U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þx Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June~~September 30, 2012

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 0-52810

ITRACKR SYSTEMS, INC.

(Exact name of registrant as specified in its charter)

Florida		05-0597678
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
1191 E Newport Center Drive Suite PH-D Deerfield Beach, FL		33442
2255 Glades Road, Suite 324A Boca Raton, FL		33431
(Address of principal executive offices)		(Zip Code)

(888) 505-9796 (Registrant’s telephone number, including area code) 1191 E Newport Center Drive, Suite PH-D, Deerfield Beach, FL 33442 (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (~~Registrant’s~~1) ~~telephone~~has ~~number,~~filed ~~including~~all ~~area~~reports ~~code~~required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and posted on its corporate Web site, if any, every Interactive Data File required to be ~~filed~~submitted byand ~~Section~~posted 13pursuant orto ~~15(d)~~Rule 405 of ~~the~~Regulation ~~Securities~~S-T ~~Exchange~~(§232.405 ~~Act~~ of ~~1934~~this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2)~~post ~~has been subject to~~ such ~~filing requirement for the past 90 days~~files). Yes x þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check One):

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þx

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Exchange Act) Yes ¨ No þx

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At ~~August~~November 135, 2012 the registrant had outstanding 28,593,613 shares of common stock, no par value per share.

ITRACKR SYSTEMS, INC.

FORM 10-Q

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements		1
	Consolidated Balance Sheets as of June 30, 2012 (Unaudited) and December 31, 2011		1
	Consolidated Balance Sheets as of September 30, 2012 (Unaudited) and December 31, 2011		3
	Consolidated Statements of Operations (Unaudited) For the Three and Six Months Ended June 30, 2012 and 2011		2
	Consolidated Statements of Operations (Unaudited) For the Three and Nine Months Ended September 30, 2012 and 2011		4
	Consolidated Statement of Stockholders' Equity (Unaudited) For the Six Months Ended June 30, 2012 and the Year Ended December 31, 2011		3
	Consolidated Statement of Stockholders' Equity (Unaudited) For the Nine Months Ended September 30, 2012 and the Year Ended December 31, 2011		5
	Consolidated Statements of Cash Flows (Unaudited) For the Three and Six Months Ended June 30, 2012 and 2011		4
	Consolidated Statements of Cash Flows (Unaudited) For the Three and Nine Months Ended September 30, 2012 and 2011		6
	Notes to Consolidated Financial Statements (Unaudited)		~~5-11~~7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		~~12-19~~15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		1922
Item 4.	Controls and ~~Procedures18~~Procedures		1922
PART II - OTHER INFORMATION			20
Item 1.	Legal Proceedings		2023
Item 1A.	Risk Factors		2023
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2023
Item 3.	Defaults Upon Senior Securities		2023
Item 4.	Mine Safety Disclosures		2023
Item 5.	Other Information		2023
Item 6.	Exhibits		2024
Signatures	~~Signatures~~		2125

Item 1. Financial Statements.

iTrackr Systems, Inc.
Consolidated Balance Sheets
	June 30,			December 31,
	2012			2011
Assets	(Unaudited)			(Audited)
Current Assets
Cash	$	65,535		$	130,139
Accounts receivable (Note B)		115,524			125,376
Other current assets		8,387			2,121
Total Current Assets		189,446			257,636
Fixed assets (Note C)		242,004			238,399
Accumulated depreciation		(201,145	)		(179,104	)
Net fixed assets		40,859			59,295
Deposits		3,500			3,500
Intangible assets (Note D)		1,424,000			1,424,000
Intangible asset amortization		(526,167	)		(239,165	)
Goodwill (Note D)		1,143,242			1,143,242
Total Assets	$	2,274,880		$	2,648,508
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable & accrued expenses (Note E)	$	443,608		$	346,304
Accrue payroll (Note E)		952,000			889,500
Accrued Interest payable (Note F)		53,956			36,946
Convertible promissory notes (Note F)		155,000			70,000
Promissory notes - related party (Note F)		222,812			222,812
Total Current Liabilities		1,827,376			1,565,562
Total Liabilities		1,827,376			1,565,562
Stockholders' Equity (Note G)
Common stock, no par value 100,000,000 shares authorized; issued and outstanding 28,593,613 and 27,843,613 at June 30, 2012 and December 31, 2011, respectively.		6,190,642			6,055,642
Common stock payable		4,635
Accumulated deficit		(5,747,773	)		(4,972,696	)
Total Stockholders' Deficit		447,504			1,082,946
Total Liabilities and Stockholders' Equity	$	2,274,880		$	2,648,508

iTrackr Systems, Inc.

Consolidated Balance Sheets

	September 30,			December 31,
	2012			2011
	(Unaudited)			(Audited)
Assets
Current Assets
Cash	$	39,472		$	130,139
Accounts receivable (Note B)		129,304			125,376
Other current assets		6,650			2,121
Total Current Assets		175,426			257,636

Fixed assets (Note C)		242,004			238,399
Accumulated depreciation		(212,317	)		(179,104	)
Net fixed assets		29,687			59,295
Deposits		3,500			3,500
Intangible assets (Note D)		1,424,000			1,424,000
Intangible asset amortization		(615,667	)		(239,165	)
Goodwill (Note D)		1,143,242			1,143,242
Total Assets	$	2,160,188		$	2,648,508

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable & accrued expenses (Note E)	$	435,009		$	346,304
Accrued payroll (Note E)		952,000			889,500
Accrued Interest payable (Note F)		65,543			36,946
Convertible promissory notes (Note F)		255,000			70,000
Promissory notes - related party (Note F)		222,812			222,812
Total Current Liabilities		1,930,364			1,565,562

Total Liabilities		1,930,364			1,565,562

Stockholders' Equity (Note G)
Common stock, no par value 100,000,000 shares authorized; issued and outstanding 28,593,613 and 27,843,613 at September 30, 2012 and December 31, 2011, respectively.		6,190,642			6,055,642
Common stock payable		9,885
Accumulated deficit		(5,970,703	)		(4,972,696	)
Total Stockholders' Equity		229,824			1,082,946
Total Liabilities and Stockholders' Equity	$	2,160,188		$	2,648,508

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.
Consolidated Statements of Operations (Unaudited)
For the Three and Six Months Ended June 30, 2012 and 2011
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Revenue	$	152,708		$	46,826		$	290,955		$	93,076
Cost of sales		85,947			-			169,791			-
Gross profit		66,761			46,826			121,164			93,076
Operating expenses
Selling, General and administrative		112,470			114,477			311,730			226,766
Operations		50,836			-			98,459			-
Product development		41,201			45,200			99,999			94,851
Depreciation and amortization		154,672			8,551			309,043			17,246
Total operating expenses		359,179			168,228			819,231			338,863
Loss from operations		(292,418	)		(121,402	)		(698,067	)		(245,787	)
Other Income and (Expense)
Interest expense		(8,614	)		(5,506	)		(17,010	)		(10,951	)
Amortization of beneficial conversion feature		-			-			(60,000	)		-
Total other income and expense		(8,614	)		(5,506	)		(77,010	)		(10,951	)
Earnings before taxes		(301,032	)		(126,908	)		(775,077	)		(256,738	)
Provision for income taxes		-			-			-			-
Net loss	$	(301,032	)	$	(126,908	)	$	(775,077	)	$	(256,738	)
Net (loss) per common share basic	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.01	)
Weighted average common shares outstanding basic		28,573,202			20,544,654			28,295,393			20,432,325

The average shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:
Warrants	455,333	1,880,676	455,333	1,993,005
Stock options	3,380,000	5,505,000	3,380,000	5,505,000
Convertible promissory notes	3,155,013	452,669	3,138,633	448,130

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.
Consolidated Statement of Stockholders' Equity
For the Six Months Ended June 30, 2012 (Unaudited) and the Year Ended December 31, 2011
	Common Stock											Total
	Number of								Accumulated			Stockholders'
	Shares			Amount		Payable			(Deficit)			Equity (Deficit)
BALANCES December 31, 2010		20,319,997		$	3,142,538	$	37,500		$	(4,095,092	)	$	(915,054	)
Stock issued in merger		5,000,000			2,380,000								2,380,000
Stock issued for warrant exercise		900,000			215,000								215,000
Stock issued upon option exercises		1,300,000			180,000								180,000
Common stock issued in exchange for services		100,000			43,350								43,350
Common stock issued upon the conversion of debt		243,616			60,904								60,904
Common stock retired		(20,000	)										-
Fair market value of warrants modified					33,850								33,850
Stock to be issued for services reversed							(37,500	)					(37,500	)
Net loss										(877,604	)		(877,604	)
BALANCES December 31, 2011		27,843,613		$	6,055,642	$	-		$	(4,972,696	)	$	1,082,946
Stock issued upon option exercise		500,000			50,000								50,000
Stock issued upon warrant exercise		250,000			25,000								25,000
Common stock to be issued in exchange for services		30,000					4,635						4,635
Common stock issued upon the conversion of debt													-
Amortization of beneficial conversion feature					60,000								60,000
Net loss										(775,077	)		(775,077	)
BALANCES June 30, 2012		28,623,613		$	6,190,642	$	4,635		$	(5,747,773	)	$	447,504

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended June 30, 2012 and 2011
	Six Months Ended
	June 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(775,077	)	$	(256,738	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and amortization		309,043			17,246
Compensation expense on fair value of warrants issued		-			9,800
Compensation expense on common stock issued for services		4,635			-
Amortization of beneficial conversion feature		60,000			-
Changes in operating accounts:
Accounts receivable		9,852			5,299
Other current assets		(6,266	)		-
Accounts payable and accrued expenses		97,304			6,688
Accrued compensation		62,500			125,000
Accrued interest		17,010			10,951
CASH USED BY OPERATING ACTIVITIES		(220,999	)		(81,754	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of furniture and equipment		(3,605	)		-
CASH PROVIDED BY INVESTING ACTIVITIES		(3,605	)		-
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash		75,000			175,000
Proceeds from promissory notes		85,000			-
CASH PROVIDED BY FINANCING ACTIVITIES		160,000			175,000
NET INCREASE (DECREASE) IN CASH		(64,604	)		93,246
CASH, beginning of period		130,139			9,051
CASH, end of period	$	65,535		$	102,297
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID DURING THE YEAR FOR:
Taxes paid	$	-		$	-
Interest paid	$	-		$	-
NON-CASH OPERATING ACTIVITIES:
Value of Common Stock issued in exchange for services	$	4,635		$	-

iTrackr Systems, Inc.

