President
purchased from the Company a total of 500,000 shares of Common Stock at price of
$2 per share.  The shares were purchased  pursuant to a subscriptions  agreement
and a note and pledge agreement. The note was for a principal amount of $999,500
(net of a $500  bonus),  bearing  interest at  approximately  6% per annum,  and
provided that the unpaid  principal  amount was due in five  consecutive  annual
installments beginning on December 29, 2001. Effective during the second quarter
2001 and with Board approval,  the note and pledge  agreements were canceled and
the shares were returned.

In April  2001,  these  executive  officers  received  an  aggregate  of 700,000
incentive   stock  options   pursuant  to  the  2001  Plan.   Pursuant  to  FASB
Interpretation 44, variable accounting at the end of each interim period must be
applied to these options since they are deemed a re-pricing of the canceled note
and pledge agreements. Accordingly, since the Common Stock fair market value was
$1.25 at  December  31,  2001 and these  options are  exercisable  at $.55,  the
Company  recorded  the  intrinsic  value  of $.70  per  option  or  $350,000  of
compensation  expense. The Company will continue to mark-to-market these options
at the end of each respective  interim period until they are exercised.  For the
three and six months ended June 30,  2002,  the Company  marked-to-market  these
options  and  recorded a  reduction  in  compensation  expense of  $130,000  and
$210,000, respectively.

During the six months ended June 30, 2002,  pursuant to various  agreements  and
board approval, the Company issued an aggregate of 75,000 shares of Common Stock
to various consultants for services received. The Common Stock was valued at the
fair  market  value of the  stock  on the date of  issuance  or  $82,500  in the
aggregate.  In addition,  in July 2001, the Company granted an investment banker
180,000 five year  warrants  with an exercise  price of $0.75 for services  from
July 2001 to July 2002.  Pursuant to EITF 96-18, the Company, at the end of each
reporting period,  must value these warrants.  For the six months ended June 30,
2002,  the  Company  recorded a charge to  earnings  of  $44,100 as an  investor
relations expense for the valuing of these warrants.

During  the six  months  ended  June 30,  2002  the  Company  sold in a  private
placement  an aggregate  of 110,000  shares of Common Stock for $47,850,  net of
$7,150 of direct costs. This private placement was commenced in November 2001.

Pursuant to a private  placement  commenced in February  2002,  the Company sold
2,527,500  shares for the six months ended June 30, 2002,  yielding  proceeds of
$1,895,625.

In connection with  facilitating  the transaction  with Palladin as discussed in
Note 7, the Company  issued 31,000 shares of Common Stock,  a warrant to acquire
200,000  shares of Common Stock at an exercise price of $1.00 per share and paid
$130,000 to an unrelated party as a finder fee. The total consideration amounted
to $416,610 and has recorded as a debt issuance cost and will be amortized  over
the life of the Debenture.

                                      S-15

                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 10--NEW ACCOUNTING PRONOUNCEMENTS

In July 2001,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards ("SFAS") No. 141, "Business  Combinations," and
SFAS No. 142,  "Goodwill  and Other  Intangible  Assets." SFAS No. 141 addresses
financial accounting and reporting for business  combinations and supercedes APB
Opinion No. 16,  "Business  Combinations."  Changes made by SFAS No. 141 include
(1)  requiring  the  purchase  method  of  accounting  be used for all  business
combinations  initiated after  September 30, 2001, and (2) established  specific
criteria for the  recognition  of intangible  assets  separately  from goodwill.
These  provisions are effective for business  combinations for which the date of
acquisition  is  subsequent  to September  30, 2001.  SFAS No. 142 addresses the
accounting for goodwill and intangible assets  subsequent to their  acquisition.
The  provisions  for SFAS No. 142 will be effective  for fiscal years  beginning
after  December  15,  2001.  The Company has  completed  its initial  transition
impairment  assessment  as  required  by  SFAS  No.  142 and  concluded  that no
impairment of recorded goodwill exists.

The changes in the carrying amount of goodwill for the six months June 30, 2002,
is as follows:


                                               Total
                                          ---------------

Balance as of January 1, 2002                 $  2,224,726
Goodwill acquired during the six months          7,311,275
Impairment losses                                       --
                                           ---------------
Balance as of June 30, 2002                   $  9,536,001
                                           ===============

The  components  of  identifiable  intangible  assets,  which are  included as a
separate line item on the consolidated balance sheet, are as follow:



                                                        As of June 30, 2002
                                               ------------------------------------
                                                 Gross Carrying        Accumulated
                                                     Amount           Amortization
                                                ----------------    ----------------
                                                                   
     Amortized intangible assets:

         Non-compete covenants                         1,370,000            (142,710)
         Customer relationships                        3,586,707            (511,350)
                                                ----------------    ----------------
            Total                                   $  4,956,707         $  (654,060)
                                                ================    ================


Amortization  expense for the three and six months ended June 30, 2002  amounted
to $159,354 and $494,706,  respectively.  Estimated amortization expense for the
remainder  of  fiscal  2002 and the  remaining  years is  $769,026,  $1,537,560,
$1,537,560, and $458,501.


