FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the quarterly period ended September 30, 2002
                                       OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from ________ to ___________

Commission file number: 0-21479

                              I-SECTOR CORPORATION
             (Exact name of Registrant as specified in its charter)

            DELAWARE                                    76-0515249
       (State of incorporation)             (I.R.S. Employer Identification No.)
6401 SOUTHWEST FREEWAY
       HOUSTON, TEXAS                                      77074
Address of principal executive offices)                 (Zip code)

Registrant's telephone number including area code: (713) 795-2000


(Former name, former address, and former fiscal year, if changed since last
 report)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No___

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.
Yes ____ No ____

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date.

Title                                       Outstanding

Common Stock, $.01 par value per share      As of November 14, 2001
                                            3,629,525 shares outstanding



<PAGE>


PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                      I-SECTOR CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and par value amounts)

                                                   September 30, December 31,
                                                   2002                  2001
                                                            (Unaudited)
ASSETS

Current assets:
     Cash and cash equivalents                $        3,201    $       3,434
     Accounts receivable, net                          6,132            4,302
     Accounts receivable - affiliates                    211              250
     Accounts receivable - other                         113               21
     Notes receivable                                    756              169
     Inventory                                           801              587
     Cost and estimated earnings in
        excess of billings                             1,302            1,695
     Income taxes receivable                             207              151
     Other current assets                                369              302
         Total current assets                         13,092           10,911
Property and equipment, net                            1,181            1,226
Intangible assets                                      1,210            1,356
Other assets                                              54               55
Total                                         $       15,537    $      13,548

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current portion of long term debt        $          205    $         213
     Accounts payable                                  4,091            1,772
     Billings in excess of cost and
        estimated earnings                               190               72
     Accrued expenses                                  2,203            2,091
     Net liabilities related to
        discontinued operations                          215              654
     Deferred service revenue                            121              126
         Total current liabilities                     7,025            4,928
Long term debt                                           267              410
Deferred credit - stock warrants                                          195

Commitments and contingencies
Stockholders' equity:
     Preferred stock, $.01 par value,
         5,000,000 shares authorized,
         no shares issued
     Common stock:
         $.01 par value, 15,000,000
         shares authorized,
         4,441,325 and 4,441,325 shares
         issued at September 30, 2002
         and December 31, 2001                            44               44
     Additional paid in capital                       10,379           10,184
     Treasury stock (811,800 and 591,800
         shares, at cost) at September 30,
         2002 and December 31, 2001                   (1,373)          (1,187)
     Retained earnings                                  (805)          (1,026)
         Total stockholders' equity                    8,245            8,015
Total                                         $       15,537    $      13,548

                 See notes to consolidated financial statements


<PAGE>


                      I-SECTOR CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
               (In thousands, except share and per share amounts)
                                   (Unaudited)

                                              Three Months Ended September 30,

                                                   2002              2001

Total revenue                                 $       11,607    $       6,241
Cost of sales and services                             9,280            4,533
Gross profit                                           2,327            1,708
Selling, general and administrative
   expenses                                            2,619            2,517
Operating loss                                          (292)            (809)
Interest and other income                                  3              116
Loss from continuing operations before
     benefit for income taxes                           (289)            (693)
Benefit for income taxes                                                   21
Net loss from continuing operations                     (289)            (714)
Discontinued Operations:
     Net loss from discontinued
        operations, net of taxes                                          (41)
     Loss on disposal, net of taxes                       (1)
Net loss                                      $         (290)   $        (755)

Net income (loss) per share:
Basic and Diluted:
         Net loss from continuing operations  $       (0.08)    $       (0.19)
         Net loss from discontinued
            operations, net of taxes                                    (0.01)
         Loss on disposal, net of taxes                0.00
              Net loss per share              $       (0.08)    $       (0.20)

Weighted average shares outstanding:
         Basic and Diluted                         3,629,525        3,853,607

                 See notes to consolidated financial statements


<PAGE>


                      I-SECTOR CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
               (In thousands, except share and per share amounts)
                                   (Unaudited)

                                              Nine Months Ended September 30,

                                                   2002              2001

Total revenue                                 $       31,075    $      16,241
Cost of sales and services                            24,807           12,159
Gross profit                                           6,268            4,082
Selling, general and administrative
   expenses                                            7,255            7,880
Operating loss                                          (987)          (3,798)
Interest and other income                                  1              273
Loss from continuing operations before
     (benefit ) for income taxes                        (986)          (3,525)
Benefit for income taxes                              (1,189)            (101)
Net income (loss) from continuing
   operations                                            203           (3,424)
Discontinued Operations:
     Net loss from discontinued
        operations, net of taxes                                         (153)
     Gain on disposal, net of taxes                       17              348
Net income (loss)                             $          220    $      (3,229)

Net income (loss) per share:
Basic:
    Net income (loss) from
       continuing operations                  $         0.05    $       (0.87)
    Net loss from discontinued
      operations, net of taxes                                          (0.04)
    Gain on disposal, net of taxes                      0.01             0.09
         Net income (loss) per share          $         0.06    $       (0.82)
Diluted:
    Net income (loss) from
       continuing operations                  $         0.05    $       (0.87)
    Net loss from discontinued
       operations, net of taxes                                         (0.04)
    Gain on disposal, net of taxes                      0.01             0.09
         Net income (loss) per share          $         0.06    $       (0.82)

Weighted average shares outstanding:
         Basic                                     3,736,704        3,926,002
         Diluted                                   3,783,345        3,926,002


                 See notes to consolidated financial statements


<PAGE>


                      I-SECTOR CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                               Nine Months Ended September 30,
                                                   2002                  2001

Net income (loss)                             $          220    $      (3,229)
Adjustments to reconcile net
     income (loss) to net cash provided by
     (used in) operating activities:
     Net loss from discontinued operations                                153
     Gain on disposal of discontinued
        operations                                       (17)            (348)
     Depreciation and amortization                       425              380
     Loss on retirement of assets                         21
     Current tax benefit                                  (9)            (179)
Changes in assets and liabilities that
     provided (used) cash:
     Accounts receivable, net                         (1,830)             579
     Accounts receivable - affiliates                     39               37
     Accounts receivable - other                         (92)              93
     Inventory                                          (162)            (164)
     Income tax receivable                               (56)
     Notes receivable                                   (622)
     Other current assets                                (67)             (59)
     Cost and estimated earnings in excess of
        billings                                         393             (798)
     Other assets                                                         137
     Accounts payable                                  2,319              546
     Accrued expenses                                    112              714
     Billings in excess of cost and
        estimated earnings                               118             (503)
     Deferred service revenue                             (5)             (10)

Net cash provided by (used in) continuing
     operating activities                                786           (2,651)
Net operating activities from discontinued
     activities                                         (417)            (148)
     Net cash provided by (used in)
       operating activities                              369           (2,799)

Cash flows from investing activities:
     Acquisition costs                                                    (50)
     Capital expenditures                               (265)            (636)
     Proceeds from sales of discontinued
        operations                                                        525

     Net cash used in investing activities:             (265)            (161)

Cash flows from financing activities:
     Purchase of treasury stock                         (186)            (195)
     Payments on long-term debt                         (151)

     Net cash used in financing activities:             (337)            (195)

Net decrease in cash and cash equivalents               (233)          (3,155)
Cash and cash equivalents at beginning
     of period                                         3,434            8,346
Cash and cash equivalents at end of period    $        3,201    $       5,191
Supplemental disclosures of cash flow
     information:
     Cash paid for interest                   $            0    $           0
     Cash paid for taxes                      $            0    $           0
Supplemental Schedule of Noncash Investing
     and Financing Activities:
     Additional paid in capital from
        expiration of stock warrants          $          195    $

                 See notes to consolidated financial statements


<PAGE>


                      I-SECTOR CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               (In thousands, except share and per share amounts)

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     I-Sector  Corporation  and  subsidiaries  ("I-Sector")  are  engaged in the
business of providing computer services and of selling  associated  hardware and
telephony software products.  I-Sector's  operations are conducted through three
segments:

o    Allstar Solutions,  Inc. ("Allstar"),  a wholly-owned subsidiary,  provides
     customers  with  turn-key  outsourced  IT  helpdesk   solutions,   helpdesk
     solutions  consulting  services,  on-site  and  carry-in  computer  repair,
     application  support,   operating  system  support  and  network  migration
     services,   network   support   and   management,    network   design   and
     implementation, IT project management, and technical staff augmentation for
     IT helpdesk operations.


o    Internetwork Experts, Inc. ("INX"), a wholly-owned subsidiary, is a network
     infrastructure  professional services provider and an integrator of network
     infrastructure  products  manufactured  by Cisco Systems,  Inc.  ("Cisco").
     INX's  areas of  practice  include  network  baseline  assessment,  network
     design/architecture,  implementation,  network security audits and firewall
     design, network management, project management and knowledge transfer.


o    Stratasoft,  Inc. ("Stratasoft"),  a wholly-owned  subsidiary,  creates and
     markets  software  related to the  integration  of computer  and  telephone
     technologies.  Stratasoft's products are designed to improve the efficiency
     of a  professional  call  center  or  other  type  of high  volume  calling
     application, for both inbound and outbound calls.

