UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 _______________

                                    FORM 10-Q

  [X]         QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR  15(D)
                      OF THE SECURITIES EXCHANGE ACTOF 1934

  [ ]              FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

                                       OR

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

                              ____________________

                         Commission File Number 1-07149

                                    ITIS INC.
             (Exact Name of Registrant as specified in its charter)


               DELAWARE                                 82-0277987
    (State or other jurisdiction  of                 (I.R.S. Employer
      incorporation or organization)                Identification No.)

     10750  HAMMERLY,  HOUSTON,  TEXAS                     77043
 (Address of principal executive office)                 (Zip Code)

       Registrant's telephone number, including area code: (281) 600-6000


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   [ ]

The  number  of shares of the registrant's common stock outstanding as of August
16,  2002  was  39,753,372.


<PAGE>
                                    ITIS INC.

                                    FORM 10-Q

                          FOR THE QUARTER JUNE 30, 2002

                                      INDEX
                                                                            PAGE
                                                                            ----

PART  I  -  FINANCIAL  INFORMATION

Item  1.   Condensed  Consolidated  Financial  Statements . . . . . . . . .    3

Item  2.   Management's  Discussion  and  Analysis  of  Financial
           Condition  and  Results  of  Operations  . . . . . . . . . . . .   23

Item  3.   Quantitative  and  Qualitative  Disclosures  About Market Risk .   30

PART  II.  OTHER  INFORMATION

Item  1.  Legal  Proceedings  . . . . . . . . . . . . . . . . . . . . . . .   30

Item  2.  Changes  in  Securities  and  Use  of  Proceeds . . . . . . . . .   31

Item  6.  Exhibits  and  Reports  on  Form  8-K . . . . . . . . . . . . . .   31

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   36


                                        2
<PAGE>
<TABLE>
<CAPTION>

ITIS  INC.  AND  SUBSIDIARIES
CONDENSED  CONSOLIDATED  BALANCE  SHEETS


                                                                                   JUNE 30,    DECEMBER 31,
                                                                                     2002          2001
                                                                                  -----------  -------------
                                                                                  (Unaudited)
<S>                                                                               <C>          <C>
                                   ASSETS

Current assets:

  Cash and cash equivalents                                                       $    21,451  $      41,137
  Accounts receivable, net of allowance for doubtful accounts
    of $84,127 at June 30, 2002 and $34,127 at
    December 31, 2001                                                               1,614,900      1,459,529
  Investments available for sale, at fair market value                                 59,257        199,250
  Note receivable                                                                     125,000              -
  Other current assets                                                                 22,460         14,710
  Current assets of entity to be disposed of                                                -         93,318
                                                                                  -----------  -------------

    Total current assets                                                            1,843,068      1,807,944
                                                                                  -----------  -------------

Long term assets:

  Accounts receivable                                                               1,140,000        760,000
  Licensing agreement                                                                 150,000        150,000
                                                                                  -----------  -------------

    Total long term assets                                                          1,290,000        910,000
                                                                                  -----------  -------------

Fixed assets and intangibles, net of amortization and depreciation
  Database content and software costs                                              11,997,679     11,913,029
  Furniture and equipment                                                             281,214        321,209
  Intangible assets                                                                   120,833        406,701
  Net fixed assets and intangibles of entity to be disposed of                              -        728,388
                                                                                  -----------  -------------
    Total fixed assets and intangibles, net                                        12,399,726     13,369,327
                                                                                  -----------  -------------

    Total assets                                                                  $15,532,794  $  16,087,271
                                                                                  ===========  =============
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                              financial statements


                                        3
<PAGE>
<TABLE>
<CAPTION>

ITIS  INC.  AND  SUBSIDIARIES
CONDENSED  CONSOLIDATED  BALANCE  SHEETS


                                                                           JUNE 30,      DECEMBER 31,
                                                                             2002            2001
                                                                         -------------  --------------
                                                                          (Unaudited)
<S>                                                                      <C>            <C>
               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Bank overdraft                                                         $     84,146   $      40,813
  Notes payable-other                                                       2,639,651       1,922,934
  Disputed note payable to Cootes Drive LLC                                   500,000         500,000
  Accounts payable                                                            579,782         535,600
  Accounts payable-related parties                                            109,643          83,125
  Accrued interest                                                            506,874         342,658
  Accrued liabilities                                                         376,381         439,785
  Deferred revenue                                                            776,300         670,245
  Advances received on purchase agreement                                     875,000               -
  Current liabilities of entity to be disposed of                                   -         206,947
                                                                         -------------  --------------
    Total current liabilities                                               6,447,777       4,742,107
  Long term notes payable from Chairman                                     2,150,117       2,150,117
                                                                         -------------  --------------
Total liabilities                                                           8,597,894       6,892,224
                                                                         -------------  --------------

  Commitments and contingencies

Stockholders' equity:
  Series A Convertible Preferred stock, par value $.001;
    50,000,000 shares authorized; 161.08 shares issued
    and outstanding                                                         2,027,526       2,027,526
  Common stock, par value $.001, 100,000,000 shares
    authorized;  41,434,488 and 39,383,396 shares                              41,434          39,383
    issued and 39,753,372 and 37,702,280 shares
    outstanding, respectively at June 30, 2002 and
    December 31, 2001
  Warrants                                                                  1,405,349       1,213,372
  Additional paid in capital                                               25,002,410      24,801,383
  Accumulated deficit                                                     (21,132,341)    (18,557,247)
  Treasury stock, at cost, 1,681,116 shares                                  (284,554)       (284,554)
  Accumulated other comprehensive income,
    unrealized gain/(loss) on investments                                     (76,933)          1,083
  Less notes receivable issued for purchase of
    common stock                                                              (47,991)        (45,899)
                                                                         -------------  --------------
    Total stockholders' equity                                              6,934,900       9,195,047
                                                                         -------------  --------------

    Total liabilities and stockholders' equity                           $ 15,532,794   $  16,087,271
                                                                         =============  ==============
</TABLE>

               The accompanying notes are an integral part of these condensed
                        consolidated financial statements


                                        4
<PAGE>
<TABLE>
<CAPTION>

ITIS  INC.  AND  SUBSIDIARIES
CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS  AND  COMPREHENSIVE  LOSS
(Unaudited)


                                                 For the six months ended June 30,       For the three months ended June 30,
                                             ---------------------------------------  -----------------------------------------
                                                   2002                 2001                  2002                 2001
                                             -----------------  --------------------  --------------------  -------------------
<S>                                          <C>                <C>                   <C>                   <C>
  REVENUE, NET OF DEFERRED INCOME            $      1,138,006   $         1,409,983   $           258,249   $        1,117,788
                                             -----------------  --------------------  --------------------  -------------------

  OPERATING EXPENSES:
    Selling and marketing                             117,118               509,507                58,533              289,797
    General and administrative                      1,390,184             1,726,558               833,259              920,259
    Production and computer service                    86,221                36,110                47,239               19,720
    Amortization and depreciation                     783,576             1,086,103               260,122              545,511
    Other expense                                     150,000                     -                     -                    -
                                             -----------------  --------------------  --------------------  -------------------
    Total operating expenses                        2,527,099             3,358,278             1,199,153            1,775,287
                                             -----------------  --------------------  --------------------  -------------------

  LOSS FROM CONTINUING OPERATIONS                  (1,389,093)           (1,948,295)             (940,904)            (657,499)

  DISCONTINUED OPERATIONS (Notes 4 and 7):
    Loss from operations of discontinued
      business segments                              (163,475)             (915,898)              (31,349)            (455,628)
    Loss on disposal of business segments            (607,656)                    -              (607,656)                   -

  INTEREST INCOME (EXPENSE), net                     (341,275)             (158,031)             (117,139)             (77,640)
  GAIN (LOSS) ON SALE OF INVESTMENTS
    AND EQUIPMENT                                     (73,595)              154,207               (41,506)             149,607
                                             -----------------  --------------------  --------------------  -------------------

  NET LOSS                                         (2,575,094)           (2,868,017)           (1,738,554)          (1,041,160)

  OTHER COMPREHENSIVE INCOME (LOSS)
    Unrealized gain (loss) on investments
      available for sale                              (78,016)              245,120                (9,268)             245,120
                                             -----------------  --------------------  --------------------  -------------------

  NET AND COMPREHENSIVE LOSS                       (2,653,110)           (2,622,897)           (1,747,822)            (796,040)
                                             =================  ====================  ====================  ===================

  LOSS PER COMMON SHARE                      $          (0.07)  $             (0.07)  $             (0.04)  $            (0.02)
                                             =================  ====================  ====================  ===================
  LOSS PER COMMON SHARE AS A RESULT
    OF DISCONTINUED OPERATIONS               $          (0.02)  $             (0.02)  $             (0.02)  $            (0.01)
                                             =================  ====================  ====================  ===================
  WEIGHTED AVERAGE SHARES USED IN
    COMPUTING LOSS PER
    COMMON SHARE                                   38,757,236            36,866,599            39,732,947           37,746,815
                                             =================  ====================  ====================  ===================
</TABLE>

         The accompanying notes are an integral part of these condensed
                        consolidated financial statements


                                        5
<PAGE>
<TABLE>
<CAPTION>

ITIS  INC.  AND  SUBSIDIARIES
CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOW
(Unaudited)


                                                       For the Six Months ended June,
                                                    ------------------------------------
                                                           2002               2001
                                                    ------------------  ----------------
<S>                                                 <C>                 <C>