                                      S-16

                          I-TRAX, INC. AND SUBSIDIARIES
                        NOTES TO THE FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 10--NEW ACCOUNTING PRONOUNCEMENTS (cont'd)

The  reconciliation  of reported net loss  adjusted for the adoption of SFAS No.
142 is as follows:




                                                 Six months ended                  Three months ended
                                                  June 30, 2001                      June 30, 2001
                                             Amount           Per share         Amount           Per share
                                        ----------------  ---------------- ----------------  ----------------

                                                                                      
       Reported net loss                   $ (6,326,559)       $     (.28)    $ (2,609,334)       $     (.11)
       Add back goodwill amortization           281,817               .01          102,300                --
                                         --------------   ---------------  ---------------   ---------------
       Adjusted net loss                   $ (6,044,742)       $     (.27)    $ (2,507,034)       $     (.11)
                                         ==============   ===============  ===============   ===============



In October 2001, the FASB issued SFAF No. 144 " Accounting for the Impairment or
Disposal of Long-Lived  Assets" which  addresses  the financial  accounting  and
reporting for the  impairment or disposal of  long-lived  assets and  supercedes
SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
assets to be Disposed  Of." SFAS 144 is  effective  for fiscal  years  beginning
after December 15, 2001 and the interim periods within. The adoption of SFAS 144
did not have a material impact on the financial statements of the Company.

In April 2002, the FASB issued SFAS No. 145,  "Rescission on FASB  Statements 4,
44, and 64,  Amendment of FASB  Statement  No. 13, and  Technical  Corrections."
Under  certain  provisions  of SFAS No.  145,  gains and  losses  related to the
extinguishment of debt should no longer be segregated on the income statement as
extraordinary items net of the effects of income taxes. Instead, those gains and
losses  should be included as a component of income  before  income  taxes.  The
provisions of SFAS No. 145 are effective  for fiscal years  beginning  after May
15, 2002 with early adoption  encouraged.  To date, the Company has not recorded
any gains or losses on its statements of operations as extraordinary items.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities." SFAS No. 146 addresses financial  accounting
and  reporting  for  costs  associated  with  exit or  disposal  activities  and
nullifies Emerging Issues Task Force Issue No. 94-3, "Liability  Recognition for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including Certain Costs Incurred in a Restructuring)." SFAS 146 requires that a
liability for costs  associated with an exit or disposal  activity be recognized
when the  liability  is incurred  rather than when a company  commits to such an
activity  and  also   establishes  fair  value  as  the  objective  for  initial
measurement of the liability.

NOTE 11--SUBSEQUENT EVENTS

During July 2002, certain principal  executives advanced to the Company $350,000
pursuant to several  promissory  notes bearing  interest at 8% and payable in 90
days.

                                      S-17


Management's  Discussion  And  Analysis Of  Financial  Condition  And Results Of
Operations

         The  following  discussions  of the  financial  condition  and  related
results of operations of I-trax, Inc. and its subsidiaries should be reviewed in
conjunction  with our financial  statements  and related notes  appearing on the
preceding pages as well as our audited financial  statements for the fiscal year
ended December 31, 2001,  incorporated  into our Form 10-KSB,  filed on April 4,
2002.

         This  Management's  Discussion and Analysis of Financial  Condition and
Results of Operations contains  forward-looking  statements,  which are based on
our current  expectations  and involve a number of risks and  uncertainties.  In
order for us to utilize the "safe harbor"  provisions of the Private  Securities
Litigation  Reform  Act of 1995,  investors  are  hereby  cautioned  that  these
statements may be affected by important  factors,  which are set forth below and
elsewhere in this report,  and  consequently,  actual operations and results may
differ materially from those expressed in these forward-looking  statements. The
important  factors  include our ability to execute new contracts for disease and
demand   management   services  and  software   license   agreements  and,  most
importantly, our ability to continue as a going concern.

         Unaudited  results of  operations  for the three and six month  periods
ended June 30, 2002 are compared to the unaudited  results of operations for the
comparable  periods ended June 30, 2001.  Results of operations are based on our
historical  financial  information  as  of  the  dates  indicated  and  are  not
necessarily indicative of results to be attained for any future period.

         Our  financial  statements  have been  prepared  assuming  that it will
continue as a going concern.  However,  as of June 30, 2002, our working capital
deficiency  was  $2,034,764.  Further,  during  the past two  years,  cash  flow
deficits  from  operations  have amounted to  approximately  $400,000 per month.
Through June 30, 2002 and the date of this report,  we have been able to finance
these  deficits.  Most  recently,  such deficits were financed by sale of Common
Stock to unrelated  parties and loans by certain key  executives.  Past deficits
were financed by sales of Common Stock and loans by our Chief Executive Officer,
a Member of our Office of the President and other  employees.  We expect that in
the near future  additional  cash will be required  to fund these  deficits  and
enable us to continue  the  development  of our core  products to meet  customer
demand,  liquidate  our  short-term  liabilities  and continue to implement  our
marketing  strategy.  We are optimistic that we will be able to raise additional
capital to fund these  initiatives and to fund our cash flow deficits,  however,
there can be no assurance that we will be able to do so.

Our Business

         I-trax  has  historically   developed   enterprise  and  client  server
applications  for  collecting  disease  specific data at the  point-of-care  for
several large  hospitals and medical  centers.  In 2001, we expanded our product
lines by  developing  additional  software  applications,  adding  services  and
completing several strategic acquisitions.  We now offer total population health
management  solutions:  we  combine  health  information  and care  coordination
services to provide a portfolio of  integrated  health  management  solutions to
payers,  providers  and  employers to improve the quality of health and wellness
for populations.