     A substantial portion of I-Sector's sales and services are authorized under
arrangements  with product  manufacturers.  I-Sector's  operations are dependent
upon maintaining its approved status with such manufacturers.  Should I-Sector's
approved status lapse, revenues and gross profit could be adversely affected.

     The condensed  consolidated financial statements presented herein as of and
for the three  months and nine  months  ended  September  30,  2002 and 2001 are
unaudited;  however,  all  adjustments  which are, in the opinion of management,
necessary  for a  fair  presentation  of  the  financial  position,  results  of
operations  and cash flows for the periods  covered  have been made and are of a
normal,  recurring nature.  Accounting  measurements at interim dates inherently
involve  greater  reliance on  estimates  than at  year-end.  The results of the
interim periods are not necessarily indicative of results for the full year. The
consolidated  balance  sheet  at  December  31,  2001 is  derived  from  audited
consolidated  financial statements but does not include all disclosures required
by  accounting  principles  generally  accepted in the United States of America.
Although management  believes the disclosures are adequate,  certain information
and disclosure  normally  included in the notes to the financial  statements has
been  condensed  or omitted as  permitted  by the rules and  regulations  of the
Securities and Exchange Commission.

     Reclassifications   -  Certain  amounts  in  the   consolidated   financial
statements  presented  herein have been  reclassified to conform to current year
presentation.

     Use  of  Estimates  -  The  preparation  of  the  financial  statements  in
conformity with accounting principles generally accepted in the United States of
America  requires  management to make estimates and assumptions  that affect the
reported  amounts of assets and liabilities and disclosure of contingent  assets
and liabilities at the date of the financial  statements and the reported amount
of revenue and expense during the reporting period.  Actual results could differ
from these estimates.

     Revenue  Recognition - Revenue from the sale of products is recognized when
the  product is  shipped.  Service  income is  recognized  as the  services  are
performed.  Revenues resulting from installations of systems including equipment
and  software  for which  duration is in excess of three months and that require
substantial   modification   or   customization   are   recognized   using   the
percentage-of-completion  method.  The percentage of revenue  recognized on each
contract is determined  principally on the basis of the relationship of the cost
of work  performed  on the  contract to  estimated  total  costs.  Revisions  of
estimates  are  reflected  in the  period in which the facts  necessitating  the
revisions  become known;  when a contract  indicates a loss, a provision is made
for the total anticipated loss.


<PAGE>


         The following reflects the amounts relating to uncompleted contracts at
September 30, 2002 and December 31, 2001:

            Costs incurred on uncompleted contracts            $   679  $   600
            Estimated earnings                                   2,517    2,181

                                                                 3,196    2,781
            Less: Billings to date                               2,084    1,158

            Cost and estimated earnings in excess of billings  $ 1,302  $ 1,695
            Billings in excess of cost and estimated earnings  $   190  $    72

     The three  months  ended  September  30,  2002 and 2001  include in service
revenue $85 and $0,  respectively of net revenues  representing $1,126 and $0 of
customer  billings.  For the nine months ended September 30, 2002 and 2001, $101
and $0 of net revenues are included in service revenue,  representing $1,283 and
$0 of customer billings.

     Accounting Pronouncements -

     In August 2001,  SFAS ("SFAS") No. 144,  "Accounting  for the Impairment or
Disposal of Long-Lived  Assets" was approved by the FASB ("FASB").  SFAS No. 144
supercedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and
for Long Lived Assets to be Disposed of". SFAS No. 144 required  recognition  of
an impairment loss,  measured as the difference  between the carrying amount and
the fair value of the asset,  only if the carrying amount of a long-lived  asset
is not  recoverable  from its  undiscounted  cash  flows.  The  adoption of this
statement had no material effect on I-Sector's  consolidated  financial position
or its results of operations.

     In April 2002, the FASB issued Statement of Financial  Accounting Standards
No. 145,  "Rescission of FASB  Statements  No. 4,44,  and 64,  Amendment of FASB
Statement No. 13, and Technical  Corrections." SFAS No. 145, among other things,
amends  SFAS No. 4 and SFAS No.  64, to require  that gains and losses  from the
extinguishments  of debt generally be classified within  continuing  operations.
The  provisions of SFAS No. 145 are effective for fiscal years  beginning  after
May 15, 2002 and early  application is encouraged.  The Company does not believe
that  the  adoption  of SFAS No.  145  will  have a  significant  impact  on its
financial statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated  with Exit or Disposal  Activities."  SFAS No. 146 replaces  Emerging
Issues Task Force (EITF" Issue 94-3, "Liability Recognition for Certain Employee
Termination  Benefits  and  Other  Costs  to Exit an  Activity".  This  standard
requires  companies  to  recognized  costs  associated  with  exit  or  disposal
activities  when they are incurred rather than at the date of a commitment to an
exit or  disposal  plan.  This  statement  is  effective  for  exit or  disposal
activities  that are  initiated  after  December 31, 2002.  The Company does not
believe that the adoption of SFAS No. 146 will have a significant  impact on its
financial statements.

2. DISCONTINUED OPERATIONS

     On  November  6,  2001,  I-Sector  approved  a plan to sell or close its IT
Staffing business. A sale was finalized on December 31, 2001. Under the terms of
the sale  I-Sector  received  a note  receivable  for $52,  $50 for the  ongoing
operations of IT Staffing, Inc. and $2 for certain fixed assets of I-Sector. The
note  receivable   bears  interest  at  5%  per  annum  and  is  collectible  in
installments  based on the total  monthly  revenue  of the buyer  over 24 months
beginning  in March,  2002.  A  disposal  loss,  including  an  estimate  of the
operating  results from the  measurement  date,  November 6, 2001 to the closing
date of the sale of $17, and  estimates  for  impairment of assets caused by the
disposal  decision of $43,  totaling  $11 (net of income tax savings of $5), was
recognized  in 2001. A loss of $6 (net of tax benefit of $3)  recognized  in the
quarter ended September 30, 2002.  I-Sector has retained accounts  receivable of
$82 and $0, net of  reserves,  at December  31,  2001 and  September  30,  2002,
respectively. The balance sheet caption "Net Liabilities related to discontinued
operations"  contains $80 and $37 at December 31, 2001 and  September  30, 2002,
respectively.


<PAGE>


     Previously,  on March 16, 2000,  I-Sector entered into an agreement to sell
certain assets of and the ongoing  operations of its Computer Products Division.
The sale transaction closed on May 19, 2000 after shareholder and other required
consents were obtained.  Additionally on November 2, 1999,  I-Sector  approved a
plan to sell or close its Telecom  Division and that  business was sold on March
16, 2000.

     During the quarter ended September 30, 2002, I-Sector recognized a net gain
(loss) on disposal of these three businesses as follows:


         IT Staffing, Inc. (net of tax benefit of $3)                    $ (6)
         Computer Products Division (net of taxes of $1)                    2
         Telecom Division (net of tax of $2)                                3

         Net loss on disposal                                            $ (1)

     The  balance  sheet  caption  "Net  Liabilities   related  to  discontinued
operations"  contains $215 and $654 at September 30, 2002 and December 31, 2001,
respectively,  of estimated  future expenses related to the winding up of the IT
Staffing business,  the Telecom Division and the Computer Products Division, and
includes  amounts  related to  settlement of pending  litigation  and to Telecom
warranties.

3. SEGMENT INFORMATION

     I-Sector  has  four  reportable  segments:  Allstar,  INX,  Stratasoft  and
Corporate. Corporate is not an operating segment. The accounting policies of the
business  segments  are the  same as  those  for  I-Sector.  I-Sector  evaluates
performance of each segment based on operating income. Management views accounts
receivable  and  inventory  and  not  total  assets  in  their  decision-making.
Inter-segment  sales  and  transfers  are not  significant  and are shown in the
Elimination  column in the following table. The tables below show the results of
the four reportable segments:

<TABLE>
<CAPTION>
For the quarter ended September 30, 2002:
                                               Allstar       INX    Stratasoft Corporate  Elimination Consolidated

<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Total  revenue                                $  1,291   $  8,584   $  1,743   $          $    (11)  $ 11,607
Cost of sales and services                         983      7,527        781                   (11)     9,280
Gross profit                                       308      1,057        962                     0      2,327
Selling, general and
     administrative expenses                       569        966        914        170          0      2,619
Operating (loss) income                       $   (261)  $     91   $     48   $   (170)  $      0       (292)
Interest and other income                                                                                   3
Loss before benefit for income tax                                                                       (289)
Benefit for income tax
Net loss from continuing operations                                                                      (289)
Net loss on disposal, net of taxes                                                                         (1)
Net loss                                                                                             $   (290)

Accounts receivable, net                      $    863   $  3,943   $  1,303   $     23   $      0   $  6,132
Inventory                                     $     60   $    324   $    416   $      0   $      0   $    801
</TABLE>

<TABLE>
<CAPTION>
For the quarter ended September 30, 2001:
                                               Allstar       INX    Stratasoft Corporate  Elimination Consolidated

<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Total revenue                                 $  1,682   $  2,876   $  1,687   $     (4)  $          $  6,241
Cost of sales and services                       1,181      2,516        841         (5)                4,533
Gross profit (loss)                                501        360        846          1                 1,708
Selling, general and
     administrative expenses                       772        729        715        301                 2,517
Operating (loss) income                       $   (271)  $   (369)  $    131   $   (300)  $      0       (809)
Interest and other income                                                                                (116)
Loss before provision for income tax                                                                     (693)
Benefit for income tax                                                                                     21
Net loss from continuing operations                                                                      (714)
Net loss from discontinued operations,
     net of taxes                                                                                         (41)
Net gain on disposal, net of taxes
Net loss                                                                                             $   (755)