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                          $      (2,575,094)  $    (2,868,017)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Issuance of common stock, options,
      or warrants for goods or services                       237,877           176,248
    Amortization of deferred compensation                           -            15,626
    Amortization and depreciation                             783,576         1,086,103
    (Gain) Loss on sales of investments                        72,194          (149,607)
    (Gain) Loss on sale of equipment                            1,401            (4,600)
    Services provided for investments                        (198,902)         (812,858)
    Disposal of operating segments                            614,759           927,501
    Changes in:
      Accounts receivable                                    (517,265)          (41,329)
      Accrued interest on notes receivable                     (2,092)           (2,228)
      Other current assets                                     (7,750)           28,323
      Accounts payable                                         88,700           377,051
      Accrued liabilities                                     114,990             8,507
      Deferred revenue                                        981,055           180,000
      Assets distributable to stockholders                          -            (1,761)
                                                    ------------------  ----------------

    Net cash used in operating activities                    (406,551)       (1,081,041)
                                                    ------------------  ----------------

CASH FLOWS FROM INVESTMENT ACTIVITIES:
  Note receivable                                             125,000                 -
  Purchases of investments                                          -            (8,711)
  Proceeds from sales of investments                          170,579           711,110
  Proceeds from sale of equipment                               3,600             5,000
  Additions to database content and software costs           (546,330)         (802,958)
  Additions to furniture and equipment                         (1,034)          (18,707)
                                                    ------------------  ----------------

    Net cash used in investment activities                   (498,185)         (114,266)
                                                    ------------------  ----------------
</TABLE>
                                                                    (continued)


  The accompanying notes are an integral part of these condensed consolidated
                              financial statements


                                        6
<PAGE>
<TABLE>
<CAPTION>

ITIS  INC.  AND  SUBSIDIARIES
CONDENSED  CONSOLIDATED  STATEMENTS  OF  CASH  FLOW
(Unaudited)


                                                              For the Six Months Ended June 30,
                                                           ---------------------------------------
                                                                  2002                2001
                                                           ------------------  -------------------
<S>                                                        <C>                 <C>

CASH FLOWS FROM FINANCING ACTIVITIES:
  Bank overdraft                                           $          43,333   $           94,886
  Proceeds from notes payable                                      1,075,000              970,617
  Payments on notes payable                                         (233,283)             (45,732)
  Payments received on notes receivable                                    -              122,500
  Shareholder contribution to paid in capital                              -               40,991
  Distribution of Planet Resources assets and liabilities                  -               13,880
                                                           ------------------  -------------------

    Net cash provided by financing activities                        885,050            1,197,142
                                                           ------------------  -------------------

NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                                       (19,686)                1,835

CASH AND CASH EQUIVALENTS, beginning of period                        41,137               25,652
                                                           ------------------  -------------------

CASH AND CASH EQUIVALENTS, end of period                   $         (21,451)  $           27,487
                                                           ==================  ===================



SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest                                   $         229,545   $          157,478
  Cash paid for income taxes                               $               -   $                -
  Non cash investing and financing transactions:
    Fair value of warrants issued                          $         191,977   $           46,000
    Fair value of common stock issued as
      note reduction                                       $         125,000   $          250,000
    Fair value of common stock issued as
      compensation for goods and services                  $          63,900   $           23,248
    Notes receivable issued for exercise
      of stock options                                     $               -   $          217,700
    Unrealized gains (losses) on investments               $         (78,016)  $          245,120
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                              financial statements


                                        7
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1-BUSINESS:

ITIS Inc. is a Delaware corporation that provides electronic publishing services
and database content through Internet sites with subscription access, licenses
and transaction fees for databases through its subsidiaries, National Law
Library, Inc. and Brief Reporter, LLC. The content of the databases consists of
pending legislation, statutory law, rules and case law at the federal and state
levels. Legal briefs from certain important cases before federal and state
courts are also available, as are litigation forms. As disclosed in note 7,
management of ITIS transferred the customers of the Internet Services subsidiary
GoverNet Affairs, Inc. to another provider and ceased operation of this
subsidiary in June 2002.

ITIS provides database content, data conversion, automated litigation support,
software, and hardware through its subsidiary, ITIS, Inc., a Texas corporation,
which conducts business as Litidex(R). Litidex(R) currently focuses its
attention on the automated litigation support aspect of the legal services
industry.

PharmHouse, Inc. represents a new business segment and newly formed subsidiary
of ITIS. PharmHouse concentrates its efforts in the business of pharmacy
operations. PharmHouse, originally formed as a subsidiary of Litidex(R), became
a wholly owned subsidiary of ITIS in May 2002. PharmHouse expects to open two
pharmacies in August 2002 that will focus primarily on specialized medications.
Another new subsidiary, OnPoint Solutions Inc., will provide technical support
for PharmHouse in the development and operation of the pharmacies.

Prior to October 31, 2001, ITIS also provided training and support with federal
regulations through its wholly owned subsidiary, Venco Compliance, Inc., and
marketed a CD-Rom product and Website that assisted in medical billing through
Compass Data Systems, Inc. As more fully disclosed in note 7, on October 31,
2001, the stock of Venco was sold and transferred by ITIS to Venco's former
shareholders and the operations and management of Compass Data Systems were
turned over to current Compass employees.

As reflected in the accompanying financial statements, ITIS has incurred
$21,132,341 in losses since inception, has a working capital deficit of
$4,604,709 at June 30, 2002, and has used significant amounts of cash in
operating the company.   Should future operating revenues not be sufficient to
fund operations, management plans to continue to utilize additional loans from
Mr. Hunter Carr (president and chairman of the board of directors of ITIS) and
other directors and investors as long as funds from these sources remain
available. If adequate funding from operations or other sources is not
available, ITIS will not be able to remain in business.

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation-In management's opinion, the accompanying unaudited
interim consolidated financial statements of ITIS have been prepared by
management of ITIS in accordance with generally accepted accounting principles
in the U.S. (GAAP) and the rules adopted by the United States Securities and
Exchange Commission (SEC) and should be read in conjunction with the audited
consolidated financial statements and notes thereto contained in ITIS's latest
Annual Report filed with the SEC on Form 10-K at December 31, 2001. As permitted
under these rules, certain footnotes or other financial information that are
normally required under annual, audited financial statements have been condensed
or omitted.  In the opinion of management, all adjustments, consisting of normal
recurring adjustments, necessary for a fair presentation of financial position
and the results of operations in accordance with GAAP for the interim periods
presented have been reflected herein. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year.


                                        8
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Reclassification of Accounts-Certain reclassifications have been made to prior
year balances for discontinued operations to conform to current year
presentation with no effect on net income.

Concentration of Credit Risk-The primary source of the automated litigation
support revenues of subsidiary Litidex(R) at the present time is the law firm of
Christian Wukoson Smith & Jewell. At June 30, 2002, Christian Wukoson Smith &
Jewell owed Litidex(R) $2,675,429 for automated litigation support services,
which represents approximately 97% of the accounts receivable of ITIS. Although
the Company expects to collect these receivables, there are no scheduled
payments required by the agreements with the law firm, and collections to date
have been minimal. Management has elected not to provide an allowance for
doubtful accounts for these receivables due to the nature of the agreements,
which, in management's opinion, provides assurance for the ultimate collection
of the fees due. Management has classified a portion of the receivable as long
term based upon expected receipts within the next twelve months.

Basic Loss Per Share-Basic loss per share has been computed by dividing net loss
by the weighted average number of shares outstanding.   Options outstanding at
June 30, 2002 and 2001 have not been included because they are anti-dilutive.
Accordingly, basic and diluted loss per share is the same for all periods
presented.

NOTE 3 - DISCUSSIONS WITH THE SEC REGARDING APPLICATION OF ACCOUNTING
PRONOUNCMENTS:

Database Content and Software Costs Amortization

As disclosed in our December 31, 2001 Form 10-K, management has discussed the
application of SFAS No. 142 with the SEC as it pertains to amortization of the
database content and software costs of ITIS. Under SFAS No. 142, goodwill and
intangible assets with indeterminate lives will no longer be amortized as
expense over estimated useful lives after December 31, 2001 for assets acquired
prior to July 1, 2001. Management has agreed with the SEC that continued
amortization of the database content and software costs would be more reflective
of the nature of the asset given the costs associated to continually update the
database to maintain its value and marketability. The Company's accounting
treatment is still subject to potential new pronouncements from the Emerging
Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB).
Depending on future issuances by the EITF, it is possible that future additions
to database content and software costs may be required to be expensed as
incurred which would have a material negative impact on the future results of
operations reported by the Company. Management will continue to monitor all
future issuances of accounting principles by the EITF and other regulatory
bodies.



                                        9
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Revenue Recognition

ITIS subsidiary Litidex(R) contracts with law firms to provide litigation
support services. These generally include determining if the law firm's
potential client has a viable cause of action, providing the law firm with a
database containing securities litigation data, and the development of a
specific case related database. Litidex(R) does not have any future delivery
requirements with respect to the first two elements and the revenue associated
with those elements is recognized when evidence exists that indicates that an
arrangement with the attorney exists. This evidence usually includes receipt of
some form of non-refundable compensation. The third element of the arrangement
requires development of a case specific database of information at a future
date. Revenues associated with this third element are deferred and recognized as
actual document production occurs. This method of revenue recognition is
consistent with the method adopted by the Company in the second quarter of 2001
when Litidex(R) commenced providing this type of litigation service.