         Our solutions  enable  health care  organizations  to  transition  from
fragmented care management practices to a coordinated, informed approach to care
through   focused  care  management  and  real  time   communication   with  all
stakeholders which yields reduced costs, and the best delivery of care.

Our Products

         Our  products are divided into the  following  portfolios:  stand-alone
technology solutions,  care services and total care coordination solutions.  The
specific products in each portfolio are:

         Stand Alone Technology Solutions

            o  AsthmaWatch(R) - a point-of-care  respiratory  disease management
               system.
            o  C-Trax(TM) - a point-of-care  cardiovascular care and information
               management tool.
            o  CarePrime(R) - a point-of-care physician web portal.

                                      S-18


            o  eImmune(R) - a  point-of-care  immunization  and related  adverse
               events management system.
            o  MyFamilyMD(TM)  -  a  patient  education  and  communication  web
               portal.
            o  Health-e-Coordinator(TM)   -  care   coordination   and   disease
               management tool.

         Our technology capabilities also include:

            o  Medicive(R)   Medical   Enterprise  Data  System,  a  proprietary
               software architecture  developed to collect,  store, retrieve and
               analyze  a broad  range  of  information  used in the  healthcare
               industry.
            o  Extensive experience in data management and reporting.
            o  Extensive experience in providing customer interfaces.
            o  Extensive  experience in design and modification of technology to
               meet the needs of all healthcare stakeholders.

         We license  our  software  applications  as  client-managed  integrated
applications or as an application  service  provider from our secure web hosting
facility.

         Care Services

            o  NurseLine - 24 hours per day, 7 days per week  demand  management
               and nurse triage service staffed by skilled nurses.
            o  Health  Service  Center  - 24  hours  per  day,  7 days  per week
               healthcare contact center staffed by various levels of healthcare
               professionals and para-professionals  designed to address a broad
               range of clinical issues or questions. These services may include
               Health Risk  Assessment  design,  delivery and analysis,  special
               projects and program support.
            o  Customer  Contact  Management - 24 hours per day, 7 days per week
               customer contact center designed to manage and support healthcare
               organization's marketing and communication center needs. Services
               range from physician and service  referrals,  class  registration
               and  web-based   information  centers  to  member   satisfactions
               surveys.

         Our care services also include:

            o  Guaranteed  24  hours  per  day,  7 days  per  week  access  to a
               healthcare professional.
            o  Experience  in  encouraging  client  behavior  changes and crisis
               management.
            o  Satisfaction  of the client's  needs through  communication  with
               appropriate stakeholders.
            o  Internal quality assurance and quality  information  processes to
               ensure consistent and appropriate care delivery.

         Care Coordination

            o  Population Health Management - management of the healthcare needs
               of  populations  for public health  agencies,  hospitals,  health
               plans, self-insured employers, and colleges and universities.
            o  Disease  Management  -  management  of the  healthcare  needs  of
               populations with chronic diseases such as asthma, coronary artery
               disease, congestive heart failure and diabetes.

         Our care coordination capabilities also include:

            o  Automated risk stratification of defined populations.
            o  Access  to  automated  evidence  based  best  practices  for  all
               stakeholders.

                                      S-19



            o  Integration  of disease  co-morbidities  into a seamless  plan of
               care for those with complex health needs.
            o  Identification  and integration  with existing health  management
               systems,  including technology and service integration,  to avoid
               duplication and omission of timely services.
            o  Providing  access to information and support for all stakeholders
               by traditional means, such as telephone,  letter and fax, as well
               as by  technology-based  means,  such  as  email  and  electronic
               alerts.
            o  Assisting  clients to determine the best  combination  of service
               and technology for their population management needs.

Our Customers

         We  currently  serve 43  customers.  Our  customers  include  physician
groups, hospitals, health plans, including plans providing Medicaid and Medicare
covered  services,  universities  and  colleges and agencies and branches of the
United States government.

         During the fourth quarter of 2001 and first quarter of 2002, we entered
into  strategic  agreements  with  several  large  organizations,  which  we are
optimistic  will have the ability to market our  products  and services to their
existing  and new  clients.  We expect  that upon full  implementation  of these
agreements, we will be able to offer our products to a larger client base.

         Finally,  we expect  that our own sales  efforts,  together  with sales
opportunities  generated  through  strategic  relationships,  will  continue  to
increase our revenue  through the third and fourth  quarter of 2002,  and we are
optimistic  that at such  time we will  have  sufficient  cash  flow to fund our
operations without additional financing activities.

Corporate History Overview

         I-trax was  incorporated in the State of Delaware on September 15, 2000
at the  direction  of  the  Board  of  Directors  of  I-trax  Health  Management
Solutions, Inc. ("Health Management"), I-trax's then parent company. On February
5, 2001,  I-trax became the holding company of Health  Management at the closing
of   reorganization   under  Delaware   corporate   law.  The  holding   company
reorganization  was  described  in  greater  detail  in  I-trax's   registration
statement on Form S-4 (Registration Number 333-48862).  At the effective time of
the  reorganization,  all of the  stockholders of Health  Management  became the
stockholders of I-trax and Health Management became a wholly owned subsidiary of
I-trax. Further, all outstanding shares of Health Management were converted into
shares of I-trax in a non-taxable transaction. Health Management no longer files
reports  with the  Securities  and  Exchange  Commission,  and the price for its
common  stock  is no  longer  quoted  on the  Over-the-Counter  Bulletin  Board.
However,  I-trax does file reports with the Securities and Exchange  Commission,
and the price of its  Common  Stock is quoted on the  Over-the-Counter  Bulletin
Board under the symbol "IMTX." I-trax's shares are represented by the same stock
certificates that represented  Health  Management's  shares prior to the holding
company reorganization.