Accounts receivable, net                      $  1,052$     2,107   $    574   $     (2)  $      0   $  3,731
Accounts receivable retained from
     discontinued operations, net                                                                         163
Total accounts receivable, net                                                                       $  3,894
Inventory                                     $    185   $    176   $    647   $     (4)  $      0   $  1,004
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended September 30, 2002:
                                               Allstar       INX    Stratasoft Corporate  Elimination Consolidated

<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Total revenue                                 $  3,983   $ 21,727   $  5,571   $          $   (206)  $ 31,075
Cost of sales and services                       3,047     19,478      2,488                  (206)    24,807
Gross profit                                       936      2,249      3,083                     0      6,268
Selling, general and
     administrative expenses                     1,723      2,446      2,600        486          0      7,255
Operating (loss) income                       $   (787)  $   (197) $     483   $   (486)  $      0       (987)
Interest and other income                                                                                   1
Loss before benefit for income tax                                                                       (986)
Benefit for income tax                                                                                 (1,189)
Net income from continuing operations                                                                     203
Net gain on disposal, net of taxes                                                                         17
Net income                                                                                           $    220
</TABLE>
<TABLE>
<CAPTION>
For the nine months ended September 30, 2001:
                                               Allstar      INX     Stratasoft Corporate  Elimination Consolidated

<S>                                          <C>         <C>        <C>        <C>        <C>        <C>
Total revenue                                $  4,076    $  7,240   $  4,959   $     (7)  $    (27)  $ 16,241
Cost of sales and services                      3,243       6,556      2,377         (5)       (12)    12,159
Gross profit (loss)                               833         684      2,582         (2)       (15)     4,082
Selling, general and
     administrative expenses                    2,453       2,120      2,114      1,208       (15)      7,880
Operating (loss) income                      $ (1,620)   $ (1,436)  $    468   $ (1,210)  $     0      (3,798)
Interest and other income                                                                                 273
Loss before provision for income tax                                                                   (3,525)
Benefit for income tax                                                                                   (101)
Net loss from continuing operations                                                                    (3,424)
Net loss from discontinued operations,
     net of taxes                                                                                        (153)
Net gain on disposal, net of taxes                                                                        348
Net loss                                                                                             $ (3,229)

<FN>
International   sales  accounted  for  $378  or  3.3%  and  $1,835  or  5.9%  of
consolidated  revenues and 21.7% and 32.9% of the Stratasoft segment revenues in
the three months and nine months ended September 30, 2002, respectively.  In the
three  months and nine  months  ended  September  30, 2001  international  sales
accounted for $1,247 or 20.0% and $1,725 or 10.6% of  consolidated  revenues and
73.9% and 20.0% of the  Stratasoft  segment  revenues.  International  sales are
derived from Southern Asia, Africa, United Kingdom and Canada.
</FN>
</TABLE>

The  following  table  represents  the  reconciliation  of products and services
included in total revenues:

                     Reconciliation of Products and Services

                        Three Months Ended September 30,
                                                 2002                2001

   Product revenue                            $  9,858           $   4,307
  Service revenues                               1,749               1,934

    Total revenues                            $ 11,607           $   6,241


                         Nine Months Ended September 30,
                                                 2002                2001

   Product revenue                            $ 26,421           $  11,225
  Service revenues                               4,654               5,016

    Total revenues                            $ 31,075           $  16,241

4. EARNINGS PER SHARE

     Basic EPS is computed by dividing net income (loss) by the weighted-average
number of common shares outstanding for the period.  Diluted EPS is based on the
weighted-average number of shares outstanding during each period and the assumed
exercise of dilutive  stock  options  and  warrants  less the number of treasury
shares  assumed to be purchased from the proceeds using the average market price
of the Company's common stock for each of the periods presented.

     The  potentially  dilutive  options of 134,503 for the three  months  ended
September 30, 2002 were not used in the  calculation  of diluted  earnings since
the effect of potentially  dilutive  securities in computing a loss per share is
antidilutive.  The  potentially  dilutive  options  totaling 46,641 for the nine
months ended September 30, 2002 were calculated under the treasury stock method.

     There were  warrants to  purchase  176,750  shares of common  stock for the
three  months and nine months ended June 30, and 2001 which were not included in
computing  diluted  earnings  per share  because the  inclusion  would have been
antidilutive.  During the three months ended June 30, 2002 such warrants expired
and the carrying  value of the warrants was  recognized  as  additional  paid in
capital.

     The potentially dilutive options of the Company's wholly-owned  subsidiary,
Internetwork  Experts,  Inc.,  (see  Note  8) of  5,459,500  were  used  in  the
calculation of diluted earnings attributable to the Company for the three months
ended  September 30, 2002.  Such inclusion in the  calculation of the net income
available  to the Company  from its  subsidiary  had no  material  effect on the
calculation  of diluted  earnings  per share of the Company.  These  potentially
dilutive  options were not used in the  calculation of diluted  earnings for the
nine  months  ended  September  30,  2002,  since  the  effect  would  have been
antidilutive.


<PAGE>


5. CURRENT DEBT OBLIGATIONS

     On September 27, 2001, Stratasoft, a subsidiary of I-Sector,  signed a note
payable  to a third  party for $725,  payable in  monthly  installments  through
February 2007. The note does not bear interest and I-Sector has imputed interest
at 5.5% to record the debt and related patent asset and has recorded interest of
$8 and $24 in the three months and nine months ended  September  30, 2002.  This
note is collateralized by Stratasoft's  patent assets and Stratasoft has granted
a security  interest to its pending patent  application  and the next two patent
applications filed by Stratasoft. In connection with this note payable, I-Sector
has reported short-term debt maturing within one year of $192 and long-term debt
of $253 at September 30, 2002.

     In October 2001,  I-Sector  signed a non-interest  bearing note payable for
$39 payable in monthly  installments  through  October 2004. In connection  with
this note payable,  I-Sector has reported  short-term  debt maturing  within one
year of $13 and long-term debt of $14 at September 30, 2002.

     On January 31, 2002 I-Sector  entered into a credit  agreement with Textron
Financial  Corporation  ("Textron") for a revolving line of credit (the "Textron
Facility").  The initial total credit  available under the Textron  facility was
$2,500 subject to borrowing base limitations that are generally  computed as 80%
of eligible accounts  receivable,  and 90% of identifiable  inventory  purchased
under this  agreement and 40% of all other  inventory.  On June 19, 2002 Textron
increased the total credit  available under the Textron  facility to $4,000.  In
connection with the increase in the credit line, a modification  was made to the
borrowing  base   limitations   that  restricted  the  eligibility  of  accounts
receivable  for  collateralization  by  disallowing  as eligible any  customer's
receivables  in their  entirety  that  have  balances  over 90 days old and that
exceed 25% of their total  balance.  I-Sector may use up to $500 of the line for
working capital advances under approved  conditions.  Borrowings accrue interest
at the prime  rate plus 2.5% on  outstanding  balances  that  extend  beyond the
vendor approved free interest  period and on working capital  advances from date
of advance.  This agreement is collateralized by substantially all of I-Sector's
assets except its patent assets. The agreement contains  restrictive  covenants,
which require us to maintain  minimum  tangible capital funds and a minimum debt
to  tangible  capital  funds  ratio.  At  September  30,  2002  I-Sector  was in
compliance its loan covenants.  Inventory floor plan borrowings are reflected in
accounts  payable on the  accompanying  balance  sheets.  At September 30, 2002,
I-Sector had $2,822 outstanding on inventory floor plan finance  borrowings,  $0
outstanding on working  capital  advances and had total credit  availability  of
$1,178.

6.   LITIGATION

     In July 2000,  Benchmark Research and Technology,  Inc. made a verbal claim
against  I-Sector,  claiming that I-Sector breached its contract with Benchmark,
and that I-Sector was negligent and breached various warranties, committed fraud
and  violated  the  Deceptive  Trade  Practices  Act.  The case was  mediated in
November 2000 but no agreement was reached.  I-Sector  knows of no lawsuit being
filed.  In July,  2002  Benchmark  offered to settle with  I-Sector  for $40 and
I-Sector  is  studying  the  offer.  In the  event  that the  settlement  is not
accepted, I-Sector intends to vigorously contest the demand.

     In August  2002,  Inacom  Corp.  filed a lawsuit in the  District  Court of
Douglas  County,  Nebraska  styled  Inacom Corp v. I-Sector  Corporation,  f/k/a
Allstar  Systems,  Inc. , claiming that  I-Sector owed the sum of  approximately
$570 to Inacom Corp.  ("Inacom") as a result of Inacom's termination of a Vendor
Purchase Agreement between Inacom and I-Sector. I-Sector believes that the claim
is without merit and intends to vigorously contest the demand.