An average of 22% of litigation support revenues are deferred as a substantial
portion of the work required has been performed to complete the first two
elements of the arrangement. Management has calculated the deferral amount based
upon the future estimated work to complete the services under the contract,
which includes the development of a case specific litigation database in an
electronic format with the client's information as it becomes available.
Management recognizes revenues from these services as they are performed. In
determining the amount of income to defer, management consulted with the
experienced personnel of Litidex(R) and others regarding the number of documents
likely to be processed over the course of the litigation support project and an
appropriate retail price to assign to these services. A consensus was reached
that 100,000 pages of data was neither too conservative nor too aggressive an
estimate to use, and management accordingly applied a fair market value per page
processing charge to 100,000 pages of production to determine the deferral
amount. While it is virtually impossible to predict the length of time a case
may be in litigation, it is reasonable to arrive at a projected number of
documents to be processed as part of a litigation support project using the
Company's extensive experience in providing these services. It is management's
opinion that Generally Accepted Accounting Principles and other professional
literature support the Company's litigation services recognition method.

As disclosed in our December 31, 2001 Form 10-K and March 31, 2002 Form 10-Q,
management contacted the SEC on a voluntary basis and had numerous discussions
with the SEC regarding revenue recognition with respect to the litigation
services of our subsidiary Litidex(R). As a result of those discussions, and
further research into this matter, management has concluded that the method of
accounting used by the Company to record its litigation services revenues is in
accordance with Generally Accepted Accounting Principles. However, the Staff of
the Securities & Exchange Commission is not in agreement with this position and
may require the Company to restate its financial statements with respect to the
revenue recognition for litigation services.

NOTE 4 - DISCONTINUED OPERATIONS

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets as well as expands the qualifications of discontinued
operations and is effective for financial statements issued for fiscal years
beginning after December 15, 2001. ITIS has elected to early adopt this
statement.

During the year ended December 31, 2001 ITIS recorded a loss on discontinued
operations of $897,418 for the disposal of Compass Data Systems and $73,950 for
the disposal of Venco Compliance as more fully disclosed in note 7. For the
three and six-month periods ended June 30, 2001, losses related to these
discontinued operations amounted to $13,511 and $22,914, respectively, for Venco
Compliance and $303,051 and $611,154, respectively, for Compass Data Systems.

A loss from discontinued operations of $163,475 was recorded for the six months
ended June 30, 2002 for the disposal of GoverNet Affairs. For the three-month
period ended June 30, 2002, as a result of the recognition of $78,172 in
deferred revenues, ITIS recorded income from discontinued operations of $54,762
for this disposal. For the three and six-month periods ended June 30, 2001,
losses related to the discontinued operations of GoverNet Affairs amounted to
$139,066 and $281,830.


                                       10
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

NOTE 5-BUSINESS SEGMENTS

For the quarter and six months ended June 30, 2001, ITIS and its subsidiaries
were engaged in the business of providing Internet services, compliance and
safety training materials, and automated litigation support services. As of
October 31, 2001 we no longer provide compliance and safety training materials,
and results from these activities have been classified as discontinued
operations. Further, the results of operations of subsidiary GoverNet Affairs,
which discontinued operations in June 2002, are no longer included in the
Internet Services segment and are classified as discontinued operations. A new
segment, "Pharmacy Operations," reflects results of new subsidiary PharmHouse,
which anticipates opening two pharmacies in August 2002. Financial results from
continuing operations are as follows:

<TABLE>
<CAPTION>
                                                    SEGMENT INFORMATION
                                                    --------------------------
                                                   INCOME
SIX MONTHS ENDED                                   (LOSS) FROM    INTEREST     TOTAL           DEPRECIATION/
JUNE 30, 2002                   NET SALES          OPERATIONS     EXPENSE      ASSETS          AMORTIZATION
------------------------------  -----------------  -------------  -----------  --------------  --------------
<S>                             <C>                <C>            <C>          <C>             <C>
  Internet Services             $         491,228  $ (1,314,320)  $   244,020  $   12,296,239  $      655,127
  Automated Litigation Support            646,778       (18,328)       99,460       3,208,719         128,449
  Pharmacy Operations                           -       (56,445)            -          27,836               -
                                -----------------  -------------  -----------  --------------  --------------
  Total, ITIS Inc.              $       1,138,006  $ (1,389,093)  $   343,480  $   15,532,794  $      783,576
                                =================  =============  ===========  ==============  ==============

                                                   INCOME
SIX MONTHS ENDED                                   (LOSS) FROM    INTEREST     TOTAL           DEPRECIATION/
  JUNE 30, 2001                 NET SALES          OPERATIONS     EXPENSE      ASSETS          AMORTIZATION
------------------------------  -----------------  -------------  -----------  --------------  --------------
  Internet Services             $         559,983  $ (1,774,083)  $   160,455  $   14,997,439  $      727,184
  Automated Litigation Support            850,000      (174,212)           12       1,542,791         358,919
  Pharmacy Operations                           -             -             -               -               -
                                -----------------  -------------  -----------  --------------  --------------
  Total, ITIS Inc.              $       1,409,983  $ (1,948,295)  $   160,467  $   16,540,230  $    1,086,103
                                =================  =============  ===========  ==============  ==============
</TABLE>

<TABLE>
<CAPTION>

                                                     INCOME
THREE MONTHS ENDED                                   (LOSS) FROM    INTEREST     TOTAL           DEPRECIATION/
  JUNE 30, 2002                  NET SALES           OPERATIONS     EXPENSE      ASSETS          AMORTIZATION
------------------------------  -------------------  -------------  -----------  --------------  --------------
<S>                             <C>                  <C>            <C>          <C>             <C>
  Internet Services             $           234,396  $   (756,944)  $    63,803  $   12,296,239  $      195,898
  Automated Litigation Support               23,853      (127,515)       54,460       3,208,719          64,224
  Pharmacy Operations                             -       (56,445)            -          27,836
                                -------------------  -------------  -----------  --------------  --------------
  Total, ITIS Inc.              $           258,249  $   (940,904)  $   118,263  $   15,532,794  $      260,122
                                ===================  =============  ===========  ==============  ==============


                                                     INCOME
THREE MONTHS ENDED                                   (LOSS) FROM    INTEREST     TOTAL           DEPRECIATION/
  JUNE 30, 2001                  NET SALES           OPERATIONS     EXPENSE      ASSETS          AMORTIZATION
------------------------------  -------------------  -------------  -----------  --------------  --------------
  Internet Services             $           267,788  $   (917,144)  $    79,964  $   14,997,439  $      186,592
  Automated Litigation Support              850,000       259,645             -       1,542,791         358,919
  Pharmacy Operations                             -             -             -               -               -
                                -------------------  -------------  -----------  --------------  --------------
  Total, ITIS Inc.              $         1,117,788  $   (657,499)  $    79,964  $   16,540,230  $      545,511
                                ===================  =============  ===========  ==============  ==============
</TABLE>


                                       11
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

NOTE 6-IMPAIRMENT OF LONG-LIVED ASSETS:

Because ITIS had not obtained substantial new capital or long-term funding and
in consideration of significant losses by the Company, especially in the
Internet Services segment, management recorded an impairment charge in the
amount of $2,741,955 at December 31, 2001 based on valuation estimates using net
cash flows projected over the estimated useful lives of the assets.
While the sale of a net revenue interest in the first 14 PharmHouse stores in
July 2002 (see note 14) has potentially provided $2.5 million in available cash
to ITIS, we do not at this time have an established source of revenues, working
capital or positive cash flow to cover operating costs to allow the Company to
remain in business. If anticipated future revenues are not realized or
additional funding is not obtained, it is reasonably possible that the Company
will not be able to remain in business and additional impairment will result
that will have a material impact on the consolidated financial statements, asset
values, and ongoing operations of ITIS. Management believes that the evaluation
of potential future impairment of content and other intangibles continues to
represent an estimate made by management that is subject to impact in the near
term in accordance with the American Institute of Certified Public Accountant's
Statement of Position (SOP) 94-6 "Disclosure of Certain Significant Risks and
Uncertainties".

Evaluation of impairment will continue to be addressed at least annually.

NOTE 7-ACQUISITIONS & DISPOSITIONS:

Compass Data Systems

On July 27, 2000, ITIS's board of directors approved the purchase of a
controlling interest in Compass Data Systems, Inc. (Compass), a private Nevada
corporation that provides electronic information publishing services in a
completely searchable information database to industries and organizations.
Stock purchase agreements by and between ITIS and three stockholders of Compass
were signed with each of the sellers effective as of October 1, 2000. Under the
terms of these stock purchase agreements, ITIS agreed to issue an aggregate of
1,676,105 restricted, unregistered shares of ITIS's common stock, valued at
approximately $2.3 million, for approximately 63% of the total outstanding
shares of Compass.  As of September 30, 2001, 1,670,378 shares had been issued
to the selling shareholders. The issuances of ITIS stock were made in reliance
upon the Section 4(2) private placement exemption from registration. None of the
sellers received registration rights for the ITIS shares they received in this
transaction. The acquisition was accounted for under the purchase method of
accounting. The total purchase price of $2,294,425 included ITIS's allocation of
$1,294,425 to database content and software costs and $1 million to a
contractual agreement, based on the results of an independent appraisal.