         The holding company structure has allowed us greater flexibility in our
operations and expansion and diversification plans, including in the acquisition
of iSummit  Partners,  LLC, doing business as  "MyFamilyMD," on February 7, 2001
and WellComm Group, Inc. on February 6, 2002.

         We  acquired  iSummit  effective   February  7,  2001  in  an  exchange
transaction  pursuant  to a  Contribution  and  Exchange  Agreement  dated as of
September 22, 2000, as amended. After post closing adjustments,  I-trax issued a
total of  2,903,409  shares of Common  Stock to the  owners of  iSummit  and the
owners  contributed  to  I-trax  all of the  issued  and  outstanding  ownership
interests in iSummit. Since February 7, 2001, iSummit has been a passive, wholly
owned entity of I-trax with certain intellectual property as its only assets.

                                      S-20



         On February 6, 2002, we acquired  WellComm  Group,  Inc.  WellComm is a
healthcare  services company that offers a broad array of expertise  including a
nurse  contact  center  specializing  in  disease  management,   triage,  health
information survey, and research services for the healthcare  industry.  For the
fiscal year ended December 31, 2001,  WellComm  recognized revenue of $5,287,702
and earnings before provision for income taxes of $327,159.  For the fiscal year
ended December 31, 2000,  WellComm  recognized revenue of $979,142 and a loss of
$119,954.

         To  acquire  WellComm,  we issued  7,440,000  shares  of common  stock,
granted  560,000  options with a nominal  exercise price and paid  $2,175,056 in
cash.  We also  issued  80,000  shares  to an  employee  for  introducing  us to
WellComm.  The aggregate  acquisition price was approximately  $12,660,000.  The
value of issued  common  stock and stock  options  was  determined  based on the
average closing price of our common stock immediately before and after we agreed
to and announced the acquisition.

         Of the total purchase price, we allocated  approximately  $1,370,000 to
covenants  not to compete,  $3,680,000  to customer  relationships,  $290,000 to
acquired net assets and $7,320,000 to goodwill.  We expect to amortize covenants
not  to  compete  on  a  straight-line   basis  over  four  years  and  customer
relationships over three years.

         The WellComm  acquisition was a two-step  reorganization  pursuant to a
Merger  Agreement dated January 28, 2002 by and among us, WC Acquisition,  Inc.,
our wholly owned subsidiary,  WellComm,  John Blazek and Carol Rehtmeyer,  Ph.D.
The  initial  step of the  reorganization  transaction  involved  a merger of WC
Acquisition  with and into WellComm,  in which merger WellComm  continued as the
surviving  corporation.  The  second  step  of  the  reorganization  transaction
involved a  statutory  merger of WellComm  with and into us, in which  merger we
continued  as the  surviving  corporation.  The parties to the Merger  Agreement
intend to treat the initial  step and the second step of the  reorganization  as
part of an  integrated  plan,  such  that the two  steps  constitute  a  single,
tax-free reorganization.

         We also  agreed to  deliver  to the  WellComm  stockholders  additional
contingent  merger  consideration  either  in cash or, at the  election  of John
Blazek as a  representative  of the WellComm  stockholders,  in shares of common
stock. The additional  contingent merger  consideration  will be equal to 10% of
revenues that may be generated by sales of new services to an existing  WellComm
client during a 12-month period beginning on the date such new services begin to
be delivered.

         We funded the  acquisition  of  WellComm  by  selling a 6%  convertible
senior  debenture in the  aggregate  principal  amount of $2,000,000 to Palladin
Opportunity  Fund, LLC pursuant to a Purchase  Agreement dated February 4, 2002.
Pursuant  to the  Purchase  Agreement,  we also  issued  Palladin  a warrant  to
purchase an aggregate  of up to 1,538,461  shares of common stock at an exercise
price of $1.10 per share.  The outstanding  principal and any deferred  interest
under the Debenture are payable in full on or before February 3, 2004.  Further,
outstanding  principal and any deferred interest may be converted at any time at
the  election of Palladin  into common stock at an initial  conversion  price of
$1.00 per share.  The initial  conversion  price is subject to "reset" as of the
dates that are 12 months and 18 months  after the issue  date.  With  respect to
each Reset Date,  the  conversion  price will only be reduced if the closing bid
price for common stock,  averaged during a period of 20 consecutive trading days
ending on the date that immediately  precedes the applicable Reset Date, is less
than the then applicable  conversion  price, in which case, the reset conversion
price will equal to this average.

         Under the  Purchase  Agreement,  Palladin  also  received  an option to
purchase an additional 6% convertible  senior debenture in the face amount of $1
million and  received an  additional  warrant to purchase an  aggregate of up to
769,230 shares of common stock. The terms of the optional  debenture and warrant
will be substantially similar to those of the Debenture and the Warrant.

         We  registered  all  of the  shares  of  common  stock  underlying  the
Debenture and the Warrant on a registration statement on Form SB-2.