     I-Sector  had filed a claim to collect on a note  receivable  from E Z Talk
Communications   ("E  Z  Talk")  and  had  recently   entered  into  arbitration
discussions  with E Z Talk. In July,  2002 E Z Talk filed a lawsuit to set aside
the  arbitration and claiming  damages of $250. A mediation  meeting was held in
November 2002, as required under the contract, however no agreement was reached.
I-Sector intends to vigorously contest the suit.

     The Equal Opportunity  Commission ("EEOC") has filed a civil action against
the Company, Civil Action No. 3-01CV2240-R,  styled Equal Employment Opportunity
Commission  v.  I-Sector  Corporation,  in the Northern  District of Texas.  The
action charges  workplace sexual harassment by I-Sector and directed against two
individuals.  The case is now in the  posture of  cross-filing  of  Motions  for
Summary  Judgment.  The  Company  believes  the demand is  without  merit and is
vigorously contesting the action.

     I-Sector  is also party to other  litigation  and claims  which  management
believes are normal in the course of its  operations;  while the results of such
litigation and claims cannot be predicted with certainty,  I-Sector believes the
final outcome of such matters will not have a materially  adverse  effect on its
results of operations or financial position.


<PAGE>

7.   INCOME TAX BENEFIT

     On March 9, 2002,  President  Bush  signed  into law the Job  Creation  and
Worker  Assistance  Act of 2002.  The new law provides for the  carryback of net
operating losses for any taxable year ending during 2001 and 2002 to each of the
5 tax years preceding the loss year.  Previously,  a net operating loss was only
eligible  to be carried  back to the 2 years  preceding  the year of loss.  As a
result of the change in the carryback period,  I-Sector recognized a tax benefit
of $1,189 in the nine months  ended  September  30,  2002.  On July 26, 2002 the
Company received $1,123 in tax refunds.

8.   RELATED PARTY TRANSACTIONS

     I-Sector has from time to time made payments on behalf of Allstar Equities,
Inc., a Texas corporation  ("Equities"),  which is wholly-owned by its President
and Chief Executive Officer, on his behalf personally,  for taxes,  property and
equipment.  Effective  on December 1, 1999 a note payable by Equities was signed
for $336 for 60 monthly  installments  of $7. The note bears  interest at 9% per
year.  At September 30, 2002 and December 31, 2001,  the  Company's  receivables
from  Equities   amounted  to   approximately   $106  and  $159,   respectively.
Additionally,  from time to time the  Company  has made  payments  to  unrelated
parties, primarily for use of a credit card, for transactions that either wholly
or partially  benefit the Company's  President and Chief  Executive  Officer and
which therefore are accounted for as indebtedness from him to the Company and on
which he pays interest of 6% per annum on the average outstanding  balance.  The
balance of approximately  $87 and $80 is included in the Company's balance sheet
and reported as part of Accounts  receivable - affiliates  at September 30, 2002
and December 31, 2001, respectively.

     In order to comply  with the  Sarbanes-Oxley  Act of 2002,  the Company has
determined that the payments for the President and Chief Executive Officer's use
of a credit  card for  transactions  that  wholly or  partially  benefit him may
possibly be deemed to  constitute  a demand loan.  Therefore,  in order to be in
complete compliance, the Company has recently made a demand for repayment of $94
related  to the  President  and  CEO's  personal  credit  card  usage,  which is
discussed  above and is  classified  in Accounts  Receivable - affiliates in the
Company's  balance sheet at September 30, 2002 and December 31, 2001.  After the
enactment  of the  Sarbanes-Oxley  Act (the Act") on July 30,  2002 the  Company
inadvertently  paid  certain  credit  card  bills for a credit  card used by the
President  and Chief  Executive  Officer  that  were  thereafter  identified  as
transactions  of a personal nature and which occurred after the enactment of the
Act. In the absence of interpretive  regulations  under the Act as to whether or
not such  assets  could  possibly  be  construed  to be a  personal  loan to the
President and Chief  Executive  Officer under the Act, the Company has taken the
conservative  approach  and  demanded  that the  President  and Chief  Executive
Officer immediately repay such amounts.  The Chief Executive Officer re-paid the
amounts in  question,  which we consider  to be  immaterial,  shortly  after the
Company made such payments and prior to the end of the quarter.

     The Company leases office space from Equities. On December 1, 1999 Equities
purchased the Company's  corporate  office  building and executed a direct lease
with us with an  expiration  date of December  31,  2004.  In  conjunction  with
Equities obtaining new financing on the building,  a new lease was executed with
the Company on February 1, 2002 with an expiration date of January 31, 2007. The
new lease has rental rates reduced from $37,692 to $37,192 per month.

     From time to time  I-Sector  obtains an  independent  survey of real estate
rental rates and consults with real estate  consulting firms to determine market
rates of facilities  that are comparable to the Houston  headquarters  facility.
The  Company  believes  that the rental  rate and other  terms of our lease from
Equities  are at least  as  favorable  as those  that  could be  obtained  in an
arms-length transaction with an unaffiliated third party.

     The Company  furnishes a  company-owned  automobile  for the  President and
Chief Executive Officer's business and personal use.

     From time to time I-Sector makes  short-term  loans and travel  advances to
its employees.  The balance of approximately $21 and $11 relating to these loans
and advances is included in the Company's  balance sheet and reported as part of
Accounts  receivable - affiliates  at September  30, 2002 and December 31, 2001,
respectively.

     Each of I-Sector's subsidiaries has a stock incentive plan in place. One of
the  subsidiaries  has granted to certain  employees  and to  management of such
subsidiary  an  incentive  award.  Under its plan such options vest ratably over
three to five years.  The quantity of incentive  options  granted to  management
personnel are  determined  based on the  percentage of  predetermined  financial
goals that they attain.  Any unvested  stock options vest  immediately  upon the
occurrence  of a liquidity  event for that  subsidiary.  The options  expire ten
years after the grant date if they are not  exercised.  The stock option  grants
are  subject  to  dilution  when  I-Sector  purchases  additional  shares of the
subsidiary stock in order to keep the subsidiary  capitalized.  At September 30,
2002,  options for 5,459,500  shares of stock were granted (with 519,151 vested)
by that subsidiary and were  outstanding  with an average issue price of $ 0.13,
which represents  potential  maximum  dilution of I-Sector's  investment in that
subsidiary of 23.0%.




<PAGE>


ITEM 2.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATION

                              I-SECTOR CORPORATION
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The  following  discussion  is  qualified in its entirety by, and should be
read in conjunction with, our consolidated  financial statements,  including the
notes thereto included elsewhere in this Form 10-Q and our Form 10-K, previously
filed  with  the  Securities  and  Exchange  Commission.  All  monetary  amounts
discussed in Items 2 through 5 are in thousands.

Overview

     Our  revenue  is derived  from  three  segments.  Allstar  Solutions,  Inc.
("Allstar")  provides  customers  with  on-site and  carry-in  computer  repair,
application  support,  operating system and network migration services,  turnkey
outsourced IT helpdesk  solutions,  technical staff augmentation for IT helpdesk
operations and helpdesk solutions  consulting  services.  Internetwork  Experts,
Inc.  ("INX")  focuses on the  design,  deployment  and  support  of  networking
infrastructure.  INX  provides  professional  services for  customers  that have
large-scale  network  infrastructure  requirements  that are Cisco centric.  The
areas of  practice  for INX  include  network  design,  implementation,  turnkey
support,  security audits and firewall design, network infrastructure management
and network infrastructure consulting services.  Stratasoft, Inc. ("Stratasoft")
develops and markets  proprietary  software that integrates  business  telephone
systems  and  networked  computer  systems.   Stratasoft's  basic  products  are
sometimes  customized  to suit a customer's  particular  needs and are sometimes
bundled  with  computer  hardware  supplied  by us at  the  customer's  request.
Stratasoft  products include software for call center management,  both in-bound
and out-bound, as well as interactive voice response software.

     Allstar and INX market our services to businesses  in Texas from  locations
in the Houston and Dallas-Fort Worth metropolitan areas.  Stratasoft markets its
products  worldwide  through  a direct  sales  force  and an  authorized  dealer
network.  During the three months  ended  September  30,  2002,  Allstar and INX
produced 11.1% and 74.0% of total revenues,  while Stratasoft  produced 15.0% of
total revenues. During the nine months ended September 30, 2002, Allstar and INX
produced 12.8% and 69.9% of total revenues,  while Stratasoft  produced 17.9% of
total revenues. Gross margin varies substantially between each of these business
segments.

     On  November  6,  2001 we  determined  to exit  the IT  Staffing  business.
Effective December 31, 2001, the business was sold to Echelon Staffing,  Inc., a
corporation  formed by the former  President of IT Staffing.  Under the terms of
the sale we received a note for $52, of which $50 was for the ongoing operations
and $2 for  certain  fixed  assets  relating  to this  business.  The note bears
interest at 5% per annum and is collectible in  installments  based on the total
monthly  revenue of the buyer over 24 months  beginning  in March  2002.  In the
three month period ended December 31, 2001, we recognized a disposal loss of $11
(net of tax of $5),  including an estimated loss for the operating  results from
the measurement  date,  November 6, 2001 to the closing date of the sale of $37,
and estimates for  impairment of assets caused by the disposal  decision of $34.
We retained accounts  receivable of $82, net of reserves and liabilities related
to the IT Staffing business at December 31, 2001.  Retained accounts  receivable
were $0 at September 30, 2002.