Under the terms of the purchase agreement dated October 2000, sixty-eight
percent of Compass stock was to be delivered; however, the required percentage
was never received. Further, it appears that the three Compass shareholders
never took appropriate action with respect to the sale of their shares of
Compass stock.

In August 2001, certain shareholders of Compass filed suit in Washoe County,
Nevada against the aforementioned three Compass shareholders, alleging that the
stock the three individuals delivered to ITIS was not valid, and that as a
result, ITIS has no ownership interest in Compass. The wrongful actions as
alleged in the suit relate to stock ownership of a predecessor of Compass. ITIS
is not a party to this lawsuit and has placed the shares of Compass received in
the transaction in the registry of the Nevada Court. Additionally, ITIS has
canceled the restricted shares of ITIS that were issued to the three
individuals. As of October 31, 2001, the operations and management of Compass,
previously reported as a subsidiary of ITIS, were turned over to current Compass


                                       12
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

employees. As a result, ITIS wrote off  $1,229,704 in assets at September 30,
2001, representing the net book value of the Compass database content and
software costs originally valued at $1,294,425. The $1 million value assigned to
a contractual agreement of Compass at the time of acquisition had been fully
amortized as of the date operations were returned. After accrual of other
disposal expenses relating to the disposition of Compass, a loss on disposition
of $897,418 was recorded in the quarter ended December 31, 2001. For the three
and six-month periods ended June 30, 2001, losses related to the operations of
Compass Data Systems amounted to $303,051 and $611,154, respectively. These
losses have been reported as "discontinued operations" in accordance with SFAS
144.

Venco Compliance

On October 1, 2000, ITIS purchased of all of the outstanding stock of Venco
Compliance, Inc., a private Texas corporation in the business of selling
compliance and safety training information to businesses such as dry cleaners
and others that deal with hazardous chemicals, biomaterials and other regulated
substances. In connection with this acquisition, ITIS issued an aggregate of
100,000 unregistered shares of its common stock at closing on October 1, 2000,
valued then at $90,600, to Donald E. and Cathryn V. Tull. These issuances were
made in reliance upon Section 4(2) private placement exemption from
registration.  Neither of the two sellers received registration rights for the
shares of ITIS they received in this transaction. The results of operations of
Venco Compliance and the fair value of tangible and intangible assets acquired
and liabilities assumed have been included in ITIS's consolidated financial
statements as of the acquisition date.

The acquisition was accounted for under the purchase method of accounting and
resulted in $90,600 of the purchase price being allocated to goodwill. On
October 31, 2001, the stock of Venco was sold and transferred by ITIS to its
former shareholders, Donald E. and Cathryn V. Tull. ITIS received $1,000 on
December 1, 2001 and will receive 5% of any future revenues of Venco in excess
of $10,000 per month. A loss on disposition of $73,950 was recorded in the
quarter ended December 31, 2001. For the three and six-month periods ended June
30, 2001, losses related to the operations of Venco amounted to $13,511 and
$22,914, respectively. These losses have been reported as "discontinued
operations" in accordance with SFAS 144. ITIS has not received any amounts
related to the agreement to receive 5% of any future revenues of Venco in excess
of $10,000 per month and no receipts under this agreement are expected in the
near term.

GoverNet Affairs

On November 15, 1999, ITIS's board of directors approved the purchase of
GoverNet Affairs, Inc., a Georgia corporation that owned and operated an
Internet site and connected databases that provided subscribers with a Federal
and state legislative tracking and monitoring system. In connection with this
acquisition, ITIS issued an aggregate of 446,352 shares of common stock in
exchange for all the outstanding stock of GoverNet Affairs. The total purchase
price of $1,341,400 includes the estimated fair value of common stock issued of
$1.3 million, $22,000 of promissory notes payable to two stockholders of
GoverNet Affairs, and assumption of $19,400 of other debt. The acquisition was
accounted for under the purchase method of accounting and resulted in $1,271,854
of the purchase price being allocated to developed technology, based on the
results of an independent appraisal. The results of operations of GoverNet
Affairs and the fair value of tangible and intangible assets acquired and
liabilities assumed have been included in ITIS's consolidated financial
statements as of the acquisition date.


                                       13
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

As part of the purchase agreement to acquire GoverNet Affairs, options to
purchase 320,000 shares of ITIS's common stock were granted to the former
stockholders of GoverNet Affairs. These stock options are exercisable on August
31, 2000, August 31, 2001, and August 31, 2002 provided certain revenue and
earnings targets are achieved in each of the three preceding twelve-month
periods. The options are subject to an exercise price of $2.94 per share. None
of these options have been exercised, and all are scheduled to expire on August
31, 2002.

In June 2002, management of ITIS transferred the customers of GoverNet Affairs
to another provider for no monetary or other consideration and ceased operation
of this subsidiary, which had never reached profitability. As a result, ITIS
wrote off $593,529 in assets at June 30, 2002, representing the net book value
of the developed technology of GoverNet Affairs, originally valued at
$1,271,854. A loss on disposition of $607,656 was recorded in the quarter ended
June 30, 2002. For the three and six-month periods ended June 30, 2001, losses
related to the operations of GoverNet Affairs amounted to $139,066 and $281,830,
respectively. These losses have been reported as "discontinued operations" in
accordance with SFAS 144.

NOTE 8 - NOTES PAYABLE AND FINANCING AGREEMENTS:

     The following table summarizes the notes payable and financing agreements
     of ITIS excluding a disputed $500,000 note payable to Cootes Drive L.L.C.
     (see note 9).

<TABLE>
<CAPTION>

                                DATE OF         JUNE 30,     DECEMBER 31,
  LENDE                         ISSUANCE          2002          2001
-----------------------------  --------------  ------------  ----------
<S>                            <C>             <C>           <C>
  Hunter M.A. Carr, CEO        Various         $ 2,150,117   $2,150,117
  George A. Roberts, Director  Various           1,840,000    1,590,000
  W. Allyn Hoaglund, Director  October 2000         50,000       50,000
  Phoenix Energy               January 2001              -      100,000
  Stephen A. Fonicello         February 2001             -       25,000
  W. Paul Thayer, Director     Various             182,500      132,500
  Frost National Bank          February 2002        21,882       25,434
  Houston RPM, L.C.            March 2002          545,269            -
                                               ------------  ----------
                                                 4,789,768    4,073,051

  Less long-term portion to
  Hunter M.A. Carr, CEO                         (2,150,117)  (2,150,117)
                                               ------------  -----------

                                               $ 2,639,651   $1,922,934
                                               ============  ==========
</TABLE>

As of June 30, 2002 and December 31, 2001, the total principal amount owed to
Hunter Carr, CEO of ITIS, was $2,150,117. Accrued but unpaid interest amounted
to $237,255 and $160,196 at June 30, 2002 and December 31, 2001, respectively.
Prior to May 22, 2002, notes payable to Mr. Carr bore interest at the rate of
prime plus two percent per year, payable in cash on demand after one year.  At
Mr. Carr's option and with 30 days written notice, the notes could be repaid in
common stock of ITIS at a discounted price based on the lowest price at which
ITIS had sold its common stock during the one-year period preceding the exercise
of this option.  On May 22, 2002, a new note was issued to Mr. Carr in the
amount of $2,150,117 as a renewal and consolidation of all prior notes. The new
note bears interest at the rate of 18% per year, and is payable on demand after
one year.  In connection with the new note, ITIS issued detachable warrants to
Mr. Carr to purchase up to 24,649,771 shares of common stock of ITIS at $.096


                                       14
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

per share and cancelled any and all rights to convert principal and interest of
the prior notes to common stock. Expense of $99,074 related to the issuance of
these warrants was recorded in May 2002.With respect to these notes payable, Mr.
Carr has provided written commitment to ITIS to provide forbearance and extend
the due date on such note to at least July 15, 2003, if to demand payment would
impair ITIS's ability to meet its other existing liabilities and commitments.
Management believes that to demand payment would impair ITIS's ability to meet
other obligations and therefore, the note has been classified as long-term.

In October 2000, February 2001, and March 2002, ITIS executed demand notes for
$400,000, $190,000, and $250,000 respectively, in favor of George A. Roberts, a
member of its board of directors. The notes bore interest at the rate of prime
plus two percent per year, payable in cash on demand after one year. At the
option of the holder and with 30 days written notice, the notes could be repaid
in common stock of ITIS at a discounted price based on the lowest price at which
ITIS has sold its common stock during the one-year period preceding the exercise
of this option. On October 24, 2001, ITIS wholly owned subsidiary ITIS, Inc., a
Texas corporation that conducts business as Litidex(R), executed a promissory
note for $1,000,000 in favor of Dr. Roberts. This note bore interest at an
annual fixed rate equal to the lesser of the maximum amount allowed by law as
adjusted from time to time or 18%, and was payable in full with accrued interest
after one year. The note was secured by a Security Agreement covering all
accounts, contract rights and general intangibles arising out of the litigation
support project among Litidex(R), the law firm of Christian Wukoson Smith &
Jewell, and the law firm of O'Quinn, Laminack & Pirtle. Legal fees of $29,100
were paid from the proceeds of this note. On May 22, 2002, a new note was issued
to Dr. Roberts in the amount of $1,840,000 as a renewal and consolidation of all
prior notes. The new note bears interest at the rate of 18% per year, and is
payable on demand after one year. In connection with the new note, ITIS issued
detachable warrants to Dr. Roberts to purchase up to 21,073,520 shares of common
stock of ITIS at $.096 per share and cancelled any and all rights to convert
principal and interest of the prior notes to common stock. Expense of $84,700
related to the issuance of these warrants was recorded in May 2002.