Consolidated Statements of Operations (Unaudited)

For the Three and Nine Months Ended September 30, 2012 and 2011

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2012			2011			2012			2011

Revenue	$	131,593		$	231,783		$	422,548		$	324,859
Cost of sales		75,369			129,893			245,160			129,893
Gross profit		56,224			101,890			177,388			194,966

Operating expenses
Selling, General and administrative		106,367			121,260			418,097			348,026
Operations		45,782			32,692			144,241			32,692
Product development		14,746			40,390			114,745			135,241
Depreciation and amortization		100,672			104,781			409,715			122,027
Total operating expenses		267,567			299,123			1,086,798			637,986

Loss from operations		(211,343	)		(197,233	)		(909,410	)		(443,020	)

Other Income and (Expense)
Interest expense		(11,587	)		(7,758	)		(28,597	)		(18,709	)
Amortization of beneficial conversion feature		-			-			(60,000	)		-
Total other income and (expense)		(11,587	)		(7,758	)		(88,597	)		(18,709	)
Loss before taxes		(222,930	)		(204,991	)		(998,007	)		(461,729	)
Provision for income taxes		-			-			-			-
Net loss	$	(222,930	)	$	(204,991	)	$	(998,007	)	$	(461,729	)

Net (loss) per common share basic	$	(0.01	)	$	(0.01	)	$	(0.04	)	$	(0.02	)
Weighted average common shares outstanding basic		28,573,202			25,203,558			28,295,393			22,024,106

The average shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:

Warrants		455,333			1,605,333			455,333			1,605,333
Stock options		3,380,000			5,505,000			3,380,000			5,505,000
Convertible promissory notes		3,546,138			574,910			3,506,308			563,672

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.

Consolidated Statement of Stockholders' Equity

For the Nine Months Ended September 30, 2012 (Unaudited) and the Year Ended December 31, 2011

	Common Stock											Total
	Number of								Accumulated			Stockholders'
	Shares			Amount		Payable			(Deficit)			Equity (Deficit)
BALANCES December 31, 2010		20,319,997		$	3,142,538	$	37,500		$	(4,095,092	)	$	(915,054	)

Stock issued in merger		5,000,000			2,380,000								2,380,000
Stock issued for warrant exercise		900,000			215,000								215,000
Stock issued upon option exercises		1,300,000			180,000								180,000
Common stock issued in exchange for services		100,000			43,350								43,350
Common stock issued upon the conversion of debt		243,616			60,904								60,904
Common stock retired		(20,000	)										-
Fair market value of warrants modified					33,850								33,850
Stock to be issued for services reversed							(37,500	)					(37,500	)
Net loss										(877,604	)		(877,604	)
BALANCES December 31, 2011		27,843,613		$	6,055,642	$	-		$	(4,972,696	)	$	1,082,946

Stock issued upon option exercise		500,000			50,000								50,000
Stock issued upon warrant exercise		250,000			25,000								25,000
Common stock to be issued in exchange for services		45,000					9,885						9,885
Common stock issued upon the conversion of debt													-
Amortization of beneficial conversion feature					60,000								60,000
Net loss										(998,007	)		(998,007	)
BALANCES September 30, 2012		28,638,613		$	6,190,642	$	9,885		$	(5,970,703	)	$	229,824

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.

Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended September 30, 2012 and 2011

	Nine Months Ended
	September 30,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(998,007	)	$	(461,729	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation and amortization		409,715			122,027
Compensation expense on fair value of warrants issued		-			9,800
Compensation expense on common stock issued for services		9,885			(37,500	)
Amortization of beneficial conversion feature		60,000			-
Changes in operating accounts:
Accounts receivable		(3,928	)		(26,071	)
Other current assets		(4,529	)		-
Accounts payable and accrued expenses		88,705			24,651
Accrued compensation		62,500			187,500
Accrued interest		28,597			18,709
CASH USED BY OPERATING ACTIVITIES		(347,062	)		(162,613	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Change in working capital due to merger		-			(16,747	)
Acquisition of furniture and equipment		(3,605	)		40,272
CASH PROVIDED (USED) BY INVESTING ACTIVITIES		(3,605	)		23,525

CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash		75,000			175,000
Proceeds from promissory notes		185,000			-
CASH PROVIDED BY FINANCING ACTIVITIES		260,000			175,000

NET INCREASE (DECREASE) IN CASH		(90,667	)		35,912
CASH, beginning of period		130,139			9,051
CASH, end of period	$	39,472		$	44,963

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Taxes paid	$	-		$	-
Interest paid	$	-		$	-

NON-CASH OPERATING ACTIVITIES:
Value of Common Stock issued in exchange for services	$	9,885		$	(37,500	)

The accompanying notes are an integral part of these financial statements

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

NOTE A - ORGANIZATION AND GOING CONCERN

Basis of Presentation

The unaudited financial statements of iTrackr Systems, Inc. as of ~~June~~September 30, 2012 and for the three and ~~six~~nine months ended ~~June~~September 30, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2011 as filed with the Securities and Exchange Commission as part of our Form 10-K. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

Organization

iTrackr, Inc. (the “Company” or “iTrackr”) was formed on May 10, 2006 to develop, market and commercialize a product and inventory search application through a social networking site designed to leverage the best of Internet and Mobile technologies. iTrackr has taken several markets, including eCommerce, social networking and mobile content, and developed a platform that drives value to consumers, retailers and advertising and marketing firms.

In 2009, iTrackr purchased online customer support software technology from ChatStat for approximately $95,000. iTrackr has launched its customer support chat software which facilitates real-time customer support, expert advice, and paid transactions.

On January 12, 2010, the Company closed a share exchange transaction pursuant to which it (i) became the 100% parent of iTrackr, Inc., a Florida corporation (“iTrackr”), (ii) assumed the operations of iTrackr, and (iii) changed its name from Must Haves, Inc. to iTrackr Systems, Inc. iTrackr, Inc. was deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations of iTrackr, Inc. prior to the Merger are reflected in the financial statements and have been recorded at the historical cost basis of iTrackr, Inc. Our financial statements, after completion of the Merger, include the assets and liabilities of both Must Haves, Inc. and iTrackr, Inc. We accounted for the merger under recapitalization accounting whereby the equity of the acquiring enterprise (iTrackr, Inc.) is presented as the equity of the combined enterprise and the capital stock account of the acquiring enterprise is adjusted to reflect the par value of the outstanding stock of the legal acquirer (Must Haves, Inc.) after giving effect to the number of shares issued in the business combination (1,303,638 shares). Shares retained by the legal acquirer (Must Haves, Inc. 1,303,638 shares) are reflected as an issuance as of the reverse merger date (January 12, 2010) for the historical amount of the net assets of the acquired entity which is in this case is a net liability of $27,515.

On July 12, 2011, iTrackr Systems, Inc. acquired 100% of the issued and outstanding membership interests (the “Units”) of RespondQ, LLC, a Florida limited liability company. The purchase price for the Units was an aggregate of five million (5,000,000) shares of restricted common stock of the Company and promissory notes in the aggregate principal amount of $100,000. The purchase consideration for the RespondQ Units was approximately $2,480,000 million, which consisted of the notes and the fair value of 5 million issued shares of iTrackr Systems, Inc. common stock.

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. In the course of funding development and sales and marketing activities, the Company has sustained operating losses since inception and has an accumulated deficit of $5,~~747~~970,~~773~~703 and $4,972,696 at ~~June~~September 30, 2012 and December 31, 2011, respectively. In addition, the Company has negative working capital of $1,~~637~~754,~~930~~ and $1,307,926 at ~~June~~September 30, 2012 and December 31, 2011, respectively.