     Our  ability to attract and retain  qualified  professional  and  technical
personnel is critical to the success of all of our services operations. The most
significant  portion of the costs  associated  with the  delivery of services is
personnel costs. Therefore,  in order to be successful,  our billable rates must
be in excess of the personnel costs and our margin is dependent upon maintaining
high utilization of our service personnel. In addition, the competition for high
quality personnel has generally intensified,  causing both our and other service
provider's  personnel  costs to  increase.  In markets  where we do not maintain
branch offices, we often subcontract for necessary technical personnel.

     A  significant  portion  of our cost of  services  for each of our  service
businesses is comprised of labor. Labor cost related to permanent  employees has
a somewhat  fixed  nature such that higher  levels of service  revenue  produces
higher gross margin while lower levels of service  revenue  produces  less gross
margin.  Management  of labor cost is important  in order to prevent  erosion of
gross margin.



<PAGE>


     A significant portion of our selling,  general and administrative  expenses
in all of our businesses  relate to personnel costs,  some of which are variable
and others of which are  relatively  fixed.  Our  variable  personnel  costs are
substantially  comprised of sales  commissions,  which are typically  calculated
based upon our gross profit on a particular sales transaction and thus generally
fluctuate with our overall gross profit.  The remainder of selling,  general and
administrative  expenses are relatively fixed and does not vary in proportion to
increases in revenue as directly.

Special notice regarding forward-looking statements

     This  quarterly  report on Form 10-Q  contains  forward-looking  statements
within  the  meaning of the  Private  Securities  Litigation  Reform Act of 1995
relating to future events or our future financial performance including, but not
limited to,  statements  contained  in Item 2. -  "Management's  Discussion  and
Analysis  of  Financial  Condition  and  Results  of  Operations."  Readers  are
cautioned  that  any  statement  that is not a  statement  of  historical  fact,
including  but not  limited  to,  statements  which may be  identified  by words
including,  but not  limited to,  "anticipate,"  "appear,"  "believe,"  "could,"
"estimate,"  "expect," "hope,"  "indicate,"  "intend," "likely," "may," "might,"
"plan,"  "potential," "seek," "should," "will," "would," and other variations or
negative  expressions thereof, are predictions or estimations and are subject to
known and unknown risks and uncertainties.  Numerous factors,  including factors
that we have little or no control over, may affect the I-Sector's actual results
and may cause actual results to differ  materially  from those  expressed in the
forward-looking  statements  contained  herein.  In evaluating such  statements,
readers should consider the various factors  identified in the I-Sector's annual
report on Form  10-K,  as filed  with the  Securities  and  Exchange  Commission
including the matters set forth in Item 1.- "Factors Which May Affect The Future
Results Of Operations," which could cause actual events,  performance or results
to differ materially from those indicated by such statements.


<PAGE>



Three Months Ended September 30, 2002 Compared To Three Months Ended September
30, 2001


     The  following  table  sets  forth,  for  the  periods  indicated,  certain
financial data derived from our unaudited consolidated  statements of operations
for the three months ended  September 30, 2002 and 2001.  The  discussion  below
relates only to our continuing operations, unless otherwise noted.

<TABLE>
<CAPTION>
                                                                          Three months ended September 30,
                                                                  2002                             2001
                                                            Amount      %                    Amount      %
<S>                                                      <C>           <C>                 <C>           <C>
Revenue
Allstar                                                  $    1,291     11.1              $    1,682     27.0
  INX                                                         8,584     74.0                   2,876     46.1
Stratasoft                                                    1,743     15.0                   1,687     27.0
Corporate                                                                                         (4)    (0.1)
Elimination                                                     (11)    (0.1)
         Total revenue                                       11,607    100.0                   6,241    100.0
Gross profit (loss):
Allstar                                                         308     23.9                     501     29.8
  INX                                                         1,057     12.3                     360     12.5
Stratasoft                                                      962     55.2                     846     50.1
Corporate                                                         0      N/A                      (5)     N/A
Elimination                                                       0      0.0
         Total gross profit                                   2,327     20.0                   1,708     27.4
Selling, general and administrative expenses:
Allstar                                                         569     44.1                     772     45.9
  INX                                                           966     11.3                     729     25.3
Stratasoft                                                      914     52.4                     715     42.4
Corporate                                                       170      N/A                     301      N/A
Elimination                                                       0      0.0
         Total selling, general and administrative
         Expenses                                             2,619     22.6                   2,517     40.3
Operating (loss) income:
Allstar                                                        (261)   (20.2)                   (271)   (16.1)
  INX                                                            91      1.1                    (369)   (12.8)
Stratasoft                                                       48      2.8                     131      7.8
Corporate                                                      (170)     N/A                    (300)     N/A
         Total operating loss                                  (292)    (2.5)                   (809)   (13.0)
Interest and other income                                         3      0.0                     116      1.9
Loss before benefit for income taxes                           (289)    (2.5)                   (693)   (11.1)
Benefit for income taxes                                                (0.0                      21      0.3
Net loss from continuing operations                            (289)    (2.5)                   (714)   (11.4)
Discontinued operations:
Net loss from discontinued operations                                                            (41)    (0.6)
Gain on disposal                                                 (1)     0.0
Net loss                                                 $     (290)    (2.5)             $     (755)   (12.1)
</TABLE>



<PAGE>


     TOTAL REVENUE. Total revenue, net of intercompany  eliminations,  increased
by $5,366 (86.0%) to $11,607 in 2002 from $6,241 in 2001.

     Allstar revenue  decreased by $391 (23.2%) to $1,291 in 2002 from $1,682 in
2001.  As a percentage of total revenue  Allstar  revenue  decreased to 11.1% in
2002  from  27.0% in  2001.  The  decrease  in  Allstar  revenue  was  primarily
attributable  to  decreased  service  revenues  of $279 and  decreased  software
product sales of $112 in the quarter ended  September 30, 2002.  The decrease in
service revenues is primarily attributable to specific contracts totaling $73 in
2001 for which there was no equivalent  contracts in 2002, and for reduced scope
of services  for another  customer in 2002  resulting  in a reduction in service
revenues of $144K

     INX revenue  increased by $5,708  (198.5%) to $8,584 in 2002 from $2,876 in
2001. As a percentage of total revenue,  INX revenue  increased to 74.0% in 2002
from 46.1% in 2001.  Of the increase in revenues,  $3,627 was  attributed to the
Houston office and $2,081 was attributed to the Dallas office.  The  achievement
of gold status with Cisco, its primary product line manufacturer,  allows INX to
purchase  directly from Cisco at lower pricing  levels and which  enhances INX's
relationship  with Cisco in the areas of lead  generation,  joint  marketing and
technical  support also  contributed  to increased  sales volume for the overall
company.

     Stratasoft revenue increased by $56 (3.3%) to $1,743 in 2002 from $1,687 in
2001.  Stratasoft revenue, as a percentage of total revenue,  decreased to 15.0%
in 2002 from 27.0% in 2001.  Stratasoft's  increased revenues were primarily the
result of better  recognition  of Stratasoft  products in the market place,  the
expansion of the sales staff and dealer network and to increased advertising and
marketing  efforts.  Stratasoft's  international  sales  accounted  for 13.1% of
Stratasoft's  revenues in the quarter  ended  September  30, 2002 as compared to
73.9% in the same quarter of 2001.

     GROSS PROFIT. Gross profit increased by $619 (36.2%) to $2,327 in 2002 from
$1,708 in 2001. Gross margin decreased to 20.0% in 2002 from 27.4% in 2001.

     Allstar gross profit decreased by $193 (38.5%) to $308 in 2002 from $501 in
2001.  Gross  margin for Allstar  decreased to 23.9% in 2002 from 29.8% in 2001.
Allstar  cost of  service  consists  primarily  of labor  cost  that has a fixed
component. The fixed component of labor causes gross profit and gross margin not
to fluctuate directly with the decrease in revenues.

     INX gross  profit  increased  $697  (193.6%) to $1,057 in 2002 from $501 in
2001.  Gross margin for INX decreased to 12.3% in 2002 from 12.5% in 2001. INX's
product gross profit has increased $642 to $883 in 2002 from $241 in 2001 due to
both sales volume  increase  and by higher  gross  margin rates  (10.99% in 2002
compared  to 10.57% in  2001).  INX's  gross  profit  on its  service  component
increased to $173 in 2002 as compared to $120 in 2001 with gross margin rates of
(31.5%) in 2002 as compared to (20.0%) in 2001.

     Stratasoft gross profit increased by $116 (13.7%) to $962 in 2002 from $846
in 2001 as  revenue  increased  by 3.3%.  Stratasoft's  gross  profit  increased
primarily  because of certain  services  totaling  $85 which are reported net in
revenues and which were not offered in the  corresponding  period of 2001. Gross
margin  for  Stratasoft  decreased  to 15.0% in 2002 from  27.0% in 2001.  Gross
margin is also impacted by the mix of sales between systems sales, which include
a hardware  component,  as compared to software only sales,  which do not have a
hardware cost of goods  component.  Stratasoft's  decreased gross margin rate is
primarily due to changing the mix of product sales to include a reduced hardware
component.