                                      S-21


Results of Operations

         For the  two  years  ended  December  31,  2001,  we did  not  generate
significant sales.  During the period, we expended a predominant  portion of our
resources to build and deliver  eImmune(R)  and  C-Trax(TM)  to Walter Reed Army
Medical Center in accordance with prior contractual obligations. Further, during
this period, we changed our focus from developing  custom software  applications
for few clients to:

            (1)  commercializing   existing  software   applications   including
      eImmune(R), AsthmaWatch(R)and C-Trax(TM);

            (2)   web-enabling  new   applications   including   MyFamilyMD(TM),
      CarePrime(R) and Health-e-Coordinator(TM); and

            (3) marketing these products as a total population health management
      solution.

         This  process  began in May 2000 when we brought  together  our current
management team. The process continued in 2001 and in the first quarter of 2002,
when,  in  response  to demand  in the  marketplace,  we  acquired  WellComm  to
supplement our technology  solutions with disease  management  services.  We now
focus our marketing  efforts on three main markets:  (1) college and  university
student health services; (2) the Department of Defense/public health sector; and
(3) health plans and self-insured employers.

         The results of operations  presented in this report reflect the results
of operations of WellComm,  which for accounting purposes, we acquired effective
as of February 1, 2002.

         Three  Months  Ended June 30, 2002  Compared To Three Months Ended June
         30, 2002

         Total  revenues for the three months ended June 30, 2002 were  $598,660
representing  an increase of $328,190 or 121% from $270,470 for the three months
ended June 30,  2001.  The total  revenues  for three months ended June 30, 2002
were  comprised of $463,660,  representing  service  revenues  derived from care
services and care coordination contracts, which we assumed effective February 1,
2002  as a  result  of  the  WellComm  acquisition,  and  $135,000  representing
technology   revenues   derived  from  the  sale  of  licenses  of   eImmune(R),
AsthmaWatch(R) and Health-e-Coordinator(TM).  For the remainder of this year and
beyond,  we  expect  to  generate  revenues  from  (1)  licensing  our  software
applications  on a  subscription  basis to  customers  that  rely on  their  own
capabilities  to  deliver  disease  management  service,  (2)  delivery  of care
services,  and (3) delivery of complete population health and disease management
solutions.

         Cost of revenue  amounted to $365,153  for the three  months ended June
30, 2002, an increase of 1,327% from $25,578 for the three months ended June 30,
2001. The increase is directly  attributable  to the personnel costs required to
service our care  services and care  coordination  contracts.  We expect that in
future  periods our cost of sales will increase or decrease in proportion to our
revenue. This is because we expect to derive a significant portion of our future
revenue from care services and care coordination contracts,  which require human
involvement proportionate to the expected size of the contract.

         Research  and  development  costs  amounted to  $103,320  for the three
months  ended June 30, 2002 as compared to $123,059  for the three  months ended
June 30, 2001, a decrease of 16%. We expect to continue to spend funds on adding
functionality   to  our  products   especially  to   MyFamilyMD(TM)   by  adding
MedWizards(R),  on CarePrime(TM),  which interacts with  MyFamilyMD(TM)  and its
MedWizards(R),  and on  Health-e-Coordinator(TM)  by adding  additional  disease
capabilities.  All  product  development  costs in this  quarter  and 2001  were
expensed.

         General and administrative expenses decreased by 9% from $1,516,827 for
the three  months ended June 30, 2001 to  $1,376,290  for the three months ended
June 30,  2002,  even though the  expenses  for the quarter  ended June 30, 2002
include  approximately  $130,000  of  expenses  assumed by us as a result of our
acquisition of WellComm.  The net decrease in expenses is primarily attributable
to continued personnel  reductions and stringent budgetary controls  implemented
in the fourth  quarter of 2001 and a $130,000  expense  reduction for marking to
market  certain  options  granted  to  key  executives.  We  do  not  anticipate


                                      S-22


increasing  spending  during  the  balance  of 2002.  We  believe  that with the
addition of  WellComm's  personnel,  we have the  resources to handle  increased
revenue with minimal incremental costs.

         Depreciation  and  amortization  expense  amounted to $627,535  for the
three  months  ended June 30, 2002 as compared to $179,517  for the three months
ended June 30, 2001. The increase is primarily  attributable to the amortization
of intangible assets recorded as a result of the WellComm acquisition.

         Marketing and  advertising  expenses were $156,636 for the three months
ended June 30, 2002 as compared to $39,229 for the three  months  ended June 30,
2001.  The  increase of 299% was caused by an  increase  in  investor  relations
spending  and  increased  marketing  efforts to promote our  disease  management
solutions following the WellComm acquisition.

         Interest  expense for the three months ended June 30, 2002  amounted to
$237,639  increasing by $90,891 or 61% from $146,748.  The increase is primarily
attributable to accruing  interest of  approximately  $30,000 per quarter on the
convertible  debenture  sold to  Palladin  and  accretion  of the  value  of the
warrants,  which we are amortizing at the rate of approximately  $55,000 per the
quarter as an interest expense over the life of the debenture.