The Company has and will continue to use significant capital to commercialize its products. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of their common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~NOTE~~THREE AAND -NINE ~~ORGANIZATION~~MONTHS ~~AND~~ENDED ~~GOING~~SEPTEMBER ~~CONCERN~~30, ~~(Continued)~~2012 AND 2011

Going Concern

Capital or in achieving profitable operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

NOTE B – ACCOUNTS RECEIVABLE

The accounts receivable balance of $~~115~~129,~~524~~304 and $125,376 as of ~~June~~September 30, 2012 and December 31, 2011, respectively, is reported at the gross amount without an allowance. The Company has not experienced any significant bad debts to date. Bad debts are written off once collectability is judged to be unlikely. We periodically review accounts receivable for collectability and will create an allowance for bad debts if our analysis so warrants. ~~No accounts were written off during the three or six months ended June 30, 2012.~~

Concentrations of credit risk

The Company performs ongoing credit evaluations of its customers. At ~~June~~September 30, 2012, two customers accounted for 8995% (5162% and 3833%) of accounts receivable. At September 30, 2011, two customers accounted for 95% (59% and 36%) of accounts receivable.

During the three months ended ~~June~~September 30, 2012, ~~three~~two customers accounted for 9792% (5961%, ~~28%~~ and 1031%) of sales. During the ~~six~~three months ended ~~June~~September 30, ~~2012~~2011, two customers accounted for 8894% (6164% and 2730%) of sales.

During the nine months ended September 30, 2012, two customers accounted for 90% (61% and 29%) of sales. During the nine months ended September 30, 2011, three customers accounted for 95% (50%, 23% and 22%) of sales.

Effective September 7, 2012, our customer Acceller transitioned their chat capability to in-house and no longer uses our services. During 2011, from July 12, 2011 - the date of merger - through December 31, 2011, Acceller accounted for 32% of revenue and 15% of gross profit. During the nine months ended September 30, 2012, Acceller accounted for 59% of revenue and 20% of gross profit.

NOTE C – FIXED ASSETS

As of ~~June~~September 30, 2012, fixed assets consisted of the following:

	March 31,			December 31,
	September 30,			December 31,
	2012			2011
Computers and office equipment	$	111,050		$	107,445
Software		129,235			129,235
Leasehold improvements		1,719			1,719
Total fixed assets		242,004			238,399
Accumulated depreciation		(~~201~~212,~~145~~317	)		(179,104	)
Fixed assets, net	$	4029,~~859~~687		$	59,295

During the three months ended ~~June~~September 30, 2012 and 2011, the Company recognized $11,172 and $89,~~551~~115, respectively in depreciation expense. During the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011, the Company recognized $2233,~~041~~213 and $1726,~~247~~362, respectively in depreciation expense.

NOTE D - GOODWILL AND INTANGIBLE ASSETS

As a result of the purchase of RespondQ, LLC on July 12, 2011, the Company recognized $1,424,000 of intangible assets and $1,143,242 of goodwill, which represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired.

~~Total intangible assets, which are being amortized, and goodwill consists of the following:~~8

	June 30, 2012
	Gross Carrying		Accumulated					Net Book
	Amount		Amortization			Impairment		Value
Customer relationships	$	324,000	$	(297,000	)	$	-	$	27,000
Purchased technology		750,000		(229,167	)		-		520,833
Marketing related		350,000		-			-		350,000
Goodwill		1,143,242		-			-		1,143,242
Total	$	2,567,242	$	(526,167	)	$	-	$	2,041,075

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

NOTE D - GOODWILL AND INTANGIBLE ASSETS (Continued)

~~The~~Total ~~customer relationship~~ intangible ~~asset is being amortized on a straight-line basis over 12 months or the estimated useful life of that portion of the allocated purchase price of RespondQ~~assets, ~~LLC~~which ~~whereas~~are ~~the purchased technology is~~ being amortized, ~~over three years on a straight-line basis based on the estimated useful life of the technology purchased. The marketing related intangible asset relates to the trade name~~ and ~~internet domain name of RespondQ and, like~~ goodwill, isconsists ~~not being amortized, but tested annually for impairment. No impairment~~ of ~~goodwill or intangible assets has been recorded. Amortization expense related to intangible assets was $143,500 and $287,000 during~~ the ~~three and six months ended June 30, 2012.~~following:

	September 30, 2012
	Gross Carrying		Accumulated					Net Book
	Amount		Amortization			Impairment		Value
Customer relationships	$	324,000	$	(324,000	)	$	-	$	-
Purchased technology		750,000		(291,667	)		-		458,333
Marketing related		350,000		-			-		350,000
Goodwill		1,143,242		-			-		1,143,242
Total	$	2,567,242	$	(615,667	)	$	-	$	1,951,575

The customer relationship intangible asset is being amortized on a straight-line basis over 12 months or the estimated useful life of that portion of the allocated purchase price of RespondQ, LLC whereas the purchased technology is being amortized over three years on a straight-line basis based on the estimated useful life of the technology purchased. The marketing related intangible asset relates to the trade name and internet domain name of RespondQ and, like goodwill, is not being amortized, but tested annually for impairment. No impairment of goodwill or intangible assets has been recorded. Amortization expense related to intangible assets was $89,500 and $376,502 during the three and nine months ended September 30, 2012.

NOTE E – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at ~~June~~September 30, 2012 consisted of $11,180 of health insurance premium reimbursement due to John Rizzo, former CEO, $4228,~~740~~983 of professional services and $~~389~~394,~~688~~846 of trade payables.

Accounts payable and accrued expenses at December 31, 2011 consisted of $9,180 of health insurance premium reimbursement due to John Rizzo, former CEO, for which six payments totaling $50,820 were made during 2011 with no other payments made since January 2007, $37,471 of professional services and $299,653 of trade payables.

Accrued compensation of $952,000 and $889,500 as of ~~June~~September 30, 2012 and December 31, 2011, respectively, represents amounts accrued and unpaid as of the related balance sheet date and due to our former CEO, John Rizzo. Pursuant to Mr. Rizzo’s employment agreement(s) effective each year starting in January 2007, the Company has been and is obligated to pay Mr. Rizzo and annual salary of $250,000. Mr. Rizzo, received 5,000,000 shares in lieu of salary for the fiscal year ended December 31, 2007 and $90,000 in cash payments during 2009. Mr. Rizzo has received no other salary based cash payments.

NOTE F – NOTES

Convertible Promissory Notes – 3rd Party	June 30,		December 31,
	2012		2011
On July 12, 2011, the company issued a convertible promissory note in connection with the purchase of RespondQ, LLC. The note bears interest at 10% per year, is convertible into shares of common stock upon default at a conversion price of $0.10 per share, matured October 12, 2011 and is currently in default.	$	70,000	$	70,000
On January 9, 2012, the company issued a convertible promissory note in the amount of $60,000. The terms of the note provide for interest at 12% per annum, maturity date of July 1, 2012 and is convertible into shares of the Company at a fixed conversion price of $0.15 per share. The Company determined that the Note was issued with a beneficial conversion feature (“BCF”) due to the conversion price ($0.15) being less than the closing stock price of $0.50 on the date of issuance, and the conversion feature being in-the-money. Thus, the BCF has been determined based on the gross note amount, and recorded as a discount to reduce the carrying value of the note and increase additional-paid-in-capital. The Company calculated the initial BCF on the closing date of the transaction to be $140,000 using the intrinsic value method. Since this amount is greater than the $60,000 value of the note, the Company reduced the initial carry value of the note to zero effectively recording a BCF of $60,000 as additional-paid-in-capital. The BCF discount was expensed when the note became convertible which was on the date of issuance.	$	60,000	$	-
On June 29, 2012, The company received $25,000. The terms of the note provide for interest at 10% per annum, maturity date of January 10, 2013 and is convertible into shares of the Company at a fixed conversion price of $0.05 per share upon default.	$	25,000	$	-
Total Convertible Promissory Notes – 3rd Party	$	155,000	$	70,000

As of September 30, 2012, the Company had the following notes outstanding:

Convertible Promissory Notes – 3rd Party	September 30,		December 31,
	2012		2011
On July 10, 2012, The company received $100,000 from two separate parties. The terms of each $50,000 note is identical and provides for interest at 10% per annum, maturity date of January 10, 2013 and is convertible into shares of the Company at a fixed conversion price of $0.05 per share upon default. During the three months ended September 30, 2012, the Company recognized $2,247, respectively of interest expense.	$	100,000	$	-

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

NOTE F – NOTES (Continued)

Convertible Promissory Notes – 3rd Party (Continued)	September 30,		December 31,
	2012		2011
On June 29, 2012, The company received $25,000. The terms of the note provide for interest at 10% per annum, maturity date of January 10, 2013 and is convertible into shares of the Company at a fixed conversion price of $0.05 per share upon default. During the three months ended September 30, 2012, the Company recognized $630 of interest expense.		25,000		-

On July 12, 2011, the company issued a convertible promissory note in connection with the purchase of RespondQ, LLC. The note bears interest at 10% per year, is convertible into shares of common stock upon default at a conversion price of $0.10 per share, matured October 12, 2011 and is currently in default. During the three and nine months ended September 30, 2012, the Company recognized interest expense of $1,764 and $5,255, respectively. As of September 30, 2012 the balance of accrued interest on this loan was $8,553.		70,000		70,000

On January 9, 2012, the company issued a convertible promissory note in the amount of $60,000. The terms of the note provide for interest at 12% per annum, maturity date of July 1, 2012 and is convertible into shares of the Company at a fixed conversion price of $0.15 per share. The Company determined that the Note was issued with a beneficial conversion feature (“BCF”) due to the conversion price ($0.15) being less than the closing stock price of $0.50 on the date of issuance, and the conversion feature being in-the-money. Thus, the BCF has been determined based on the gross note amount, and recorded as a discount to reduce the carrying value of the note and increase additional-paid-in-capital. The Company calculated the initial BCF on the closing date of the transaction to be $140,000 using the intrinsic value method. Since this amount is greater than the $60,000 value of the note, the Company reduced the initial carry value of the note to zero effectively recording a BCF of $60,000 as additional-paid-in-capital. The BCF discount was expensed when the note became convertible which was on the date of issuance. This note is currently in default. During the three and nine months ended September 30, 2012, the Company recognized interest expense of $1,815 and $5,188, respectively. As of September 30, 2012 the balance of accrued interest on this loan was $5,188.		60,000		-

Total Convertible Promissory Notes – 3rd Party	$	255,000	$	70,000

Interest expense related to the non-related party notes payable during the three months ended September 30, 2012 and 2011 was $6,456 and $1,192, respectively.Interest expense related to the non-related party notes payable during the nine months ended September 30, 2012 and 2011 was $13,319 and $3,538, respectively. As of September 30, 2012 and December 31, 2011, the Company had outstanding $16,618 and $3,299, respectively, of accrued interest due for non-related party notes payable.