In October 2000, ITIS executed a demand note for $50,000 in favor of W. Allyn
Hoaglund, a member of its board of directors. The note bears interest at the
rate of prime plus two percent per year and is payable in cash on demand after
one year. At the option of the holder and with 30 days written notice, the note
may be repaid in common stock of ITIS at a discounted price based on the lowest
price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option.

On January 16, 2001, ITIS executed a demand promissory note in the amount of
$100,000 payable to Phoenix Energy Consulting Services, Inc. The note bore
interest at 10% per year and was payable in cash on demand after one year. At
the option of the holder and with 30 days written notice, the note could be
repaid in common stock of ITIS at a discounted price based on the lowest price
at which ITIS had sold its common stock during the one-year period preceding the
exercise of this option. On April 2, 2002, the lender exercised the option to
convert the note plus accrued interest into restricted common shares of ITIS.
Accordingly, ITIS issued 1,601,565 restricted common shares to the lender, such
shares representing $100,000 in principal and $12,109 in accrued and unpaid
interest at April 2, 2002.

On February 28, 2001, ITIS executed a demand promissory note in the amount of
$25,000 payable to Stephen A. Fonicello. The note bore interest at the rate of
prime plus two percent per year and was payable in cash on demand after one
year. At the option of the holder and with 30 days written notice, the note
could be repaid in common stock of ITIS at a discounted price based on the


                                       15
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

lowest price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option. On February 28, 2002, Mr. Fonicello
exercised the option to convert the note plus accrued interest into restricted
common shares of ITIS. Accordingly, on March 4, 2002, ITIS issued 192,384
restricted common shares to Mr. Fonicello, such shares representing $25,000 in
principal and $2,068 in accrued and unpaid interest at February 28, 2002.

On February 5, March 21, April 11, and May 16 of 2001, and on April 3, 2002,
ITIS executed demand promissory notes for $50,000, $70,000, $25,000, $12,500,
and $50,000 respectively, in favor of W. Paul Thayer, a member of the board of
directors. On May 31, 2001, ITIS repaid Mr. Thayer $25,000 of principal toward
these notes. Prior to May 22, 2002, the notes bore interest at the rate of prime
plus two percent per year, payable in cash on demand after one year. At the
option of the holder and with 30 days written notice, the notes could be repaid
in common stock of ITIS at a discounted price based on the lowest price at which
ITIS had sold its common stock during the one-year period preceding the exercise
of this option. On May 22, 2002, a new note was issued to Mr. Thayer in the
amount of $182,500 as a renewal and consolidation of all prior notes. The new
note bears interest at the rate of 18% per year, and is payable on demand after
one year. In connection with the new note, ITIS issued detachable warrants to
Mr. Thayer to purchase up to 2,041,020 shares of common stock of ITIS at $.096
per share and cancelled any and all rights to convert principal and interest of
the prior notes to common stock. Expense of $8,203 related to the issuance of
these warrants was recorded in May 2002.

In March 2002, ITIS wholly owned subsidiary National Law Library executed a
promissory note for $425,000 in favor of Houston RPM, L.C. The note bore
interest at 18% per year and was payable in monthly installments including
principal and interest commencing April 1, 2002. On April 17, 2002, National Law
Library executed a new promissory note for $675,441 in favor of Houston RPM,
L.C. This note refinanced $325,441 of the note dated March 1, 2002 in the
original amount of $425,000, and provided $350,000 in new funding to National
Law Library. The note bears interest at 18% per year and is payable in monthly
installments including principal and interest commencing May 17, 2002. The
amount of each monthly installment shall equal the total amount of credit card
receipts generated by National Law Library, but in no event shall the monthly
installment be less than $65,000. Any unpaid principal and accrued interest is
due in full on April 17, 2003. A Security Agreement covering all proceeds paid
or otherwise due from credit card companies and others pursuant to a Continuing
Service Agreement between Litidex(R) and National Law Library secures the note,
as do guarantees from ITIS Inc. and Litidex(R). At June 30, 2002, the total
principal amount owed to Houston RPM, L.C. was $545,269. During the three months
ended June 30, 2002, National Law Library paid $152,732 in principal and $26,176
in interest related to this note.

NOTE 9-FINANCING AGREEMENT WITH COOTES DRIVE L.L.C.

On November 20, 2000, ITIS entered into an equity line financing arrangement
with Cootes Drive LLC. This arrangement was the successor to an intermediate
financing agreement of May 11, 2000. The financing arrangement was in the form
of a Securities Purchase Agreement providing for the purchase by Cootes Drive of
up to $25 million worth of shares of common stock of ITIS over an 18-month
period. Under the terms of the Securities Purchase Agreement, ITIS could have
delivered a put to Cootes Drive specifying the dollar amount of shares ITIS
intended to sell on each put. The maximum amount that ITIS could have received
under the Securities Purchase Agreement was $25 million or a lesser amount
depending on the limitation on the number of shares Cootes Drive (and its
affiliates) were permitted to hold at any one time.  Certain conditions had to
be met before Cootes Drive was obligated to accept a put from ITIS. Due to


                                       16
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

litigation in regard to the foregoing financing agreement (see note 10), it is
not expected that Cootes Drive would honor a put even if ITIS were to meet the
funding requirements in the future.

On December 5, 2000, ITIS executed a convertible promissory note in the face
amount of $500,000 in favor of Cootes Drive. The note was a demand note to
accrue interest at the rate of 5% per annum, and the principal could have been
converted to common stock of ITIS. In connection with this promissory note, ITIS
issued a warrant to Cootes Drive for 41,650 shares of ITIS common stock at an
exercise price of $0.288 per share.  A commission of $17,500 and legal fees of
$30,000 related to the equity line financing arrangement were paid from the
proceeds of this note. On December 5, 2000, ITIS also entered into a side letter
agreement that obligated Cootes Drive to provide an additional $500,000 on
January 14, 2001, in exchange for another convertible promissory note, on
similar terms.  This additional funding never occurred.

ITIS disputes the validity of the $500,000 convertible promissory note dated
December 5, 2000, on the grounds that this convertible note is a part of Cootes
Drive's efforts to defraud ITIS and to manipulate the price of ITIS's stock.
This convertible note and the associated funding transactions are all the
subject of ITIS's suit against Cootes Drive and others (see note 10). The note
is reflected on the accompanying balance sheet as a current liability entitled
"Disputed Note Payable to Cootes Drive LLC."

On December 5, 2000, ITIS granted registration rights to Cootes Drive for up to
17,541,650 shares of common stock it could have acquired under the equity line
financing, the convertible promissory note financings and the warrants granted
in connection with all of these financings. ITIS filed a registration statement
with the SEC covering the resale of these shares that was declared effective on
January 11, 2001. Due to litigation as discussed herein (see note 10) and
because ITIS does not meet the funding requirements, it is not expected that any
further funding will occur from this source.

NOTE 10-COMMITMENTS AND CONTINGENCIES:

Litigation

On January 26, 2001, in order to protect ITIS and its stockholders, ITIS filed a
lawsuit in United States District Court for the Southern District of Texas,
Houston Division, against Southridge Capital Management and several other
defendants, including Cootes Drive LLC, an alleged "straw man," for damages
resulting from alleged stock manipulation, federal securities law violations,
civil RICO, fraud, violations of Texas securities laws and other Texas statutes,
and conspiracy. The case also alleges misrepresentations by co-conspirators in
connection with certain funding transactions by the defendants with ITIS.  All
defendants filed a joint motion to transfer this case to New York to be
consolidated with the lawsuit filed against us as described below.  The United
States District Judge granted this motion and the case has been transferred to
the Southern District of New York.  The defendants filed motions to dismiss the
case, and on July 17, 2002, the Judge issued an opinion refusing dismissal. The
case is ongoing, and discovery is underway. We intend to prosecute the case
vigorously.  Our litigation counsel has advised us that the case is not
sufficiently advanced to evaluate the outcome, but that resolution of the suit
is anticipated in accordance with the Judge's July 17, 2002 ruling which states,
"the court is fully prepared to assist the parties in moving this case forward
to trial without undue delay."

On February 5, 2001, Cootes Drive LLC filed a suit against ITIS in the Southern
District of New York alleging breach of one of the financing agreements with us
for our failure to honor a conversion of its preferred shares to common stock.
The suit seeks monetary damages of $10,000 per day and seeks to compel ITIS to


                                       17
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

issue shares of common stock to Cootes Drive LLC.  ITIS filed an answer to this
lawsuit. Cootes Drive LLC amended their complaint in order to add allegations
that ITIS is in default on a $500,000 promissory note in favor of Cootes Drive
LLC (the alleged default occurring after the filing of ITIS's suit against
Cootes Drive LLC and others); that ITIS has not honored a notice of redemption
of preferred shares held by Cootes Drive LLC in the amount of $2,214,012
(allegedly occurring after the filing of ITIS's suit against Southridge Capital
Management, Cootes Drive LLC, and others); and that ITIS defrauded Cootes Drive
by failing to disclose material information with respect to the background of a
key officer at ITIS.  ITIS's answer was timely filed on July 20, 2001. The
preferred shares and the associated funding transactions at issue are the
subject matter of ITIS's suit against Southridge Capital Management and others.
ITIS intends to defend this case vigorously.  This case has been consolidated
with the ITIS case (above) and the parties have been realigned so that ITIS is
the plaintiff and Cootes Drive is the defendant. Litigation counsel has advised
us that the case is not sufficiently advanced to evaluate the outcome, but that
resolution of the suit is anticipated in accordance with the Judge's July 17,
2002 ruling which states, "the court is fully prepared to assist the parties in
moving this case forward to trial without undue delay."