         Our net loss amounted to $2,322,489 for the quarter ended June 30, 2002
as compared to a loss of  $2,609,334  for the three months ended June 30, 2001 a
decrease of 11%. The loss for the three  months  ended June 30, 2001  included a
non-recurring  charge of $869,168 for the  conversion of certain debt to equity.
Accordingly,  excluding such non-recurring charge, our loss for the three months
ended June 30, 2001 would have been $1,740,166 versus $2,322,489 for the current
quarter.  The increase in the loss from quarter to quarter is primarily a direct
result of  additional  amortization  expense  for the current  quarter  relating
intangible assets acquired from WellComm.

         Six months  ended June 30, 2002  compared to six months  ended June 30,
         2001

         Total revenues for the six months ended June 30, 2002 were  $1,005,017,
an increase of $544,607 or 118% from  $460,410 for the six months ended June 30,
2001.  The total  revenues for the six months ended June 30, 2002 were comprised
of $825,517,  representing  service revenues derived from care services and care
coordination contracts,  which we assumed effective February 1, 2002 as a result
of the WellComm  acquisition,  and $179,500 representing our technology revenues
derived from the sale of a software licenses to eImmune(R),  AsthmaWatch(R), and
Health-e-Coordinator(TM).  For the remainder of this year and beyond,  we expect
to  generate  revenues  from  (1)  licensing  our  software  applications  on  a
subscription  basis to customers that rely on their own  capabilities to deliver
disease management service,  (2) delivery of care services,  and (3) delivery of
complete population health and disease management solutions.

         Cost of revenue  amounted to $627,318 for the six months ended June 30,
2002, an increase of 1,636% from $36,124 for the six months ended June 30, 2001.
The increase is directly  attributable  to the personnel costs required to staff
the care services and care coordination contracts,  which we assumed on February
1, 2002.  We expect  that our cost of sales  will  fluctuate  in future  periods
because  technology-only  contracts  yield a low  cost  of  sales  whereas  care
services and care  coordination  contracts are labor intensive.  We also expect,
based on our current  projections,  that we will derive a significant portion of
our future revenue from application service provider contracts with colleges and
universities, self-insured employers and health plans.

         Research and development  costs amounted to $222,820 for the six months
ended June 30, 2002 as compared  to $350,323  for the six months  ended June 30,
2001, a decrease of 36%. The decrease was  attributable in significant part to a
development subcontract of a software component during the six months ended June
30, 2001  because we did not have the work force to complete the  build-out.  We
expect to  continue  to spend  funds on  adding  functionality  to our  products
especially to MyFamilyMD(TM) by adding  MedWizards(R),  on CarePrime(TM),  which
interacts    with    MyFamilyMD(TM)    and    its    MedWizards(R),    and    on
Health-e-Coordinator(TM) by adding additional disease capabilities.  All product
development costs for the six months ended June 30, 2002 and 2001 were expensed.

                                      S-23



         General and  administrative  expenses decreased 10% from $3,095,749 for
the six months ended June 30, 2001 to $ 2,778,108  for the six months ended June
30, 2002, which includes  approximately  $200,000 of expenses assumed by us as a
result  of  our   acquisition  of  WellComm.   The  net  decrease  is  primarily
attributable   to  personnel   reductions  and  stringent   budgetary   controls
implemented in the fourth quarter of 2001 and a $210,000  expense  reduction for
marking  to  market  certain  options  granted  to  key  executives.  We do  not
anticipate  increasing  spending in 2002.  We believe  that with the addition of
WellComm's  personnel,  we have the resources to handle  increased  revenue with
minimal incremental costs.

         Acquired in process research and development amounted to $1,642,860 for
the six months ended June 30, 2001. This amount was directly attributable to the
acquisition  of iSummit  on  February  7, 2001.  An  independent,  third  party,
valuation  company  derived  this  amount  after a detailed  analysis of all the
underlying facts.

         Depreciation and amortization expense amounted to $ 847,522 for the six
months ended June 30, 2002 as compared to $281,817 for the six months ended June
30,  2001.  The  increase  is  primarily  attributable  to the  amortization  in
connection  with the  intangible  assets  recorded  as a result of the  WellComm
acquisition.

         Marketing  and  advertising  expenses were $ 327,092 for the six months
ended June 30, 2002 as compared  to $105,366  for the six months  ended June 30,
2001.  The  increase of 210% was caused by an  increase  in  investor  relations
spending  and  increased  marketing  efforts to promote our  disease  management
solutions following the WellComm acquisition.

         Interest  expense for the six months  ended June 30,  2002  amounted to
$1,408,454  increasing  by  $978,773,  or 227% from  $429,681 for the six months
ended June 30,  2001.  The net increase is  primarily  attributable  to taking a
charge to interest  expense for the beneficial  conversion value associated with
the $2,000,000  convertible  debenture sold to Palladin to fund the cash portion
of  the  WellComm  acquisition.   Generally,  the  beneficial  conversion  value
represents  the  benefit  to  the  investor  that  results  from  purchasing  an
immediately convertible debenture with a conversion price that is less than fair
market  value on the date of purchase  after first  allocating  a portion of the
proceeds from the debenture to the associated warrants.

         Our net loss amounted to  $5,297,287  for the six months ended June 30,
2002 as compared to a loss of $6,326,559 for the six months ended June 30, 2001,
a decrease of 16%. For both  periods,  we had  significant  transaction  related
charges.  For the six  months  ended  June 30,  2002,  we  incurred  a charge of
approximately   $1,200,000  on  account  of  the  beneficial   conversion  value
associated  with the  Debenture.  For the six  months  ended June 30,  2001,  we
incurred a one-time  charge of  $1,642,860  on  account of  acquired  in process
research and  development  in the iSummit  acquisition  and $869,168 for certain
securities issuances and conversion costs.