During the year ended December 31, 2011, the Company: 1) issued a $70,000 convertible promissory note to Iselsa II, LLC (See table above); and 2) converted 100% of the debt held by three different parties, or $56,000 of principle and $4,904 of accrued interest into 243,616 shares of common stock.

Interest expense related to the non-related party notes payable during the three months ended June 30, 2012 and 2011 was $3,540 and $1,179, respectively.Interest expense related to the non-related party notes payable during the six months ended June 30, 2012 and 2011 was $6,864 and $2,346, respectively. As of June 30, 2012 and December 31, 2011, the Company had outstanding $10~~,161 and $3,299, respectively, of accrued interest due for non-related party notes payable.~~

Promissory Notes - Related Party	March 31,
	2012		2011
Note payable to Bluewater Advisors, Inc. a company wholly owned by John Rizzo, our former CEO; convertible into common stock (conversion price 50% below the previous 10 day average closing price) upon default, bears interest at 9% per year, Matured July 1, 2011 and is currently in default.	$	192,812	$	192,812
On July 12, 2011, the company issued a convertible promissory note in connection with the purchase of RespondQ, LLC. The note bears interest at 10% per year, is convertible into shares of common stock upon default at a conversion price of $0.10 per share, matured October 12, 2011 and is currently in default.	$	30,000	$	30,000

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

NOTE F – NOTES (Continued)

Promissory Notes - Related Party	September 30,		December 31,
	2012		2011
Note payable to Bluewater Advisors, Inc. a company wholly owned by John Rizzo, our former CEO; convertible into common stock (conversion price 50% below the previous 10 day average closing price) upon default, bears interest at 9% per year, matured July 1, 2011 and is currently in default. During the three and nine months ended September 30, 2012, the Company recognized interest expense of $4,374 and $13,027, respectively. As of September 30, 2012 the balance of accrued interest on this loan was $45,259.	$	192,812	$	192,812

On July 12, 2011, the company issued a convertible promissory note in connection with the purchase of RespondQ, LLC. The note bears interest at 10% per year, is convertible into shares of common stock upon default at a conversion price of $0.10 per share, matured October 12, 2011 and is currently in default. During the three and nine months ended September 30, 2012, the Company recognized interest expense of $756 and $2,252, respectively. As of September 30, 2012 the balance of accrued interest on this loan was $3,666.		30,000		30,000

Total Convertible Promissory Notes – Related Party	$	222,812	$	222,812

Interest expense related to our related party notes payable during the three months ended September 30, 2012 and 2011 was $5,130 and $4,374, respectively. Interest expense related to our related party notes payable during the nine months ended September 30, 2012 and 2011 was $15,279 and $12,979, respectively. As of September 30, 2012 and December 31, 2011, the Company has outstanding $48,925 and $33,647, respectively, of accrued interest due under the notes above.

During the year ended December 31, 2011, the Company issued a $30,000 convertible promissory note to Idiama, LLC (See table above) which is 100% owned by Mrs. Rizzo the spouse of our former CEO, John Rizzo and originated as part of the purchase price paid for RespondQ, LLC.

Interest expense related to our related party notes payable during the three months ended June 30, 2012 and 2011 was $5,074 and $4,326, respectively. Interest expense related to our related party notes payable during the six months ended June 30, 2012 and 2011 was $10,149 and $8,605, respectively. As of June 30, 2012 and December 31, 2011, the Company has outstanding $43,795 and $33,647, respectively, of accrued interest due under the notes above.

NOTE G – STOCKHOLDERS EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of no par value preferred stock available for issuance. No shares of preferred stock have been issued as of ~~June~~September 30, 2012.

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTE G – STOCKHOLDERS EQUITY (Continued)

Common Stock Issued - Summary

The Company has authorized 100,000,000 shares of no par value common stock available for issuance. During the year ended December 31, 2011, the Company issued 7,543,616 shares of common stock, including 5,000,000 as a part of the RespondQ, LLC purchase. During the ~~six~~nine months ended ~~June~~September 30, 2012, the Company issued 750,000 shares of common stock bringing the balance of shares outstanding to 28,593,613 as of ~~June~~September 30, 2012 compared to 27,843,613 and 20,319,997 as of December 31, 2011 and 2010, respectively.

Stock Issued for Debt Repayment

During the ~~six~~nine months ended ~~June~~September 30, 2012, no shares were issued in connection with the conversion of debt.

During the year ended December 31, 2011, the Company converted $56,000 of principle and $4,904 of accrued interest into 243,616 shares of restricted common stock.

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

NOTE G – STOCKHOLDERS EQUITY (Continued)

Stock Issued for Cash

During the ~~six~~nine months ended ~~June~~September 30, 2012, the Company 1) issued 500,000 shares of common stock upon the exercise of options and received $50,000, and 2) issued 250,000 shares of common stock upon the exercise of warrants and received $25,000

During the year ended December 31, 2011, the Company 1) received $315,000 upon the exercise of warrants to purchase 1,400,000 shares of common stock, and 2) received $80,000 upon the exercise of options to purchase 800,000 shares of common stock.

Stock Issued for Services

During the ~~six~~nine months ended ~~June~~September 30, 2012, the Company recognized $49,~~635~~885 related to the 15,000 monthly restricted common share amount due to our interim CEO in exchange for his services. As of ~~June~~September 30, 2012, the interim CEO was due 3075,000 shares which were not issued prior to the end of the most recent quarter, but which are included in the calculation of earnings per share as if issued.

During the year ended December 31, 2011, the Company issued 100,000 in exchange for services valued at $43,350 and rendered during 2011. Also, 125,000 shares that were to be issued to a former employee were canceled and related expense of $37,500 reversed in the current period.

NOTE H – WARRANTS

At ~~June~~September 30, 2012, the Company had 455,333 Warrants outstanding entitling the holder thereof the right to purchase one share of common stock for each warrant held as follows:

			Exercise
Issuance	Number of		Price Per		Expiration
Date	Warrants		Warrant		Date
1/19/2010		36,000	$	0.75	1/19/15
1/19/2010		56,000	$	0.75	1/19/15
2/1/2010		13,333	$	0.75	2/1/15
3/1/2010		350,000	$	0.10	10/31/12
Total		455,333

During the ~~six~~nine months ended ~~June~~September 30, 2012, the holder of the 3/1/2010 warrants in the table above exercised 250,000 warrants resulting in the issuance of 250,000 restricted common shares and the receipt of $25,000

During the year ended December 31, 2011, the holder of the 3/1/2010 warrant in the table above exercised 400,000 warrants resulting in $40,000 to the company. Additionally, the Company modified one outstanding warrant to reduce the exercise price in order to induce the holder to exercise. Specifically, for 1,000,000 warrants the exercise price was reduced from $0.40 to $0.35. The holder then exercised 500,000 warrants resulting in $175,000 to the Company. Then, later in the year, in order to induce the same holder to exercise the remaining 500,000 warrants, the Company decreased the exercise price from $0.35 to $0.20. The holder then exercised 500,000 warrants resulting in $100,000 to the Company. As a result of the modifications, the Company determined the difference in the fair value of the warrants using the Black-Scholes Options Pricing Model and recorded $9,800 and $24,050 of stock compensation expense for the first and second modifications, respectively.

All the warrants issued through September 30, 2012 are classified as equity on our balance sheet as they require physical settlement, contain no performance contingencies, have a fixed exercise price and are exercisable by the holder at any time through the expiration date of the warrant. Each warrants fair value was calculated on the date of grant using the Black-Scholes Option Pricing Model.

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

~~NOTE~~THREE HAND –NINE ~~WARRANTS~~MONTHS ~~(Continued)~~ENDED SEPTEMBER 30, 2012 AND 2011

All the warrants issued through June 30, 2012 are classified as equity on our balance sheet as they require physical settlement, contain no performance contingencies, have a fixed exercise price and are exercisable by the holder at any time through the expiration date of the warrant. Each warrants fair value was calculated on the date of grant using the Black-Scholes Option Pricing Model.