John M. O'Quinn, our Texas-based litigation counsel, has agreed to represent
ITIS and our directors, if necessary, in all of these lawsuits on a 50%
contingent fee basis, with his law firm paying all expenses of the litigation.
The fee will be calculated after all expenses have been reimbursed to Mr.
O'Quinn's law firm.

On June 4, 2001, Cootes Drive LLC filed a suit in Delaware against certain
directors of ITIS on behalf of itself as a holder of preferred stock and
allegedly derivatively on behalf of ITIS, alleging that the directors breached
their fiduciary duty to the stockholders by approving repayment in common stock
of loans made to ITIS by its directors. This suit was filed in the Court of
Chancery of Delaware in and for New Castle County. The suit has been dismissed
by Order of the Court entered February 15, 2002.

On July 18, 2002 HEB Grocery Company, LP, the previous landlord of ITIS, filed a
lawsuit in Texas District Court in Houston seeking damages in a presently
unspecified amount for alleged breach by ITIS of the lease for its prior
location. The answer date for ITIS has not yet been reached. ITIS intends to
answer and vigorously defend this suit on the grounds that HEB did not perform
its obligations, including repairing the roof, preventing mold, providing
adequate and accurately measured utilities, and others.

ITIS is also a defendant in other lawsuits related to matters normally
incidental to the Company's business. No individual case, or group of related
cases presenting substantially similar issues of law or fact, exceeds 10% of the
Company's current assets or is expected to have a material effect on the manner
in which the Company conducts its business.

NOTE 11-STOCKHOLDER'S EQUITY:

Common and Preferred Stock

On February 28, 2002, Stephen A. Fonicello, holder of a demand promissory note
dated February 28, 2001 in the principal amount of $25,000, exercised his option
to convert the note plus accrued interest into restricted common shares of ITIS.
Accordingly, on March 4, 2002, ITIS issued 192,384 restricted common shares to
Mr. Fonicello, such shares representing $25,000 in principal and $2,068 in
accrued and unpaid interest at February 28, 2002.

On April 2, 2002, Phoenix Energy Consulting Services, Inc., holder of a demand
promissory note dated January 16, 2001 in the principal amount of $100,000,
exercised the option to convert the note plus accrued interest into restricted


                                       18
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

common shares of ITIS. Accordingly, on April 2, 2002, ITIS issued 1,601,565
restricted common shares to the lender, such shares representing $100,000 in
principal and $12,109 in accrued and unpaid interest at April 2, 2002.

On April 11, 2002, ITIS entered into an agreement with a vendor pursuant to
which ITIS issued 257,143 shares of unregistered common stock, valued at
$18,000, as consideration for professional services rendered during the 1st
quarter of 2001.

Stock Options and Warrants

On March 1, 2002, ITIS issued stock options to Merit Financial, Inc. to purchase
600,000 shares of ITIS's common stock at an exercise price defined as the market
price of the stock on the date that the option is exercised, less fifteen
percent. These options were issued in exchange for consulting services
previously provided to ITIS, and related expense of $45,900 was recorded in
March 2002.

On May 22, 2002, in conjunction with the renewal and consolidation of various
notes payable to Hunter M.A. Carr, W. Paul Thayer, and George A. Roberts (see
note 8), ITIS cancelled any and all rights to convert principal and interest of
the prior notes to common stock and instead issued warrants to Carr, Thayer and
Roberts to purchase up to 24,649,771, 2,041,020, and 21,073,520 shares of common
stock, respectively, at $.096 per share. Expense of $191,977 and an equal amount
of equity related to issuance of these warrants was recorded in May 2002.

NOTE 12-CONDITIONS AFFECTING ONGOING OPERATIONS

ITIS's financial statements are prepared using principles applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. While the sale of a net revenue
interest in the first 14 PharmHouse stores in July 2002 has potentially provided
$2.5 million in available cash to ITIS (see note 14), we do not at this time
have an established source of revenues, working capital or cash flow to cover
operating costs to allow the Company to remain in business. Management's
business plan realizes that anticipated revenues to be generated by the
automated litigation support services of Litidex(R) and the PharmHouse stores
will be critical in providing some of the funds necessary to continue company
operations and to remain in business. However, cash provided by the automated
litigation support services of Litidex(R) is not received on a scheduled basis,
and PharmHouse has not yet commenced pharmacy operations. While management
believes that revenues provided by these subsidiaries may be adequate to fund
company operations, it is possible that such revenues may never be sufficient to
meet company needs. While additional automated litigation support contracts are
anticipated by management, the revenues of Litidex(R) cannot be sustained if no
additional contracts are obtained. If this should be the case, management plans
to continue to utilize additional loans from Mr. Carr (President and Chairman of
the Board of Directors of ITIS) and other directors and investors as long as
funds from these sources remain available. If the receivables associated with
the litigation services contracts are not collected timely, or at all, cash flow
will be severely restricted and additional reliance will have to be placed on
other sources of cash, if available when needed. Although management believes
that the receivables will be collected, collections to date have been minimal.
If adequate funding from the operations of Litidex(R), PharmHouse or other
sources is not available, ITIS will be unable to remain in business.

ITIS may be required to obtain additional financing or equity capital to remain
in business, and that capital, if available, may have provisions that could
further suppress current and future stock prices and cause significant dilution
to current shareholders. Our internally generated cash flows from operations


                                       19
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

have historically been insufficient for our cash needs and will continue to be
for the foreseeable future. While management projects that the internal source
of liquidity may improve, this objective may not be achieved in the near term,
if ever. As of August 15, 2002, sources of external and internal financing are
very limited. It is not expected that the internal source of liquidity will
improve until significant net cash is provided by operating activities (which
may not be achieved), and until such time, ITIS will rely upon external sources
for liquidity. ITIS's current working capital is not sufficient to cover cash
requirements for the balance of the 2002 fiscal year or to bring the Company to
a positive cash flow position. ITIS may not ever become profitable and could
fail as a going concern.

We may in the future experience significant fluctuations in the results of our
operations. Such fluctuations may result in significant volatility in the price
and/or value of ITIS's common stock. Shortfalls in revenues, financing or
capital may adversely and disproportionately affect the results of operations
because a high percentage of current operating expenses are relatively fixed and
are primarily financed through loans and capital contributions. These funds are
not guaranteed and may not continue in the future. Accordingly, management
believes that period-to-period comparisons of results of operations should not
be relied upon as an indication of future results of operations.

Obtaining additional automated litigation support contracts through Litidex(R)
and the success of the PharmHouse stores are critical to the success of the
Company's business plan. Management hopes to continue reductions in operating
costs and to increase revenues through the pursuit of additional litigation
service contracts and aggressive marketing of our PharmHouse stores. While many
factors can impact future operations and these improvements cannot be assured of
success, the management of ITIS intends to take all actions deemed prudent and
necessary. As reflected in note 14-Subsequent Events and elsewhere in these
footnotes and Form 10-Q, management is currently pursuing alternatives in its
attempt to provide the cash necessary to remain in business. Alternatives being
considered include the sale of other ITIS subsidiaries.

NOTE 13 - LICENSING AGREEMENT:

On March 8, 2002, Litidex(R) entered into an agreement with MedEx Systems, Inc.
whereby Litidex(R), through a newly formed Litidex(R) subsidiary, PharmHouse,
Inc., intends to operate pharmacies that focus primarily on specialty
medications in 81 exclusive territories identified in a Settlement and
Separation Agreement. MedEx is a Louisiana corporation that has developed a
patent-pending system for technologies related to the operation of such
pharmacies. The agreement between MedEx and Litidex(R) provided for a paid-up
perpetual license from MedEx for the operating system to be used in pharmacies
to be established in territories belonging to Litidex(R). This licensing
agreement has been recorded at its cost of $150,000. Subsequent to signing this
agreement, and by letter agreement dated March 27, 2002, Litidex(R) paid MedEx
an additional $150,000 as earnest money and consulting fees towards a
contemplated purchase of 50% of the issued and outstanding shares of MedEx and
an associated entity, Pegasus Pharmacy, Inc. This stock purchase was not
consummated, and the $150,000 earnest money and consulting fees was recorded as
"other expense" in March 2002. An additional $125,000 was advanced to MedEx
pursuant to an interim binding letter agreement dated April 11, 2002. Under the
terms of this agreement, MedEx agreed to repay the $125,000 plus 8% interest
within 120 days of demand by PharmHouse if the stock purchase was not
consummated. On May 15, 2002, PharmHouse issued a demand letter to MedEx for
repayment of these funds. PharmHouse has two pharmacies in Houston, Texas
expected to open in August 2002.