<PAGE>

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses  increased by $102 (4.1%) to $2,619 in 2002 from $2,517
in 2001. As a percentage of revenue, these expenses decreased by 17.7%, to 22.6%
of revenue in 2002 from 40.3% of revenue in 2001. Bad debt expense  decreased by
$355 and legal expense  increased by $452 in 2002 as compared to 2001.  Overall,
our  sales  compensation  was  higher  by  $157 in 2002  as  compared  to  2001.
Administrative wages decreased by $89 in 2002 as compared to 2001, primarily due
to efforts to reduce  administrative  overhead at Corporate and  throughout  the
subsidiaries.  Insurance  expense  increased  $50 in 2002 as  compared  to 2001,
telephone  expense  decreased  $20 in 2002 as  compared  to  2001  and  employee
education  decreased $35 in 2002 as compared to the same period in 2001. General
office expenses decreased $34 while utilities  decreased $18 in 2002 as compared
to 2001.

     INTEREST AND OTHER INCOME (NET). Interest income decreased by $28 to $18 in
2002 compared to interest income of $46 in 2001,  primarily due to the reduction
of  invested   available  cash  and  lower  interest  rates  on  invested  cash.
Additionally,  imputed  interest expense of $9 and loss on disposition of assets
of $6 were incurred in 2002 as compared to $0 in 2001. Other income decreased to
$0 in 2002 as compared to $71 in the same quarter of 2001.

     DISCONTINUED  OPERATIONS.  On  December  31,  2001 we sold our IT  Staffing
business.  On March 16, 2000 we entered into an agreement to sell certain assets
of, and the ongoing  operation  of, our  Computer  Products  Division.  The sale
transaction  closed on May 19,  2000.  During 1999 we  discontinued  our Telecom
Systems  business.  As a consequence  of these events,  the  operations of these
businesses  are reported as  discontinued  operations.  For the  quarters  ended
September 30, 2002 and 2001,  respectively,  loss from discontinuing  operations
was $0 and $41  (net of tax  benefit  of $0 and  $18)  and  the  (loss)  gain on
disposal related to these business was $(1) and $0, net of taxes of $(0) and $0.

     NET INCOME (LOSS). Net loss on continuing  operations in the quarters ended
September 30, 2002 and 2001 was $289 and $714, respectively.  No tax benefit had
been recorded for the loss in the three months ended September 30, 2002 and 2001
because, due to our recurring losses, a valuation allowance was recorded.


Nine Months Ended September 30, 2002 Compared To Nine Months Ended September 30,
2001

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
financial data derived from our unaudited consolidated  statements of operations
for the six months  ended  September  30, 2002 and 2001.  The  discussion  below
relates only to our continuing operations, unless otherwise noted.

<TABLE>
<CAPTION>
                                                                    Nine months ended September 30,
                                                                  2002                             2001
                                                            Amount      %                    Amount      %
<S>                                                      <C>           <C>                <C>           <C>
Revenue
Allstar                                                  $   3,983      12.8              $    4,076     25.1
  INX                                                       21,727      69.9                   7,240     44.6
Stratasoft                                                   5,571      17.9                   4,959     30.5
Corporate                                                                                         (7)    (0.0)
Elimination                                                   (206)     (0.6)                    (27)    (0.2)
         Total revenue                                      31,075     100.0                  16,241     100.0
Gross profit (loss):
Allstar Systems, Inc.                                          936      23.5                     833     20.4
  INX                                                        2,249      10.4                     684      9.4
Stratasoft                                                   3,083      55.3                   2,582     52.1
Corporate                                                        0       N/A                      (2)     N/A
Elimination                                                      0       0.0                     (15)   (55.6)
         Total gross profit                                  6,268      20.2                   4,082     25.1
Selling, general and administrative expenses:
Allstar                                                      1,723      43.3                   2,453     60.2
  INX                                                        2,446      11.3                   2,120     29.3
Stratasoft                                                   2,600      46.7                   2,114     42.6
Corporate                                                      486       N/A                   1,208      N/A
Elimination                                                      0       0.0                     (15)   (55.6)
         Total selling, general and administrative
         Expenses                                            7,255      23.3                   7,880     48.5
Operating (loss) income:
Allstar                                                       (787)    (19.8)                 (1,620)   (39.7)
  INX                                                         (197)     (0.9)                 (1,436)   (19.8)
Stratasoft                                                     483       8.7                     468      9.4
Corporate                                                     (486)      N/A                  (1,210)     N/A
         Total operating loss                                 (987)     (3.2)                 (3,798)   (23.4)
Interest and other income                                        1       0.0                     273      1.7
Loss before benefit for income taxes                          (986)     (3.2)                 (3,525)   (21.7)
Benefit for income taxes                                    (1,189)     (3.8)                   (101)    (0.6)
Net income (loss)  from continuing operations                  203       0.6                  (3,424)   (21.1)
Discontinued operations:
Net loss from discontinued operations                                                           (153)    (0.9)
Gain on disposal                                                17       0.1                     348      2.1
Net income (loss)                                        $     220       0.7              $   (3,229)   (19.9)
</TABLE>

     TOTAL  REVENUE.  Total revenue  increased by $14,834  (91.3%) to $31,075 in
2002 from $16,241 in 2001.

     Allstar  revenue  decreased  by $93 (2.3%) to $3,983 in 2002 from $4,076 in
2001.  As a percentage of total revenue  Allstar  revenue  decreased to 12.8% in
2002  from  25.1% in  2001.  The  decrease  in  Allstar  revenue  was  primarily
attributable  to decreased  service  sales of $393 offset by increased  software
product sales of $290 in the nine months ended September 30, 2002.

     INX revenue increased by $14,487 (200.1%) to $21,727 in 2002 from $7,240 in
2001. As a percentage of total revenue,  INX revenue  increased to 69.9% in 2002
from 44.6% in 2001.  Of the increase in revenues,  $9,841 was  attributed to the
Houston  office where INX put in place new  management  and new sales team,  and
$4,647 was attributed to the Dallas office.  The achievement of gold status with
Cisco,  its primary  product  line  manufacturer,  which  allows INX to purchase
directly  from  Cisco  at  lower  pricing   levels  and  which   enhances  INX's
relationship  with Cisco in the areas of lead  generation,  joint  marketing and
technical  support also  contributed  to increased  sales volume for the overall
company.  While INX does expect continued  revenue growth, it is not anticipated
that its growth will be at the same rate as it has experienced in the nine month
period ended September 30, 2002.

     Stratasoft  revenue increased by $612 (12.3%) to $5,571 in 2002 from $4,959
in 2001.  Stratasoft  revenue,  as a percentage of total  revenue,  decreased to
17.9% in 2002 from 30.5% in 2001. Stratasoft's increased revenues were primarily
the result of increased sales in the international sector, better recognition of
Stratasoft  products in the market  place,  the expansion of the sales staff and
dealer network and to increased advertising and marketing efforts.  Stratasoft's
international  sales  accounted for 26.4% of  Stratasoft's  revenues in the nine
months ended  September 30, 2002 as compared to 28.4% in the same nine months of
2001.

     GROSS PROFIT.  Gross profit  increased by $2,186  (53.6%) to $6,268 in 2002
from $4,082 in 2001. Gross margin decreased to 20.2% in 2002 from 25.1% in 2001.

     Allstar gross profit increased by $103 (12.4%) to $936 in 2002 from $833 in
2001.  Gross  margin for Allstar  increased to 23.5% in 2002 from 20.4% in 2001.
Allstar  cost  of  service  consists  primarily  of  labor  cost  for  which  we
experienced improved labor utilization in 2002.

     INX gross profit  increased  $1,565 (228.8%) to $2,249 in 2002 from $684 in
2001.  Gross margin for INX increased to 10.4% in 2002 from 9.4% in 2001.  INX's
product gross profit increased due to both sales volume increase offset by lower
gross margin rates.  INX's gross profit on its service component  decreased to a
loss of $29 in 2002 as compared to a loss of $56 in 2001 with gross margin rates
of (2.46%) in 2002 as compared to (3.97%) in 2001. The cause of the 2002 loss is
primarily due to customers delaying planned service projects.

     Stratasoft  gross  profit  increased by $501 (19.4%) to $3,083 in 2002 from
$2,582 in 2001 as  revenue  increased  by 12.3%.  Gross  margin  for  Stratasoft
increased  to 55.3% in 2002 from 52.1% in 2001.  The  increased  gross profit is
consistent with the increased sales volume. Gross margin is also impacted by the
mix of sales  between  systems  sales,  which include a hardware  component,  as
compared to  software  only  sales,  which do not have a hardware  cost of goods
component. Stratasoft's increased gross margin rate is primarily due to changing
the mix of product sales to include a reduced hardware component.


<PAGE>

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses  decreased by $625 (7.9%) to $7,255 in 2002 from $7,880
in 2001. As a percentage of revenue, these expenses decreased by 25.2%, to 23.3%
of revenue in 2002 from 48.5% of revenue in 2001. Sales  compensation  decreased
by $304  and  legal  expense  increased  by $324 in 2002 as  compared  to  2001.
Administrative  wages,  contract labor and benefits  decreased by $389,  general
office expenses decreased by $157, and employee  education  decreased by $110 in
2002 as  compared  to 2001,  primarily  due to  efforts  to reduce  overhead  at
Corporate and throughout the subsidiaries.