NOTE I – 2007 LONG-TERM EQUITY INCENTIVE PLAN

In June 2007 the Board of Directors of the Company adopted the 2007 Long-Term Equity Incentive Plan (the "Plan"). The Plan was ratified at the 2007 shareholder’s meeting (the "Effective Date"). The purpose of this Plan is to attract and retain directors, officers and other employees and non-employees of the Company and its Subsidiary and to provide to such persons incentives and rewards for performance. The Company may issue each of the following under the Plan: Incentive Options, Nonqualified Options, Stock Appreciation Rights, Restricted Stock Awards, Performance Stock Awards or any other award approved by the Board to employees, directors, officers and consultants. No Award shall be granted pursuant to the Plan ten years after the Effective Date. Stock options to purchase shares of our common stock expire no later than ten years after the date of grant. The total number of shares available under the Plan is Fifteen Million (15,000,000). No Plan participant will be granted the right, in the aggregate, for more than Two Million (2,000,000) Common Shares during any calendar year.

We measure all stock-based compensation awards using a fair value method on the date of grant and recognize such expense in its consolidated financial statements over the requisite service period. We use the Black-Scholes option pricing model to calculate the fair value of warrants and stock option grants. The Black-Scholes option pricing model requires management to make assumptions regarding the option lives, expected volatility, and risk-free interest rates, all of which impact the fair value of the option and, ultimately, the expense that will be recognized over the life of the option.

During the ~~six~~nine months ended ~~June~~September 30, 2012, the Company issued 500,000 shares of common stock pursuant to option exercises resulting in $50,000 to the Company

During the year ended December 31, 2011, the Company issued 800,000 shares of common stock pursuant to option exercises resulting in $80,000 to the Company, and canceled 825,000 options that expired due to termination of services by the related parties and their failure to exercise their respective options.

The following table summarizes information about options outstanding at ~~June~~September 30, 2012:

		Options Outstanding						Options Exercisable
		Number		Weighted		Weighted				Weighted
Range of		Outstanding		Average		Average				Average
Exercise		At ~~June~~September 30,		Contractural		Exercise		Number		Exercise
Prices		2012		Life (years)		Price		Outstanding		Price
$	0.40		1,000,000		54.0075	$	0.40		1,000,000	$	0.40
	0.25		1,250,000		4.7125		0.25		1,250,000		0.25
	0.10		887,500		54.0075		0.10		887,500		0.10
	0.05		242,500		54.0075		0.05		242,500		0.05
Total			3,380,000		54.1856	$	0.24		3,380,000	$	0.24

10A summary of the Company’s stock option activity for the nine months ended September 30, 2012 and the year ended December 31, 2011 and related information follows:

ITRACKR SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

NOTE I – 2007 LONG-TERM EQUITY INCENTIVE PLAN (Continued)

A summary of the Company’s stock option activity for the six months ended June 30, 2012 and the year ended December 31, 2011 and related information follows:

	Number of Options			Weighted Average Exercise Price ($)		Options Exerciseable as of	Number of Options		Weighted Average Exercise Price ($)
Outstanding at December 31, 2010		5,505,000		$	0.18	December 31, 2010		5,505,000	$	0.18
Forfeitures		(825,000	)	$	0.06	December 31, 2011		3,880,000	$	0.22
Exercises		(800,000	)	$	0.10	September 30, 2012		3,380,000	$	0.24
Outstanding at December 31, 2011		3,880,000		$	0.22
Exercises		(500,000	)	$	0.10
Outstanding at September 30, 2012		3,380,000		$	0.240

Available for grant at September 30, 2012		2,138,001

	Number of Options			Weighted Average Exercise Price ($)		Options Exerciseable as of	Number of Options		Weighted Average Exercise Price ($)
Outstanding at December 31, 2010		5,505,000		$	0.18	December 31, 2010		5,505,000	$	0.18
Forfeitures		(825,000	)	$	0.06	December 31, 2011		3,880,000	$	0.22
Exercises		(800,000	)	$	0.10	June 30, 2012		3,380,000	$	0.24
Outstanding at December 31, 2011		3,880,000		$	0.22
Exercises		(500,000	)	$	0.10
Outstanding at June 30, 2012		3,380,000		$	0.240
Available for grant at June 30, 2012		2,138,001

During the nine months ended September 30, 2012 and the years ended December 31, 2011 and 2010, the Company recognized no compensation expense related to stock options. From inception to date, the Company has recognized $178,844 of compensation expense related to stock options.

During the Six months ended June 30, 2012 and the years ended December 31, 2011 and 2010, the Company recognized no compensation expense related to stock options. From inception to date, the Company has recognized $178,844 of compensation expense related to stock options.

NOTE J – RELATED PARTY TRANSACTIONS

The Company has a note payable outstanding to Bluewater Advisors, Inc. and Idiama, LLC, companies wholly owned by John Rizzo, our former CEO and his wife, respectively. See NOTE F - NOTES for additional information. Additionally, Mr. Rizzo is due $952,000 of unpaid compensation and $11,180 of accrued health insurance premiums. See NOTE E – ACCOUNTS PAYABLE AND ACCRUED EXPENSES.

NOTE K - COMMITMENTS

Upon the purchase of RespondQ, LLC on July 12, 2011, the Company assumed a lease for office space originally entered into on January 17, 2011 and expiring on January 17, 2012. WeThrough ~~are~~September ~~currently~~30, 2012, we were on a month-to-month rental basis. The lease ~~requires~~required the Company to pay all executory costs such as maintenance and insurance totaling approximately $2,122 per month. Rent expense for the three months ended ~~June~~September 30, 2012 and 2011 was approximately $6,~~366~~365 and $06,365, respectively. Rent expense for the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011 was approximately $1219,~~732~~094 and $06,365, respectively. During September, we gave notice to the landlord and no longer rent these facilities. The Company has 3 full-time employees and operates virtually allowing us to save on rent. The Company maintains an executive office pursuant to a 12 month lease at a cost of $99 per month located at 2255 Glades Road, Suite 324A, Boca Raton, Florida, 33431.

NOTE L – SUBSEQUENT EVENTS

Pursuant to FASB Accounting Standards Codification 855, Subsequent Events, Including ASC 855-10-S99-2, the Company evaluated subsequent events through the date of this report.

1114

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

This quarterly report contains forward-looking statements including statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes” or similar language. These forward-looking statements involve risks, uncertainties and other factors. All forward-looking statements included in this quarterly report are based on information available to us on the date hereof and speak only as of the date hereof. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. The factors discussed elsewhere in this quarterly report are among those factors that in some cases have affected our results and could cause the actual results to differ materially from those projected in the forward-looking statements.

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report.

Overview

We are an ecommerce and social media software and services company. We have developed two technology platforms branded as RespondQ (See www.RespondQ.com) and iTrackr (See www.itrackr.com) both of which enable web based and local businesses to increase sales through innovative technology and increased web presence.

Through our RespondQ chat communications platform, ~~the~~our ~~Company~~customers ~~offers~~are aable ~~comprehensive~~to ~~suite~~capture ofand ~~real-time,~~analyze ~~live~~the ~~interaction~~substantial ~~tools~~amount ~~designed~~of toonline ~~allow~~data ~~our~~we ~~customers~~collect ~~the~~on ~~information~~their ~~they~~behalf ~~need~~ while interacting with potential purchasers by employing a comprehensive suite of real-time, live interaction tools, including our proprietary chat application, live web statistics, live visitor engaging, live web analytics and real time support ticketing for both enterprise and single site users. Our chat platform's features are all geared to sales and customer service. We regularly add new features and functionality to our platform to further enhance value to our customers.

InFor ~~order~~the topast ~~sustain~~three years, RespondQ's ~~growth,~~has ~~our~~been ~~strategy~~focused ison toproviding ~~expand~~and refining our ~~customer~~platform on a full service, pay for performance model in the home services vertical. Over the same period the chat industry has experienced significant growth in the monthly subscriber base of websites purchasing chat software for internal use. ToNow ~~accomplish~~that ~~this,~~our weplatform and technology are ~~focused~~proven onand refined, the ~~following~~Company ~~initiatives:~~is offering the RespondQ platform on a monthly subscription basis to those looking for a top shelf, self-service solution for a highly competitive price while continuing to offer pay for performance pricing for larger users.

~~Technology~~Our ~~and~~iTrackr ~~Process~~direct ~~Enhancements. We~~deals ~~take~~platform ~~a no~~represents ~~nonsense~~the ~~approach~~latest toevolution ~~Chat.~~of ~~Our~~the ~~platform's~~daily ~~features~~deal ~~are~~business ~~all~~model ~~geared~~by tocombining ~~sales~~the ~~and~~benefits ~~customer~~of ~~service.~~social Wenetworking, ~~regularly~~daily ~~add~~deals ~~new features~~ and ~~functionality~~couponing toonto ~~our~~a technology platform tothat ~~further~~significantly ~~enhance~~enhances ~~value~~web topresence ~~our~~and ~~customers.~~allows Inboth ~~2011,~~the welocal ~~enhanced~~business ~~our~~owner ~~reporting, analysis~~ and ~~administrative~~the ~~tools~~consumer asto ~~part~~create ofand ~~our~~request ~~overall~~personalized ~~portfolio~~discounts ofon ~~features,~~the asfly. ~~well~~The aspremise ~~our~~of ~~ability~~iTrackr tois ~~capture,~~that ~~analyze~~consumers ~~and~~should ~~report~~drive ondiscounts ~~the~~based ~~substantial amount of online data we collect~~ on ~~behalf~~their ofspecific ~~our~~desires ~~clients.~~and ~~More~~needs ~~recently~~and webe ~~streamlined~~able ~~the~~to ~~RespondQ~~easily ~~customer~~find ~~service~~those ~~standard~~discounts ~~operating~~any ~~procedures~~time tono ~~decrease~~matter ~~response~~where ~~times~~they are.