                                       20
<PAGE>
ITIS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

NOTE 14-SUBSEQUENT EVENTS:

Acquisition or Disposition of Assets

On July 1, 2002, ITIS and its wholly owned subsidiary PharmHouse entered into a
Purchase Agreement and Grant of Net Revenue Interest with Rainmaker Ventures,
Ltd., a Texas limited partnership in which Hunter M.A. Carr, W. Paul Thayer and
George Roberts are limited partners. Messrs. Carr, Thayer and Roberts are
directors of ITIS and Mr. Carr is the President, Chief Executive Officer, and
Chairman of the Board of ITIS. Under the terms of the Purchase Agreement,
Rainmaker committed to fund up to $2,500,000 to ITIS in exchange for a 50%
interest in the net revenues of the first 14 specialty medication pharmacy
locations opened by PharmHouse. The Purchase Agreement also grants to Rainmaker
an option to acquire a 50% net revenue interest in an additional 4 stores in
exchange for additional funding of $500,000 to ITIS. At June 30, 2002, Rainmaker
had advanced $875,000 of the $2,500,000 purchase price in anticipation of
execution of this Purchase Agreement. Although it is the intent of the parties
that a material amount of the purchase price will be used for the purpose of
constructing and opening separately licensed specialty medication pharmacy
locations, the Agreement does not place any restrictions on the use of such
funds by ITIS. The amount of funding of the $2,500,000 is dependent upon the
opening of at least one separately licensed specialty medication pharmacy for
each $166,667 invested by Rainmaker as of the date of the funding request. While
at the date of the filing of this Form 10-Q, no such pharmacy has been opened,
all funding requests made by ITIS have been honored by Rainmaker.

On July 29, 2002 ITIS entered into an Asset Purchase Agreement with American
Legal Data, LLC, a Delaware limited liability company (Buyer). Under the terms
of the Purchase Agreement, ITIS sold to Buyer all right, title and interest in
one complete copy of data consisting of an electronic form of federal and state
constitutions, statutes, regulations, case law, rules and legal briefs, together
with additions, derivations and updates, as it existed on July 29, 2002. In
consideration for these assets, Buyer agreed to pay to ITIS $2 million dollars,
of which $91,000 was paid at or prior to closing on July 29, 2002. The balance
of the consideration ($1,909,000) is payable in minimum monthly installments of
$16,000 for 120 months beginning August 16, 2002. Unpaid principal accrues
interest at the rate of 8% per year, and in the 121st month following the
closing date, Buyer will make a lump sum payment equal to the outstanding
principal and any accumulated interest.


                                       21
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following discussion should be read in conjunction with the condensed,
consolidated financial statements of ITIS, which are included elsewhere in this
Form 10-Q.  Included in this discussion are certain forward-looking statements
regarding ITIS's expectations for its business and its capital resources.   The
reader should not rely on forward-looking statements because they are subject to
known and unknown risks, uncertainties and other factors that may cause our
actual results to differ materially from those contemplated by the
forward-looking statements. ITIS and its subsidiaries may experience high
volatility in operating results and cash flows from quarter to quarter and from
year to year.

ITIS Inc. is a Delaware corporation that provides electronic publishing services
and database content through Internet sites with subscription access, licenses
and transaction fees for databases through its subsidiaries, National Law
Library, Inc. and Brief Reporter, LLC. The content of the databases consists of
pending legislation, statutory law, rules and case law at the federal and state
levels.  Legal briefs from certain important cases before federal and state
courts are also available, as are litigation forms.  As disclosed in note 7,
management of ITIS transferred the customers of Internet Services subsidiary
GoverNet Affairs, Inc. to another provider and ceased operation of this
subsidiary in June 2002.

ITIS provides database content, data conversion, automated litigation support,
software, and hardware through its subsidiary, ITIS, Inc., a Texas corporation,
which conducts business as Litidex(R). Litidex(R) currently focuses its
attention on the automated litigation support aspect of the legal services
industry.

Representing a new business segment for ITIS, newly formed subsidiary PharmHouse
Inc. concentrates its efforts in the business of pharmacy operations.
PharmHouse, originally a subsidiary of Litidex(R), became a wholly owned
subsidiary of ITIS in May 2002. In August 2002 PharmHouse expects to open two
pharmacies that will focus primarily on specialized medications. Another new
subsidiary, OnPoint Solutions Inc., will provide technical support for
PharmHouse in the development and operation of the pharmacies.

Prior to October 31, 2001, ITIS also provided training and support with federal
regulations through its wholly owned subsidiary, Venco Compliance, Inc., and
marketed a CD-Rom product and Website that assisted in medical billing through
Compass Data Systems, Inc. As more fully disclosed in note 7, on October 31,
2001, the stock of Venco was sold and transferred by ITIS to Venco's former
shareholders and the operations and management of Compass Data Systems were
turned over to current Compass employees.

The revenues of National Law Library depend on our ability to attract and retain
customers. Most of the customers of National Law Library have the option of
discontinuing their service at the end of their monthly subscription period for
any reason. Additionally, management realizes that anticipated revenues to be
generated by the automated litigation support services of Litidex(R) and the
PharmHouse stores will be critical in providing some of the funds necessary to
continue company operations and to remain in business. Our expense levels are
based, in part, on our expectations as to future revenues. To the extent that
revenues are below expectations, we may be unable or unwilling to reduce
expenses proportionately, and operating results and cash flows are likely to be
adversely affected.

The reader of the following discussion of the results of our operations and
liquidity and capital resources should be aware of critical accounting policies
applied by management as follows:


                                       22
<PAGE>
     -    Accounts receivable, net of doubtful accounts, at June 30, 2002 and
          December 31, 2001 amount to $2,754,900 and $2,219,529 respectively. Of
          the accounts receivable at June 30, 2002, 97%, or $2,675,429,
          represents receivables related to the automated litigation support
          services of Litidex(R). Because a portion of this amount is to be paid
          in common shares of publicly traded companies and/or by notes
          receivable, it is likely that realization of a significant amount of
          these receivables may not be achieved in a traditional timely fashion
          and may take twelve months or longer to convert to cash. Management
          has elected not to provide an allowance for doubtful accounts for
          these receivables due to the nature of the agreements with the
          customer, which, in management's opinion, provides assurance for the
          ultimate collection of the fees due.

     -    Database content and software costs, which amount to $11,997,679 and
          $11,913,029 at June 30, 2002 and December 31, 2001 respectively, are a
          significant asset of the Company. Because ITIS has not obtained
          substantial new capital or long-term funding and in consideration of
          significant losses by the Company and especially the Internet Services
          segment, management recorded an impairment charge in the amount of
          $2,741,955 at December 31, 2001 based on valuation estimates using net
          cash flows projected over the estimated useful lives of the assets.
          While it is management's judgment that the database and content assets
          will continue to be of significant value to the Company, there is no
          guarantee that additional material impairments will not be needed in
          the future.

     -    Management has discussed the application of SFAS No. 142 with the SEC
          as it pertains to amortization of the database content and software
          costs of ITIS. Under SFAS No. 142, goodwill and intangible assets with
          indeterminate lives will no longer be amortized as expense over
          estimated useful lives after December 31, 2001 for assets acquired
          prior to July 1, 2001. Management has agreed with the SEC that
          continued amortization of the database content and software costs
          would be more reflective of the nature of the asset given the costs
          associated to continually update the database to maintain its value
          and marketability. The Company's accounting treatment is still subject
          to potential new pronouncements from the Emerging Issues Task Force
          (EITF) of the Financial Accounting Standards Board (FASB). Depending
          on future issuances by the EITF, it is possible that future additions
          to database content and software costs may be required to be expensed
          as incurred which would have a material negative impact on the future
          results of operations reported by the Company. Management will
          continue to monitor all future issuances of accounting principles by
          the EITF and other regulatory bodies.

     -    ITIS subsidiary Litidex(R) contracts with law firms to provide
          litigation support services. These generally include determining if
          the law firm's potential client has a viable cause of action,
          providing the law firm with a database containing securities
          litigation data, and the development of a specific case related
          database. Litidex(R) does not have any future delivery requirements
          with respect to the first two elements and the revenue associated with
          those elements is recognized when evidence exists that indicates that
          an arrangement with the attorney exists. This evidence usually
          includes receipt of some form of non-refundable compensation. The
          third element of the arrangement requires development of a case
          specific database of information at a future date. Revenues associated
          with this third element are deferred and recognized as actual document
          production occurs. This method of revenue recognition is consistent
          with the method adopted by the Company in the second quarter of 2001
          when Litidex(R) commenced providing this type of litigation service.


                                       23
<PAGE>
          An average of 22% of litigation support revenues are deferred as a
          substantial portion of the work required has been performed to
          complete the first two elements of the arrangement. Management has
          calculated the deferral amount based upon the future estimated work to
          complete the services under the contract, which includes the
          development of a case specific litigation database in an electronic
          format with the client's information as it becomes available.
          Management recognizes revenues from these services as they are
          performed. In determining the amount of income to defer, management
          consulted with the experienced personnel of Litidex(R) and others
          regarding the number of documents likely to be processed over the
          course of the litigation support project and an appropriate retail
          price to assign to these services. A consensus was reached that
          100,000 pages of data was neither too conservative nor too aggressive
          an estimate to use, and management accordingly applied a fair market
          value per page processing charge to 100,000 pages of production to
          determine the deferral amount. While it is virtually impossible to
          predict the length of time a case may be in litigation, it is
          reasonable to arrive at a projected number of documents to be
          processed as part of a litigation support project using the Company's
          extensive experience in providing these services. It is management's
          opinion that Generally Accepted Accounting Principles and other
          professional literature support the Company's litigation services
          recognition method.