Liquidity and Capital Resources

         Working Capital Deficiency

         We ended the quarter with approximately  $84,000 in cash on our balance
sheet. As of June 30, 2002, we had a working  capital  deficiency of $2,034,764.
Since June 30,  2002,  we have been  advanced,  by certain  principal  executive
officers  $350,000  through July 31, 2002. In order to meet our  immediate  cash
shortfall,  we have begun the process of  establishing  a credit line,  which we
expect will be guaranteed by certain of our principal executive officers.

         We  believe,   although  no  assurances  exist,  that  we  will  obtain
additional funding before our operations produce positive cash flow.

                                      S-24


         Sources and Uses of Cash

         Despite our  negative  cash flows from  operations,  which  amounted to
approximately  $2,800,000  for the six months ended June 30, 2002 and $2,400,000
for the six months  ended June 30,  2001,  we have been able to secure  funds to
support our  operations.  During the six months ended June 30, 2002,  such funds
were received by selling equity  securities and the Debenture,  which aggregated
approximately  $4,000,000.  Of  the  total  $4,000,000  received,  approximately
$2,100,000  was used to acquire  WellComm and the remainder to fund  operations.
For the six months ended June 30, 2001, we received  approximately $375,000 from
our Chief Executive Officer, Frank A. Martin, Gary Reiss, a Member of our Office
of the President,  and certain other senior officers.  Additionally,  during the
six months  ended June 30,  2001,  we borrowed  approximately  $963,000 of which
$270,000 was subsequently converted into equity. Lastly, the Company sold common
stock  yielding  net  proceeds  of  $1,100,000,  which  was  also  used  to fund
operations.

         In the near  future,  we expect to rely less on equity  financings  and
more on cash flows from operations.  However,  before we reach that point we are
seeking to establish a credit line,  which will be  substantially  guaranteed by
certain key officers and executives. This credit line will be primarily drawn on
to fund any working capital shortfalls until we ramp up revenue.

         As of  June  30,  2002,  our  current  liabilities  were  approximately
$2,685,000,  of which approximately  $700,000 is due to Messrs. Martin and Reiss
for which no repayment  terms have been  established.  We do not expect to repay
management  loans  until we begin to  generate  cash flows from  operations  and
obtain the  consent  of  Palladin  pursuant  to the terms of the  Debenture  and
related  documents.  The  remainder  of  current  liabilities  of  approximately
$1,985,000 is made up, primarily,  of trade payables of approximately  $743,000,
accrued expenses of approximately $526,000,  $300,000 credit line payable, which
was assumed with the  acquisition  of WellComm,  and  approximately  $365,000 of
deposits  on  future  contracts.  We have  good  relationships  with  all of our
vendors.

         Our long-term debt is made up of 6% convertible senior debenture in the
aggregate  principal amount of $2,000,000 held by Palladin,  for which principal
and deferred  interest is not due until February 3, 2004, and $692,809 held by a
group of investors led by Psilos Group Partners,  L.P., which includes Nantucket
Healthcare  Ventures I, L.P.,  a venture  fund  managed by Mr.  Martin for which
principal and interest is not due until March 2006.

         Related Party Transactions

         During the six months  ended June 30,  2001,  Mr.  Martin and Mr. Reiss
periodically  advanced funds to fund our working capital deficiency.  As of June
30, 2002, we owed these individuals $674,598.

         In connection with signing of their employment  agreements,  Mr. Martin
and Mr.  Reiss  purchased  from us a total of 500,000  shares of Common Stock at
price of $2 per share.  The shares were  purchased  pursuant to a  subscriptions
agreement and a note and pledge  agreement.  The note was for a principal amount
of $999,500  (net of a $500 bonus),  bearing  interest at  approximately  6% per
annum, and provided that the unpaid principal amount was due in five consecutive
annual installments  beginning on December 29, 2001. Effective during the second
quarter  2001 and with  Board  approval,  the note and  pledge  agreements  were
canceled and the share were returned.


                                      S-25


         In April  2001,  these  executive  officers  received an  aggregate  of
700,000 incentive stock options pursuant to the 2001 Equity  Compensation  Plan.
Pursuant  to FASB  Interpretation  44,  variable  accounting  at the end of each
interim  period  must be  applied  to these  options  since  they  are  deemed a
re-pricing of the canceled note and pledge  agreements.  Accordingly,  since the
Common Stock fair market value was $1.25 at December 31, 2001 and these  options
are exercisable at $0.55, we recorded the intrinsic value of $0.70 per option or
$350,000 of  compensation  expense.  We will  continue to  mark-to-market  these
options at the end of each  respective  interim period until they are exercised.
For the six months ended June 30, 2002,  we  marked-to-market  these options and
recorded a reduction in compensation expense of $210,000.

Critical Accounting Policies

         Legal Contingencies

         We are  currently  involved  in a  certain  threatened  litigation.  As
discussed in Note 13 of our consolidated  financial  statements,  as of December
31, 2001, we have not accrued a loss contingency because the plaintiff's success
in this matter is not deemed probable nor could I-trax  reasonably  estimate any
adverse  effect based on the current  facts.  We do not believe this  proceeding
will have a material adverse effect on our consolidated  financial position.  It
is possible,  however,  that future  results of  operations  for any  particular
quarterly  or annual  period  could be  negatively  and  materially  affected by
changes in our assumptions,  of the effectiveness of our strategies,  related to
these proceedings.