Marketing. For the past three years, RespondQ has been focused on providing and refining our platform on a full service, pay for performance model in the home services vertical. Over the same period the chat industry has experienced significant growth in the monthly subscriber base of websites purchasing chat software for internal use. Now that our platform and technology are proven and refined RespondQ plans to make our platform widely available on a monthly subscription basis to those looking for a top shelf, self-service solution for a highly competitive price while continuing to offer pay for performance pricing for larger users.

Our newly redesigned and currently in beta testing iTrackr direct deals platform represents the latest evolution of the daily deal business model by combining the benefits of social networking, daily deals and couponing onto a technology platform that significantly enhances web presence and allows both the local business owner and the consumer to create and request personalized discounts on the fly. The premise of iTrackr is that consumers should drive discounts based on their specific desires and needs and be able to easily find those discounts any time no matter where they are.

In order to grow iTrackr, our strategy is to complete our technology development and focus on the following initiatives:

·	open beta testing of iTrackr.com to solicit and garner feedback from users in order to eliminate bugs in the software, increase usability, and improve user friendliness;

·	populate our database with 1 million currently active merchant profiles determined by their SIC codes and continually increasing our profile base as we expand in to different local markets;

·	promote itrackr virally to enhance visibility across the social networks;

·	Offer the platform as a private label tool to third party merchants;

·	engage with an international B2B sales organization for outbound and direct marketing campaigns to rapidly solicit the businesses within our proprietary database to activate their profiles on iTrackr.com;

·	continue to invest in the depth of our website to provide the look, feel and experience our users demand.

·	Cross sell to the 1 million pre populated profiles currently in our database our RespondQ chat communication platform;

·	offer our platform to consumers free of charge on wired and wireless mediums;

·	reducing the cost of distributed advertising to merchants by offering 60 days free and a small $14.99 per month subscription fee thereafter;

Our primary sources of operating funds have been historically through the issuance of debt and equity. During the six months ended June 30, 2012, we raised $160,000 from the exercise of derivatives and convertible promissory notes in the amount of $75,000 and $85,000, respectively. During the year ended December 31, 2011 we raised $395,000 from the exercise of warrants and options. For the year ended December 31, 2010 we raised $50,000 from the sale of a warrant, $100,000 from the sale of common stock and $139,500 in debt. To finance our growth strategy, we continue to actively pursue additional funds through equity financing, including the sale of additional shares of common and debt financing, or a combination thereof.15

AtExecution ~~June 30, 2012, iTrackr Systems had current assets~~ of ~~$189,446,~~our ~~including~~growth ~~cash~~strategy onrequires ~~hand~~adequate offunding ~~$65,535~~to ~~and~~be ~~accounts~~able ~~receivable of $115,524 compared~~ to ~~accounts~~properly ~~payable~~market ~~and~~our ~~accrued expenses of $443,608~~offerings. ~~During~~ ~~the~~To ~~six~~date ~~months~~much ~~ended~~of ~~June~~our ~~30,~~expenditures ~~2012,~~have ~~the~~been ~~Company~~focused ~~had~~on ~~revenue~~product ofdevelopment ~~$290,955~~ and ~~net~~administrative ~~losses~~expenses ofand ~~$775,077, including $373,678 of non cash expense related~~ to ~~depreciation,~~a ~~amortization~~lesser ~~and~~extent ~~stock~~on ~~compensation. iTrackr~~sales ~~has incurred losses since inception~~ and ~~may~~marketing ~~not~~related beactivities. ~~able~~Historically, toour ~~generate~~primary ~~sufficient~~sources ~~net~~of ~~revenue~~operating ~~from~~funds ~~its~~have ~~business~~been inthrough the ~~future~~issuance toof ~~achieve~~debt orand ~~sustain profitability~~equity. ~~The~~ ~~Company~~During ~~believes that its cash on hand is insufficient to continue operations for~~ the ~~next~~nine ~~twelve~~ months~~. On~~ ~~July~~ended 12September 30, ~~2011~~2012, ~~the~~we ~~Company~~raised ~~purchased RespondQ~~$260,000 ~~LLC.~~from ~~With~~ the ~~purchase~~exercise of ~~RespondQ~~derivatives and ~~subsequent~~convertible ~~improvements~~promissory ~~made~~notes toin the ~~related~~amount ~~product~~of ~~offerings~~$75,000 ~~the Company anticipates improved financial performance~~ and ~~increases~~$185,000, ~~in sales~~respectively. InDuring the ~~near~~year ~~term,~~ended weDecember ~~expect~~31, ~~that~~2011 ~~the~~we ~~cash~~raised ~~on hand and accounts receivable totaling~~ $~~181~~395,~~059~~000 ~~will~~from bethe ~~sufficient~~exercise ~~to cover approximately 3-4 months~~ of ~~operations.~~warrants ~~Management is working to secure additional sales~~ and ~~debt and equity financing~~options.

At September 30, 2012, iTrackr Systems had current assets of $175,426, including cash on hand of $39,472 and accounts receivable of $129,304 compared to accounts payable and accrued expenses of $435,009. During the nine months ended September 30, 2012, the Company had revenue of $422,548 and net losses of $998,007, including $479,600 of non cash expense related to depreciation, amortization, stock compensation and amortization of a beneficial conversion feature. iTrackr has incurred losses since inception and may not be able to generate sufficient net revenue from its business in the future to achieve or sustain profitability. On July 12, 2011, the Company purchased RespondQ, LLC. With the purchase of RespondQ and subsequent improvements made to the related product offerings, the Company anticipated improved financial performance and increased sales. However, sales of our chat platform and related services have proved elusive and to require more funding than originally anticipated or currently available in our cash and accounts receivable balance. Our current cash on hand and accounts receivable totaling $168,776 is insufficient to continue operations for the next twelve months. We expect said funds will be sufficient to cover approximately 4-6 months of operations. To finance our growth strategy, we are currently pursuing additional funds through equity or debt financing or a combination thereof. The Company currently has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.

If adequate funds are not available on reasonable terms or at all, it would result in a material adverse effect on the Company’s business, operating results, financial condition and prospects. In particular, the Company may be required to reduce headcount, sell rights to its Chat platform technology, or license the rights to such technologies or products on terms that are less favorable to the Company than might otherwise be available.

Impact of Inflation

General inflation in the economy has driven the operating expenses of many businesses higher, and, accordingly we have experienced increased salaries and higher prices for supplies, goods and services. We continuously seek methods of reducing costs and streamlining operations while maximizing efficiency through improved internal operating procedures and controls. While we are subject to inflation as described above, our management believes that inflation currently does not have a material effect on our operating results. However, inflation may become a factor in the future.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that have a significant impact on the results that we report in our consolidated financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates regarding matters that are inherently uncertain Note B of the Notes to Consolidated Financial Statements describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies require us to make critical accounting estimates, as defined below.

A critical accounting estimate is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:

·	we are required to make assumptions about matters that are highly uncertain at the time of the estimate; and

·	different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

Our most critical accounting estimates include:

·	the valuation of stock-based compensation, which impacts our operating expenses;

·	the assessment of recoverability of long-lived assets and goodwill, which impacts operating expenses when we record impairments or accelerate depreciation; and

·	the recognition and measurement of current and deferred income taxes, which impact our provision for taxes.

Below, we discuss these policies further, as well as the estimates and judgments involved.

Stock-Based Compensation

The Company accounts for all compensation related to stock, options and warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. We use the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees.

In calculating this fair value, there are certain assumptions that we use consisting of:

The expected life of the option. No incentive stock options have been granted to date. In the event the Company issues employee options, we will base our determination of expected life on the guidance in ASC 718-10-55-29 to 34. The Company utilizes the contract term of each non qualified option except in the event that the option is not transferrable in which case we apply the aforementioned guidance in determining the expected term.

2)	Risk-free interest rate. We use the treasury bill rate that most closely aligns with the duration of the derivative.

3)	Dividend yield. Until a dividend is offered this input will always be zero.

4)	Volatility. Due to the short amount of time the Company's stock has traded, we use the Dow Jones Internet Composite Index (Ticker: FDN) from inception of the index to the date of grant as a proxy for volatility.

5)	Forfeiture rate. To date this rate has been zero.

6)	Stock price. As quoted on the OTC QB Tier.

The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

We periodically issue common stock as compensation. Pursuant to ASC 505-50-30-6 issuances are valued using the market price of the stock or value of the services rendered on the date of the related agreement, whichever is more readily determinable. To date, common stock granted and issued for services has been issued free of obligation to the recipient and for no consideration.