     INTEREST AND OTHER INCOME (NET).  Interest income  decreased by $155 to $45
in 2002  compared  to  interest  income  of $200 in 2001,  primarily  due to the
reduction of invested  available cash and lower interest rates on invested cash.
Additionally,  imputed interest expense of $24 and loss on disposition of assets
of $21 were  incurred in 2002 as compared to $0 in 2001.  Other  income of $1 in
2002 compares to $73 in 2001, a decrease of $72.

     DISCONTINUED  OPERATIONS.  On  December  31,  2001 we sold our IT  Staffing
business.  On March 16, 2000 we entered into an agreement to sell certain assets
of, and the ongoing  operation  of, our  Computer  Products  Division.  The sale
transaction  closed on May 19,  2000.  During 1999 we sold our  Telecom  Systems
business.  As a consequence of these events,  the operations of these businesses
are reported as discontinued operations. For the nine months ended September 30,
2002 and 2001, respectively,  loss from discontinuing operations was $0 and $153
(net of tax  benefit  of $0 and $79) and the gain on  disposal  related to these
business was $17 and $348, net of taxes of $10 and $179.

     NET INCOME (LOSS).  Net income on continuing  operations in the nine months
ended  September  30,  2002 was  $203.  The net loss for the nine  months  ended
September 30, 2001 was $3,424.  No tax provision  (benefit) had been recorded on
continuing  operations  for the nine months ended June 30, 2001 because,  due to
our recurring losses, a valuation allowance was recorded.

Liquidity and Capital Resources

     Our  working  capital  was  $6,067  and $5,983 at  September  30,  2002 and
December 31, 2001,  respectively.  As of September 30, 2002, we had  outstanding
inventory floor plan financings of $2,822 and available borrowing base of $1,178
under our Textron  Finance  Division credit  facility.  We expect to satisfy our
capital and debt requirements from our existing cash balances, cash generated by
our operations  through  collection of our accounts  receivables  and borrowings
under our credit facilities.

Cash Flow

     Operating activities provided net cash totaling $369 during the nine months
ended  September  30, 2002.  Operating  activities  provided net cash during the
period primarily due to an increase in accounts payable of $2,319,  offset by an
increase in accounts receivable of $1,830.  Additionally,  the uses of cash were
offset by cash  produced  from  continuing  operations  of $786 and cash used by
discontinued operations of $417.

     Investing  activities  used cash totaling $265 during the nine months ended
September 30, 2002 and financing activities used cash totaling $337.

Asset Management

     Our cash flow from operations has been affected  primarily by the timing of
our collection of accounts  receivable.  We have typically sold our products and
services on  short-term  credit  terms and seek to  minimize  our credit risk by
performing  credit checks and  conducting  our own  collection  efforts.  We had
accounts  receivable,  net of  allowance  for doubtful  accounts,  of $6,132 and
$4,302 at September 30, 2002 and December 31, 2001, respectively. We have a note
receivable  from  Echelon  Staffing,  Inc., a  corporation  formed by the former
President of IT Staffing.  The balance on the note at September 30, 2002 is $46.
Collections on the note as contingent on the operating  revenues of Echelon.  We
intend to monitor  the note and will  record a reserve if and when it appears to
be uncollectible.

     Our subsidiary,  Stratasoft, has modified the terms under which it is doing
business  with certain  customers by requiring a portion of its sales to be paid
in  advance  and  accepting  notes  receivable  on the  remaining  balance  . At
September  30, 2002 and December 31, 2001,  Stratasoft  had notes  receivable of
$699 and $0, respectively.  In addition,  our subsidiary,  Internetwork Experts,
has a note  receivable  for $12 and $117 at September  30, 2002 and December 31,
2001, respectively, relating to one of its customers.

Current Debt Obligations

     Historically,  we have satisfied our cash requirements  principally through
borrowings under our lines of credit and through operations. On January 31, 2002
we  entered  into  a  credit  agreement  with  Textron   Financial   Corporation
("Textron") for a revolving line of credit (the "Textron  Facility").  The total
credit  available under the Textron facility is $4,000 subject to borrowing base
limitations that are generally computed as 80% eligible accounts  receivable and
90% of  identifiable  inventory  purchased  under this  agreement and 40% of all
other  inventory.  In  connection  with  the  increase  in the  credit  line,  a
modification  was made to the borrowing  base  limitations  that  restricted the
eligibility  of accounts  receivable  for  collateralization  by  disallowing as
eligible any customer's receivables in their entirety that have balances over 90
days old that  exceed 25% of their total  balance.  We may use up to $500 of the
line for working capital  advances under approved  conditions.  Borrowings under
the accrue  interest at the prime rate plus 2.5% on  outstanding  balances  that
extend beyond the vendor  approved free interest  period and on working  capital
advances from date of advance.  Inventory floor plan borrowings are reflected in
accounts payable on the accompanying  balance sheets.  At September 30, 2002, we
had  $2,822  outstanding  on  inventory  floor  plan  finance   borrowings,   $0
outstanding on working  capital  advances and had total credit  availability  of
$1,178.


<PAGE>

     This agreement is  collateralized by substantially all of our assets except
our patent assets. The agreement contains restrictive  covenants,  which require
us to maintain  minimum  tangible capital funds of $4,000,000 and a minimum debt
to  tangible  capital  funds ratio of 2 to 1. At  September  30, 2002 we were in
compliance with all of the loan covenants.

Critical Accounting Policy

     Revenue  Recognition - Revenue from the sale of products is recognized when
the product is shipped. Service income is recognized as the services are earned.
Revenues  resulting from  installations of equipment and software  contracts for
which  duration  is in  excess  of three  months  and that  require  substantial
modification or customization are recognized using the  percentage-of-completion
method.  The percentage of revenue  recognized is determined  principally on the
basis of the  relationship  of the cost of work  performed  on the  contract  to
estimated  total costs.  Revisions of estimates  are  reflected in the period in
which the facts  necessitating  the  revisions  become  known;  when a  contract
indicates  a loss,  a  provision  is made for the total  anticipated  loss.  The
percentage-of-completion  method relies on estimates of total expected  contract
revenue and costs. We follow this method since reasonably  dependable  estimates
of the revenue and costs applicable to various stages of a contract can be made.

     During 2002 and 2001 our subsidiary, Stratasoft, recognized revenues on the
percentage-of-completion basis for several projects associated with one reseller
in South Asia. I-Sector has risk to the extent that this group of customers have
not paid or  issued  contractual  letters  of credit up to the level of cost and
earnings recognized.  On the projects in South Asia we typically required a cash
payment or letter of credit from the  customer  prior to shipping  the  product.
Additionally,  Stratasoft  has had  revenues  derived  from  Africa,  the United
Kingdom, and Canada.

     We maintain  allowances  for  doubtful  accounts and notes  receivable  for
estimated  losses resulting from the inability of our customers to make required
payments.  If the  financial  condition of our  customers  were to  deteriorate,
resulting  in an  impairment  of  their  ability  to make  payments,  additional
allowances may be required.

Related Party Transactions

     We have from  time to time made  payments  on behalf of  Allstar  Equities,
Inc., a Texas corporation  ("Equities"),  which is wholly-owned by our President
and Chief Executive Officer, on his behalf personally,  for taxes,  property and
equipment.  Effective  on December 1, 1999 a note payable by Equities was signed
for $336 for 60 monthly  installments  of $7. The note bears  interest at 9% per
year.  At September 30, 2002 and December 31, 2001,  the  Company's  receivables
from  Equities   amounted  to   approximately   $106  and  $159,   respectively.
Additionally,  from time to time the  Company  has made  payments  to  unrelated
parties, primarily for use of a credit card, for transactions that either wholly
or  partially  benefit  our  President  and Chief  Executive  Officer  and which
therefore are accounted for as indebtedness from him to the Company and on which
he pays interest of 6% per annum on the average outstanding balance. The balance
of  approximately  $87 and $80 is included in the  Company's  balance  sheet and
reported as part of Accounts  receivable - affiliates  at September 30, 2002 and
December 31, 2001, respectively.

     In order to comply with the  Sarbanes-Oxley Act of 2002, we have determined
that the payments  for the  President  and Chief  Executive  Officer's  use of a
credit card for transactions  that wholly or partially  benefit him may possibly
be deemed to  constitute  a demand loan.  Therefore,  in order to be in complete
compliance,  the Company has recently made a demand for repayment of $94 related
to the President and CEO's personal credit card usage,  which is discussed above
and is classified in Accounts  Receivable - affiliates in the Company's  balance
sheet at September  30, 2002 and December 31, 2001.  After the  enactment of the
Sarbanes-Oxley  Act (the "Act") on July 30, 2002, we inadvertently  paid certain
credit  card  bills for a credit  card used by our  President  and CEO that were
thereafter  identified as transactions  that were of a personal nature and which
occurred  after  the  enactment  of the  Act.  In the  absence  of  interpretive
regulations  under the Act as to whether or not such  assets  could  possibly be
construed to be a personal  loan to the President and CEO under the Act, we have
taken  the  conservative  approach  and  demanded  that  the  President  and CEO
immediately  repay such  amounts.  The  President and CEO re-paid the amounts in
question,  which we consider to be  immaterial,  shortly  after the Company made
such  payments and prior to the end of the quarter.  The President and CEO is in
the process of  facilitating  repayment of his debt to the  Company.  During the
quarter  ended  September 30, 2002,  the note payable owed by Allstar  Equities,
Inc.  has been reduced by $17 and the amount owed by the  President  and CEO for
credit card usage has been reduced by $8.