         Impairment of Goodwill

         We have evaluated goodwill for impairment  indicators and will continue
to do so in the future.  Our  judgments  regarding  the  existence of impairment
indicators  are  based on  legal  factors,  market  conditions  and  operational
performance of our acquired businesses. Future events could cause us to conclude
that impairment indicators exist, requiring a write-down of goodwill, which may,
in turn,  negatively  affect our earnings  for any  particular  period.  We have
completed our initial transition  impairment  assessment as required by SFAS No.
142 and have concluded that no impairment of recorded goodwill exists.

         Revenue Recognition

         We derive our revenue  pursuant to different type contracts,  including
perpetual  software  licenses,  subscription  licenses  and  custom  development
services,  all of which  may  also  include  support  services  revenue  such as
licensed   software   maintenance,   training,   consulting   and  web   hosting
arrangements. As described below, significant management judgments and estimates
must  be  made  and  used in  connection  with  the  revenue  recognized  in any
accounting period.  Material  differences may result in the amount and timing of
our  revenue  for any  period if our  management  made  different  judgments  or
utilized different estimates.

         We license our software  products for a specific term or on a perpetual
basis.  Most of our license contracts also require  maintenance and support.  We
apply  the  provisions  of  Statement  of  Position  97-2,   "Software   Revenue
Recognition,"  as amended by Statement  of Position  98-9  "Modification  of SOP
97-2, Software Revenue Recognition, With Respect to Certain Transactions" to all
transactions  involving the sale of software products and hardware  transactions
where the software is not incidental.  For hardware  transactions where software
is not  incidental,  we do not  unbundle  the fee and we do not  apply  separate
accounting  guidance  to  the  hardware  and  software  elements.  For  hardware
transactions  where no software is  involved  we apply the  provisions  of Staff
Accounting  Bulletin  101  "Revenue  Recognition."  In  addition,  we apply  the
provisions of Emerging  Issues Task Force Issue No. 00-03  "Application of AICPA
Statement  of  Position  97-2 to  Arrangements  that  Include  the  Right to Use
Software Stored on Another  Entity's  Hardware" to our hosted  software  service
transactions.

         We recognize revenue from the sale of software licenses when persuasive
evidence of an arrangement  exists,  the product has been delivered,  the fee is
fixed and determinable and collection of the resulting  receivable is reasonably
assured.  Delivery  generally  occurs  when  product  is  delivered  to a common
carrier.

         At the time of the  transaction,  we assess  whether the fee associated
with our  revenue  transactions  is fixed and  determinable  and  whether or not
collection  is  reasonably  assured.  We  assess  whether  the fee is fixed  and
determinable  based on the payment terms associated with the  transaction.  If a
significant portion of a fee is due after our normal payment terms, which are 30
to 90 days from  invoice  date,  we account  for the fee as not being  fixed and
determinable. In these cases, we recognize revenue as the fees become due.

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         We assess  collection  based on a number  of  factors,  including  past
transaction history with the customer and the credit-worthiness of the customer.
We do not request collateral from our customers. If we determine that collection
of a fee is not reasonably  assured,  we defer the fee and recognize  revenue at
the time collection becomes reasonably assured,  which is generally upon receipt
of cash.

         For arrangements  with multiple  obligations (for example,  undelivered
maintenance  and  support),  we  allocate  revenue  to  each  component  of  the
arrangement  using the  residual  value  method  based on the fair  value of the
undelivered elements.  This means that we defer revenue from the arrangement fee
equivalent to the fair value of the undelivered elements.

         We recognize revenue for maintenance services ratably over the contract
term. Our training and consulting services are billed based on hourly rates, and
we generally recognize revenue as these services are performed.  However, at the
time of  entering  into a  transaction,  we assess  whether or not any  services
included within the arrangement require us to perform significant work either to
alter the underlying  software or to build additional complex interfaces so that
the software performs as the customer  requests.  If these services are included
as part of an  arrangement,  we recognize the entire fee using the percentage of
completion  method.  We  estimate  the  percentage  of  completion  based on our
estimate of the total costs estimated to complete the project as a percentage of
the costs incurred to date and the estimated costs to complete.

Material Equity Transactions

         For the six months ended June 30, 2002, we executed equity transactions
with related and  unrelated  parties in  connection  with the raising  funds for
working  capital  along with  issuing  securities  in lieu of  compensation  for
services received.  We believe that we have valued all such transaction pursuant
to the various accounting rules and that they ultimately  represent the economic
substance of each transaction.

Proposed Stock Split

         We  held  our  annual   meeting  of   stockholders   in   Philadelphia,
Pennsylvania on May 22, 2002. At this meeting,  our stockholders  approved three
alternative reverse stock split transactions:

                  o a reverse 1-for-3 stock split;

                  o a reverse 1-for-4 stock split; and

                  o a reverse 1-for-5 stock split.

         Our Board of Directors  has the  discretion  to determine  which of the
alternative reverse stock split transactions will be implemented. The purpose of
the proposed  reverse stock split is to comply with the listing  requirements of
the American Stock Exchange if it is the last  requirement to secure listing for
our common stock on that exchange.



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