Long-lived Assets

Long-lived assets, comprised of equipment, and identifiable intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that may cause an impairment review include significant changes in technology that make current computer-related assets that we use in our operations obsolete or less useful and significant changes in the way we use these assets in our operations. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted and with interest charges). We recognize an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. The new cost basis will be depreciated (amortized) over the remaining useful life of that asset. Using the impairment evaluation methodology described herein, there have been no long-lived asset impairment charges for each of the last two years.

Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.

We have not made any material changes in our impairment loss assessment methodology during the past two fiscal years. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.

Goodwill

Goodwill is no longer amortized, but evaluated for impairment annually, or immediately if conditions indicate that impairment could exist. Goodwill represents the excess of the purchase price over the fair value of current financial assets, property and equipment, and separately reportable intangible assets. The tangible assets, intangible assets, and goodwill acquired are then assigned to reporting units. Goodwill is then tested for impairment at least annually for each reporting unit. Step one of the goodwill impairment test involves comparing the fair value of the reporting unit to its carrying value. If the fair value exceeds the carrying value, no further testing is required. If the carrying value exceeds the fair value, a step two test must be performed. Step two includes estimating the fair value of all tangible and intangible assets for the reporting unit. The fair value of goodwill is then estimated by subtracting the fair value of tangible and intangible assets from the fair value of the reporting unit total assets determined in step one. The goodwill impairment is the excess of the recorded goodwill over the estimated fair value of goodwill.

We acknowledge the uncertainty surrounding the key assumptions that drive the estimated fair value. Any material negative change in the fundamental outlook of our business, our industry or the capital market environment could cause the reporting unit to fail step one. Accordingly, we will be monitoring events and circumstances each quarter (prior to the annual testing date) to determine whether an additional goodwill impairment test should be performed.

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current period and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

When accounting for Uncertainty in Income Taxes, first, the tax position is evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company’s utilization of U.S. Federal net operating losses will be limited in accordance to Section 381 rules. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Results of Operations

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2012 Compared With the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2011.

Revenues

Our sales revenue represents the amounts charged to our customers on a monthly basis pursuant to contractual arrangements. Revenues for the three months ended ~~June~~September 30, 2012 were $~~152~~131,~~708~~593 compared to revenues of $46231,~~826~~783 for the three months ended ~~June~~September 30, 2011. Revenues for the ~~six~~nine months ended ~~June~~September 30, 2012 were $~~290~~422,~~955~~548 compared to revenues of $93324,~~076~~859 for the ~~six~~nine months ended ~~June~~September 30, 2011. The $~~105~~100,~~882~~190 or ~~226~~43% three month ~~increase~~decrease ~~and~~is ~~$197,879~~due orto ~~213%~~a ~~six~~change ~~month~~in ~~increase~~the manner in ~~revenue~~which isthe ~~primarily~~Company ~~due~~billed Saveology. Through August 31, 2011, the Company billed Saveology for the total value of their services and remitted back to KG Information Systems Private Ltd. ("KG") the ~~purchase~~portion of ~~RespondQ,~~revenue ~~LLC~~related onto ~~July~~their 12support services. Beginning September 1, 2011, Saveology began paying KG directly and we bill Saveology the difference which has been approximately $14,000 to $15,000 per month with no related cost of sales.

The $97,689 or 30% nine month increase in revenue is due to the purchase of RespondQ, LLC on July 12, 2011 and related sales.

Cost of Revenue

During the three months ended ~~June~~September 30, 2012, cost of revenue was $8575,~~947~~369 or 57.3% of revenue resulting in a gross margin of 42.7% compared to the three months ended September 30, 2011 where cost of revenue was $129,893 or 56.0% of revenue resulting in a gross margin of 44.0%. During the ~~six~~nine months ended ~~June~~September 30, 2012, cost of revenue was $~~169~~245,~~791~~160 or 58.0% of revenue resulting in a gross margin of 42.0% compared to the nine months ended September 30, 2011 where cost of revenue was $129,893 or 40.0% of revenue resulting in a gross margin of 60.0%. Cost of revenue consists of amounts owed to KG Information Systems Private Ltd. ("KG") pursuant to services performed under a Master Services Agreement ("MSA") dated January 1, 2011 between KG and RespondQ. The MSA automatically renews on December 31, 2013 for successive 30 day periods. KG is a Business Process Outsource company ("BPO"). Under the MSA, KG is responsible for supplying the chat agents and tracking certain metrics related to the live chat sessions of our customers. KG sales agents primary goal is to initiate communications with website visitors through chat sessions on our customers websites and facilitate the close of a sale. The amount earned by KG is based on the number of sales of certain products made in a given month and to a lesser extent KG earns fees on a time and materials basis based on agent hours worked in a given month. The decrease in the nine month gross margin from 60.0% to 42.0% is largely due to the inclusion of sales prior to the inclusion of RespondQ during the first half of 2011 for which there was no cost of goods. The three month, 1.3% decrease in the gross margin from 44.0% in 2011 to 42.7% in 2012 is due to slightly higher costs to KG.

Operating Expenses

Selling, General and Administrative. Our selling, general and administrative ("SG&A") expenses consist of compensation and related expenses for sales, executive, accounting, legal and administrative personnel, as well as office, phone, rent, postage, banking and related overhead. SG&A expenses decreased by $214,~~007~~893 to $~~112~~106,~~470~~367 during the three months ended ~~June~~September 30, 2012 compared to $~~114~~121,~~477~~260 during the three months ended ~~June~~September 30, 2011. SG&A expenses increased by $8470,~~964~~071 to $~~311~~418,~~730~~097 during the ~~six~~nine months ended ~~June~~September 30, 2012 compared to $~~226~~348,~~766~~ 026 during the ~~six~~nine months ended ~~June~~September 30, 2011. The ~~six~~three month ~~increase~~year-over-year decrease is ~~primarily~~due ~~attributable~~to lower costs related to professional fees and personnel. The nine month year-over-year increase is due to increases in personnel, travel and facilities offset by decreased professional fees ~~resulting~~and ~~from~~general ~~increased~~administrative ~~sales~~costs. Moving forward, management expects SG&A costs to decrease as we pair down our operations to better align our costs and ~~administrative~~with ~~activities~~revenue.

Operations. Operations costs consist of costs related to compensation of internal and external network support staff, the cost of supporting our servers and network infrastructure as well as allocated occupancy costs and related overhead. Operations expenses increased to $50,836 during the three months ended June 30, 2012 compared to $0 during the three months ended June 30, 2011. Operations expenses increased to $98,459 during the six months ended June 30, 2012 compared to $0 during the six months ended June 30, 2011. The increase is primarily attributable to an increase in website and related server hosting, licensing and network personnel costs.19

~~Product Development~~Operations. ~~Our~~Operations ~~product~~costs ~~development~~consist ~~expenses~~of ~~consist~~costs ~~primarily~~related ofto compensation of internal and ~~related~~external ~~expenses~~network ~~for~~support ~~internal~~staff, the cost of supporting our servers and ~~external~~network ~~product~~infrastructure ~~development~~as ~~personnel~~well as allocated occupancy costs and related ~~costs~~overhead. ~~Product~~Operations ~~development~~ expenses ~~decreased~~increased ~~by $3,999~~ to $4145,~~201~~782 during the three months ended ~~June~~September 30, 2012 compared to $4532,~~200~~692 during the three months ended ~~June~~September 30, 2011. ~~Product~~Operations ~~development~~ expenses increased ~~by $5,148~~ to $99144,~~999~~241 during the ~~six~~nine months ended ~~June~~September 30, 2012 compared to $9432,~~851~~692 during the ~~six~~nine months ended ~~June~~September 30, 2011. The ~~six month~~ increase is primarily attributable to ~~development~~an ofincrease ~~iTrackr.com~~in ~~whereas~~website ~~the~~and 3related ~~month~~server ~~year-over-year~~hosting, ~~quarterly~~software ~~decrease~~licensing ~~reflects~~and ~~the~~network ~~transition~~personnel ~~of the Company's products from development to commercialization~~costs.

~~Depreciation~~Product ~~and Amortization~~Development. ~~Depreciation~~Our product development expenses consist primarily of compensation and ~~amortization~~related ~~expense~~expenses for internal and external product development personnel and related costs. Product development expenses decreased by $25,644 to $14,746 during the three ~~and~~months ~~six~~ended September 30, 2012 compared to $40,390 during the three months ended ~~June~~September 30, 2011. Product development expenses decreased by $20,496 to $114,745 during the nine months ended September 30, 2012 ~~and~~compared to $135,241 during the nine months ended September 30, 2011. ~~was~~The asdecrease ~~follows:~~reflects the transition of the Company's products from development to commercialization.

	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Amortization	$	143,500	$	-	$	287,002	$	-
Depreciation		11,172		8,551		22,041		17,246
	$	154,672	$	8,551	$	309,043	$	17,246

Depreciation and Amortization. Depreciation and amortization expense during the three and nine months ended September 30, 2012 and 2011 was as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Amortization	$	89,500	$	95,666	$	376,502	$	95,666
Depreciation		11,172		9,115		33,213		26,361
	$	100,672	$	104,781	$	409,715	$	122,027

Amortization relates to acquisition costs recorded as a result of our acquisition of RespondQ, LLC in July 2011 (See NOTE D - GOODWILL AND INTANGIBLE ASSETS to our financial statements for additional disclosure).