     We lease office space from Equities. On December 1, 1999 Equities purchased
our  building and  executed a direct  lease with us with an  expiration  date of
December 31, 2004. In conjunction  with Equities  obtaining new financing on the
building,  a new  lease  was  executed  with  us on  February  1,  2002  with an
expiration date of January 31, 2007. The new lease has rental rates reduced from
$37,692 to $37,192 per month.

     From time to time we obtain an  independent  survey of real  estate  rental
rates and consults with real estate  consulting firms to determine market rates
of facilities  that are  comparable  to our Houston  headquarters  facility.  We
believe  that the rental rate and other terms of our lease from  Equities are at
least as favorable as those that could be obtained in an arms-length transaction
with an unaffiliated third party.

     We furnish company-owned  automobiles for the President and Chief Executive
Officer's business and personal use.


<PAGE>

         From time to time we make short-term loans and travel advances to our
employees. The balance of approximately $18 and $11 relating to these loans and
advances is included in the Company's balance sheet and reported as part of
Accounts receivable - affiliates at September 30, 2002 and December 31, 2001,
respectively.

     Each of our  subsidiaries  has a stock incentive plan in place.  One of our
subsidiaries  has  granted  to  certain  employees  and to  management  of  such
subsidiary  an  incentive  award.  Under its plan such options vest ratably over
three to five years.  The quantity of incentive  options  granted to  management
personnel are  determined  based on the  percentage of  predetermined  financial
goals that they attain.  Any unvested  stock options vest  immediately  upon the
occurrence  of a liquidity  event for that  subsidiary.  The options  expire ten
years after the grant date if they are not  exercised.  The stock option  grants
are  subject  to  dilution  when  I-Sector  purchases  additional  shares of the
subsidiary stock in order to keep the subsidiary  sufficiently  capitalized.  At
September 30, 2002,  options for 5,459,500  shares of stock were granted by that
subsidiary  and were  outstanding  with an average issue price of $ 0.13,  which
represents   potential  maximum  dilution  of  I-Sector's   investment  in  that
subsidiary of 23.0%.

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

     We incur certain market risks related to interest rate  variations  because
we hold floating rate debt.  Based upon the average  amount of debt  outstanding
during the three months ended  September  30,  2002, a  one-percent  increase in
interest  rates paid by us on our floating  rate debt would not have resulted in
an increase in interest for the period.

ITEM 4.  Controls and Procedures

     Under  the  supervision  and  with  the  participation  of our  management,
including our Chief Executive Officer,  Chief Financial  Officer,  President and
Chairman of the Board, we conducted an evaluation of our disclosure controls and
procedures,  as such term is defined under Rule 13a-14(c)  promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), within 90 days
of the  filing  date of this  report.  Based  on  their  evaluation,  our  Chief
Executive Officer, Chief Financial Officer,  President and Chairman of the Board
concluded that I-Sector's disclosure controls and procedures are effective.

     There have been no significant  changes (including  corrective actions with
regard to  significant  deficiencies  or material  weaknesses)  in our  internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the date of the evaluation  referenced in the immediate  paragraph
above.


<PAGE>


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     In July 2000,  Benchmark Research and Technology,  Inc. made a verbal claim
against  I-Sector,  claiming that we breached our contract with  Benchmark,  and
that we were  negligent and breached  various  warranties,  committed  fraud and
violated the Deceptive  Trade  Practices  Act. The case was mediated in November
2000 but no agreement was reached.  We know of no lawsuit being filed.  In July,
2002 Benchmark  offered to settle with us for $40 and we are studying the offer.
In the event  that the  settlement  is not  accepted,  we  intend to  vigorously
contest the demand.

     In August  2002,  Inacom  Corp.  filed a lawsuit in the  District  Court of
Douglas  County,  Nebraska  styled Inacom Corp. v. I-Sector  Corporation,  f/k/a
Allstar Systems,  Inc.,  claiming that we owed the sum of approximately  $570 to
Inacom as a result of termination of a Vendor Purchase  Agreement between Inacom
and us. We believe  that the demand is  without  merit and intend to  vigorously
contest the demand.

     We  had  filed  a  claim  to  collect  on a note  receivable  from E Z Talk
Communications   ("E  Z  Talk")  and  had  recently   entered  into  arbitration
discussions  with E Z Talk. In July,  2002 E Z Talk filed a lawsuit to set aside
the arbitration  and claiming  damages of $250.  I-Sector  intends to vigorously
contest the suit.

     The Equal Opportunity  Commission ("EEOC") has filed a civil action against
us,  Civil  Action  No.  3-01CV2240-R,   styled  Equal  Employment   Opportunity
Commission  v.  I-Sector  Corporation,  in the Northern  District of Texas.  The
action  charges  workplace  sexual  harassment  by us and  directed  against two
individuals.  The case is now in the  posture of  cross-filing  of  Motions  for
Summary  Judgment.  We believe  the demand is without  merit and are  vigorously
contesting the action.

     We are party to other litigation and claims which  management  believes are
normal in the course of its operations; while the results of such litigation and
claims cannot be predicted with certainty.  We believe the final outcome of such
matters will not have a materially  adverse  effect on its results of operations
or financial position.

ITEM 5.           OTHER INFORMATION

     We  disclosed  in our Proxy  Statement  and  Notice of  Annual  Meeting  of
Stockholders  to be held August 8, 2002,  that our  Secretary of the Board,  our
retired former Chief Financial Officer, Mr. Donald R. Chadwick,  is serving as a
member of our Audit Committee. Mr. Chadwick does not yet meet the three years of
non-employee  status  requirement  for  independence.  We  are  relying  on  the
Marketplace  Rule 4350D2B for his appointment to the Audit Committee since he is
not a current employee.

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


                                      I-Sector Corporation.

August 13, 2002                       By:      /s/ JAMES H. LONG
Date                                  James H. Long, Chief Executive Officer,
                                      Chief Financial Officer,
                                      President and Chairman of the Board

                                      By:      /s/ PATRICIA L. WINSTEAD
                                      Patricia L. Winstead, Vice President
                                      and Controller, Chief Accounting Officer



<PAGE>


CERTIFICATIONS

I, James H. Long, Chief Executive Officer,  Chief Financial  Officer,  President
and Chairman of the Board, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of I-Sector Corporation.

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary in
     order to make the  statements  made,  in light of the  circumstances  under
     which such  statements were made, not misleading with respect to the period
     covered by this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   I am responsible for  establishing and maintaining  disclosure  controls an
     procedures  (as  defined  in  Exchange  Act Rules  13a-14 and  15d-14)  for
     I-Sector Corporation ("I-Sector") and I have:

a.        designed  such  disclosure  controls  and  procedures  to ensure  that
          material information relating to I-Sector,  including its consolidated
          subsidiaries,  is made known to me by others  within  those  entities,
          particularly during the period in which this quarterly report is being
          prepared.

b.        evaluated  the  effectiveness  of I-Sector's  disclosure  controls and
          procedures  as of a date  within 90 days prior to the  filing  date of
          this quarterly report (the "Evaluation Date"); and

c.        presented  in  this  quarterly   report  my   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures  based on my
          evaluation as of the Evaluation Date.

5.   I have disclosed,  based on my most recent evaluation,  to the registrant's
     auditors and the audit  committee  of  I-Sector's  board of  directors  (or
     persons performing the equivalent function):

a.        all  significant  deficiencies  in the design or operation of internal
          controls which could adversely  affect  I-Sector's  ability to record,
          process,  summarize and report  financial data and have identified for
          I-Sector's auditors any material weaknesses in internal controls; and

b.        any fraud, whether or not material,  that involves management or other
          employees who have a significant role in I-Sector's internal controls;
          and

6.   I have  indicated  in this  quarterly  report  whether  or not  there  were
     significant  changes in internal  controls or in other  factors  that could
     significantly  affect the internal  controls  subsequent to the date of our
     most recent  evaluation,  including any  corrective  actions with regard to
     significant deficiencies and material weaknesses.

     Dated:  November 14, 2002       /s/ James H. Long
                                         James H. Long, Chief Executive Officer,
                                         Chief Financial Officer,
                                         President and Chairman of the Board

<PAGE>


Exhibit 99.1


CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In  connection  with the  Quarterly  Report of  I-Sector  Corporation  (the
"Company" ) on Form 10-Q for the period ending  September 30, 2002 as filed with
the Securities  and Exchange  Commission on the date hereof (the  "Report"),  I,
James H. Long, Chief Executive Officer,  Chief Financial Officer,  President and
Chairman of the Board,  certify,  pursuant  to 18 U.S.C.  ss.  1350,  as adopted
pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

    1) The Report fully complies with the requirements of section 13 (a)
       or 15 (d) of the Securities Exchange Act of 1934; and

    2) The information contained in the Report fairly presents, in all
       material respects, the financial condition and result of
       operations of the Company.


                                         I-Sector Corporation.

November 14, 2002                        By:      /s/ JAMES H. LONG
Date                                     James H. Long, Chief Executive Officer,
                                         Chief Financial Officer,
                                         President and Chairman of the Board