Nonoperating Income and (Expense)

During the three months ended ~~June~~September 30, 2012 and 2011, interest expense totaled $811,~~614~~587 and $57,~~506~~758, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011, interest expense totaled $1728,~~010~~597 and $1018,~~951~~709, respectively. Interest expense increased due to higher average loan balances outstanding in 2012 compared to 2011. Additionally, during the ~~six~~nine months ended ~~June~~September 30, 2012 the Company recognized $60,000 of expense related to the beneficial conversion feature contained in the January 9, 2012 convertible promissory note (See NOTE F – NOTES to our financial statements for additional disclosure).

Net Loss and Net Loss per Share

During the three months ended ~~June~~September 30, 2012 and 2011, our net loss totaled $~~301~~222,~~032~~930 and $~~126~~204,~~908~~991, respectively, resulting in a net loss per share of $0.01 and $0.01, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2012 and 2011, our net loss totaled $~~775~~998,~~077~~007 and $~~256~~461,~~738~~729, respectively resulting in a net loss per share of $0.0304 and $0.0102, respectively. Common stock equivalents and outstanding options and warrants were not included in the calculations due to their being anti-dilutive.

Liquidity and Capital Resources

Our available working capital and capital requirements will depend upon numerous factors, including the sale of live chat services, the timing and cost of ~~expanding~~commercialization ~~into new markets~~efforts, the cost of further developing ~~competitive~~our technologies, the ~~resources that we devote to developing new products and commercializing capabilities, the~~ status of our competitors, our ability to establish collaborative arrangements with other organizations, and our ability to attract and retain key employees.

From inception to ~~June~~September 30, 2012, we have incurred an accumulated deficit of $5,~~747~~970,~~773~~703. This loss has been incurred through a combination of stock compensation of $1,~~198~~203,~~651~~901, professional fees and expenses supporting our plans to develop our business and brand our services as well as continued operating losses.

At June 30, 2012, iTrackr Systems had current assets of $189,446, including cash on hand of $65,535 and accounts receivable of $115,524 compared to accounts payable and accrued expenses of $443,608. During the six months ended June 30, 2012, the Company had revenue of $290,955 and net losses of $775,077, including $373,678 of non cash expense related to depreciation, amortization and stock compensation. iTrackr has incurred losses since inception and may not be able to generate sufficient net revenue from its business in the future to achieve or sustain profitability. The Company believes that its cash on hand is insufficient to continue operations for the next twelve months. On July 12, 2011, the Company purchased RespondQ, LLC. With the purchase of RespondQ and subsequent improvements made to the related product offerings, the Company anticipates improved financial performance and increases in sales. In the near term, we expect that the cash on hand and accounts receivable totaling $181,059 will be sufficient to cover approximately 3-4 months of operations. Management is working to secure additional sales and debt and equity financing.20

~~Net~~At September 30, 2012, iTrackr Systems had current assets of $175,426, including cash ~~used~~on byhand ~~operating~~of ~~activities~~$39,472 ~~was~~and accounts receivable of $~~220~~129,~~999~~304 ~~for~~compared to accounts payable and accrued expenses of $435,009. During the ~~six~~nine months ended ~~June~~September 30, 2012, asthe ~~compared~~Company had revenue of $422,548 and net losses of $998,007, including $479,600 of non cash expense related to depreciation, amortization, stock compensation and amortization of a beneficial conversion feature. iTrackr has incurred losses since inception and may not be able to generate sufficient net revenue from its business in the future to achieve or sustain profitability. On July 12, 2011, the Company purchased RespondQ, LLC. With the purchase of RespondQ and subsequent improvements made to the related product offerings, the Company anticipated improved financial performance and increased sales. However, sales of our chat platform and related services have proved elusive and to require more funding than originally anticipated or currently available in our cash and accounts receivable balance. Our current cash on hand and accounts receivable totaling $81168,~~754~~776 is insufficient to continue operations for the ~~six~~next twelve months. ~~ended~~We ~~June~~expect 30said funds will be sufficient to cover approximately 4-6 months of operations. To finance our growth strategy, ~~2011~~we are currently pursuing additional funds through equity or debt financing or a combination thereof. The Company currently has no commitments to obtain any such financing, and there can be no assurance that financing will be available in amounts or on terms acceptable to the Company, if at all.

Net cash used ~~for~~by ~~investing~~operating activities was $3347,~~605~~062 ~~for~~during the ~~six~~nine months ended ~~June~~September 30, 2012 as compared to $0162,613 ~~for~~during the ~~six~~nine months ended ~~June~~September 30, 2011.

Net cash ~~provided~~used byfor ~~financing~~investing activities was $~~160~~3,~~000~~605 ~~for~~during the ~~six~~nine months ended ~~June~~September 30, 2012 as compared to net cash provided by investing activities of $~~175~~23,~~000~~525 ~~for~~during the ~~six~~nine months ended ~~June~~September 30, 2011.

18Net cash provided by financing activities was $260,000 during the nine months ended September 30, 2012 as compared to $175,000 during the nine months ended September 30, 2011.

During the ~~six~~nine months ended ~~June~~September 30, 2012, iTrackr Systems, Inc.:

·	Received $50,000 upon the exercise of options to purchase 500,000 shares of restricted common stock.

·	Received $25,000 upon the exercise of warrants to purchase 250,000 shares of restricted common stock.

· Committed to issue 3075,000 shares to our interim CEO in exchange for services valued at $49,~~635~~885.

During the year ended December 31, 2011, iTrackr Systems, Inc.:

·	Received $315,000 upon the exercise of warrants to purchase 1,400,000 shares of restricted common stock;

·	Received $80,000 upon the exercise of stock options to purchase 800,000 shares of restricted common stock;

·	Converted $60,904 of notes payable and accrued interest into 243,616 shares of restricted common stock;

·	Issued 100,000 shares in exchange for services valued at $43,350; and

·	Issued 5,000,000 shares in conjunctions with the purchase of RespondQ, LLC.

Off-Balance Sheet Arrangements

We have no material off-balance sheet transactions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the date of this report, our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Internal Control over Financial Reporting

During the period covered by this report, the Company hired an experienced financial reporting professional as CFO thereby increasing the number of personnel involved in the Company’s preparation and review of the Company’s financial statements and is reasonably likely to materially affect internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

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PART II -- OTHER INFORMATION

Item 1. Legal Proceedings.

Not applicable.

Item 1a. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the ~~six~~nine months ended ~~June~~September 30, 2012, the company received $50,000 and issued 500,000 shares upon the exercise of an option; received $25,000 upon the exercise of warrants to purchase 250,000 shares of restricted common stock; and committed to issue 3075,000 shares to our interim CEO in exchange for services valued at $49,~~635~~885.

Item 3. Defaults Upon Senior Securities.

Related party note payable to Bluewater Advisors, Inc. a company wholly owned by John Rizzo, our former CEO; convertible into common stock (conversion price 50% below the previous 10 day average closing price) upon default, bears interest at 9% per year, Matured July 1, 2011 and is currently in default. The total due under this note is $~~233~~238,~~697~~071 including principle of $192,812 and accrued interest of $4045,~~885~~259.

Related Party convertible promissory issued on July 12, 2011 in connection with the purchase of RespondQ, LLC. The note bears interest at 10% per year, is convertible into shares of common stock upon default at a conversion price of $0.10 per share, matured October 12, 2011 and is currently in default. The total due under this note is $33,666 including principle of $30,000 and accrued interest of $3,666.

Convertible promissory issued on July 12, 2011 in connection with the purchase of RespondQ, LLC. The note bears interest at 10% per year, is convertible into shares of common stock upon default at a conversion price of $0.10 per share, matured October 12, 2011 and is currently in default. The total due under this note is $78,553 including principle of $70,000 and accrued interest of $8,553.

Convertible promissory issued on January 9, 2012 in the amount of $60,000. The note bears interest at 12% per year, is convertible into shares of the Company at a fixed conversion price of $0.15 per share and matured on July 1, 2012 and is currently in default. The total due under this note is $65,188 including principle of $60,000 and accrued interest of $5,188.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

Exhibit No.		Identification of Exhibit

31.1*		Certification of Jacobo Melcer, Chief Executive Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Justin Frere, Chief Financial Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Jacobo Melcer, Chief Executive Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Justin Frere, Chief Financial Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

101.INS **		XBRL Instance Document
101.SCH **		XBRL Taxonomy Extension Schema Document
101.CAL **		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF **		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB **		XBRL Taxonomy Extension Label Linkbase Document
101.PRE **		XBRL Taxonomy Extension Presentation Linkbase Document

~~____________~~_________

* Filed Herewith

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ITRACKR SYSTEMS, INC.
Date: August 13, 2012	By:	/s/ Jacobo Melcer
Date: November 6, 2012	By:	/s/ Jacobo Melcer
		Jacobo Melcer,
		Jacobo Melcer, Interim Chairman and Interim Chief Executive Officer (Principal Executive Officer)
		Interim Chairman and Interim Chief Executive Officer (Principal Executive Officer)
	By	/s/ Justin Frere
	By:	/s/ Justin Frere
		Justin Frere, Chief Financial Officer (Principal Financial Officer, and Principal Accounting Officer)
		Justin Frere,
		Chief Financial Officer (Principal Financial Officer, and Principal Accounting Officer)

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