          As disclosed in our December 31, 2001 Form 10-K and March 31, 2002
          Form 10-Q, management contacted the SEC on a voluntary basis and had
          numerous discussions with the SEC regarding revenue recognition with
          respect to the litigation services of our subsidiary Litidex(R). As a
          result of those discussions, and further research into this matter,
          management has concluded that the method of accounting used by the
          Company to record its litigation services revenues is in accordance
          with Generally Accepted Accounting Principles. However, the Staff of
          the Securities & Exchange Commission is not in agreement with this
          position and may require the Company to restate its financial
          statements with respect to the revenue recognition for litigation
          services.

The following is management's discussion and analysis of certain significant
factors that have affected ITIS's financial condition and results of operations
during the six and three months ended June 30, 2002 and 2001.

RESULTS OF OPERATIONS

Revenues-Revenues decreased by $271,977 to $1,138,006 during the six months
ended June 30, 2002, from $1,409,983 recorded for the six months ended June 30,
2001. Revenues also decreased by $859,539 for the quarter ended June 30, 2002,
from $1,117,788 in recorded revenues for the quarter ended June 30, 2001 to
$258,249 in revenues for the quarter ended June 30, 2002. Revenues from our
Internet services segment decreased by $68,755 from $559,983 during the six
months ended June 30, 2001 to $491,228 for the six months ended June 30, 2002.
Internet services revenue also decreased by $33,392 from $267,788 for the
quarter ended June 30, 2001 to $234,396 for the quarter ended June 30, 2002. The
reduction in sales in both periods is primarily due to reductions in sales and
marketing efforts. Revenues from our automated litigation support services of
subsidiary Litidex(R) decreased by $203,222 for the six months ended June 30,
2002 from $850,000 recorded for the six months ended June 30, 2001 to $646,778
recorded for the six months ended June 30, 2002. The revenues of Litidex(R) also
decreased by $826,147 for the quarter ended June 30, 2002 from $850,000 recorded
for the quarter ended June 30, 2001 to $23,853 for the quarter ended June 30,
2002. These decreases are due to no new litigation contracts being received in
the quarter ended June 30, 2002. While additional contracts to provide these
services are anticipated, revenues and cash flow from automated litigation
support services may not be sustained if no additional contracts are obtained.

Sales and Marketing Expense-Sales and marketing expense decreased by $392,389 to
$117,118 during the six months ended June 30, 2002, from $509,507 for the
corresponding period ended June 30, 2001. Sales and marketing expense also
decreased by $231,264 from $289,797 for the quarter ended June 30, 2001 to
$58,533 for the quarter ended June 30,2002. The majority of the decrease in both
periods resulted from reduction in the sales force of National Law Library.
Other decreases were attributable to reductions in telephone expense related to
telemarketing efforts and the elimination of non-productive advertising
expenditures related to our Internet services segment.

General and Administrative Expense-General and administrative expense decreased
by $336,374 from $1,726,558 during the six months ended June 30, 2001 to
$1,390,184 for the six months ended June 30, 2002. General and administrative
expense also decreased by $87,000 for the quarter ended June 30, 2002 from
$920,259 in expenses recorded for the quarter ended June 30, 2001 to $833,259 in
expenses for the quarter ended June 30, 2002.

     -    Payroll and related costs at the administrative and management level
          decreased by $97,129 from $729,631 for the six months ended June 30,
          2001 to $632,502 for the six months ended June 30, 2002, and by


                                       24
<PAGE>
          $35,971 from $351,468 for the quarter ended June 30, 2001 to $315,497
          for the quarter ended June 30, 2002, due to workforce and salary
          reductions.

     -    Non-cash expense related to stock and option awards for the six months
          ended June, 2002 amounted to $237,877, representing an increase of
          $35,350 from the $202,527 reported for the six months ended June 30,
          2001. Stock and option awards increased by $55,479 for the quarter
          ended June 30, 2002 from $136,498 reported for the quarter ended June
          30, 2001 to $191,977 for the quarter ended June 30, 2002.

     -    Administrative expense reductions were realized in professional fees,
          contract services, and the expense of outside consulting which in
          aggregate decreased by $197,830 from $442,085 for the six months ended
          June 30, 2001 to $244,255 for the six months ended June 30, 2002.
          Reduction in these fees were also realized in the quarter ended June
          30, 2002 in the amount of $126,320, from $255,897 in expense for the
          quarter ended June 30, 2001 to $129,577 for the quarter ended June 30,
          2002.

     -    Rent, utilities and related expenses decreased by $53,651 for the six
          months ended June 30, 2002 from $158,558 for the six months ended June
          30, 2001 to $104,907 for the six months ended June 30, 2002. These
          expenses also decreased by $11,261 for the quarter ended June 30, 2002
          to $49,419 for the quarter ended June 30, 2002 from $60,680 for the
          quarter ended June 30, 2001. These reductions are due to renegotiation
          of the corporate office lease in Houston, Texas in January 2001 and a
          corporate move to smaller office space in June 2002.

     -    Miscellaneous other general and administrative expenses were reduced
          by $23,114 from $193,757 for the six months ended June 30, 2001 to
          $170,643 for the six months ended June 30, 2002. These expenses
          increased by $31,073 to $146,789 for the quarter ended June 30, 2002
          from $115,716 for the quarter ended June 30, 2001 primarily due to the
          recording of a $50,000 allowance for doubtful collection of rents due
          from a subtenant at our previous office location.

Production and Computer Service Expense-Production and computer service expense
increased by $50,111 to $86,221 for the six months ended June 30, 2002, from
$36,110 for the six months ended June 30, 2001. Production and computer service
expense also increased by $27,519 from $19,720 for the quarter ended June 30,
2001 to $47,239 for the quarter ended June 30, 2002. Production labor costs
increased primarily due to the automated litigation support services of
Litidex(R).

Amortization and Depreciation Expense-Amortization and depreciation expense
decreased by $302,527 to $783,576 for the six months ended June 30, 2002, from
$1,086,103 for the six months ended June 30, 2001. Amortization and depreciation
expense also decreased by $285,389 to $260,122 for the quarter ended June 30,
2002 from $545,511 for the quarter ended June 30, 2001. These decreases are
primarily due to the completion of amortization of a $2 million service contract
of subsidiary Litidex(R). Quarterly amortization of the contract amounted to
$260,868 per quarter until expiration of the contract in the first quarter of
2002.

Other Expense-Other expense of $150,000 for the six months ended June 30, 2002
represents earnest money and consulting fees for the contemplated purchase of
stock in MedEx Systems, Inc. and an associated entity, Pegasus Pharmacy, as
further discussed in note 13 to the financial statements. The purchase was not
consummated, and this expense is not expected to recur.

Interest Expense-Interest expense increased by $183,013 to $ 343,480 for the six
months ended June 30, 2002, from $160,467 for the six months ended June 30,
2001. Interest expense also increased by $38,299 for the quarter ended June 30,
2002 from $79,964 for the quarter ended June 30, 2001 to $118,263 for the
quarter ended June 30, 2002. The interest expense increase is due to


                                       25
<PAGE>
approximately $1.3 million in new debt acquired in 2001 and an additional
$675,000 and $400,000 in new debt acquired in the first and second quarters of
2002, respectively.

LIQUIDITY AND CAPITAL RESOURCES

ITIS's ability to execute its business strategy depends to a significant degree
on its ability generate an established source of revenues, working capital and
positive cash flow, and its ability to attract additional capital. ITIS's
principal demands for liquidity are cash for normal operations, funds for
investment in new database content, and funds for development of PharmHouse
stores.

For the six months ended June 30, 2002, ITIS's cash and cash equivalents
decreased in total by $63,019 from the December 31, 2001 balance of $41,137 in
available cash and a $40,813 bank overdraft at one its banks to $21,451 in
available cash and a $84,146 bank overdraft at June 30, 2002.  The Company
further had a working capital deficit of $4,604,709. The Company had $2,754,900
in accounts receivable at June 30, 2002. Of this amount, $2,675,429 represents
receivables related to the automated litigation support services of Litidex(R).
Because a portion of this amount is to be paid in common shares of publicly
traded companies and/or by notes receivable, it is likely that realization of a
significant amount of these receivables may not be achieved in a traditional
timely fashion and may take twelve months or longer to convert to cash.
Accordingly, management has classified $1,140,000 of accounts receivable from
litigation support as noncurrent at June 30, 2002.

Cash used in operating activities of $406,551 is primarily due to operating
losses, disposal of operating segments (GoverNet Affairs), and increases in
accounts receivable and deferred revenues, which are partially offset by
depreciation and amortization and increases in liabilities.  Cash used in
investment activities of $498,185 is primarily due to additions to database
content of $(546,330) offset by proceeds received from the sales of investments
of $170,579. Cash provided by financing activities of $885,050 was due to
increased borrowings to finance working capital needs.

As further outlined in note 8 to the financial statements, the Company has
incurred significant amounts of debt to finance its working capital requirements
and has made additional borrowings in the current quarter.  As of June 30, 2002,
the total principal amount and accrued but unpaid interest owed to Hunter Carr,
CEO of ITIS, was $2,150,117 and $237,255, respectively.

On February 28, 2002, Stephen Fonicello exercised the option to convert his
$25,000 note plus accrued interest into restricted common shares of ITIS.
Accordingly, on March 4, 2002, ITIS issued 192,384 restricted common shares to
Mr. Fonicello, such shares representing repayment of $25,000 in principal and
$2,068 in accrued and unpaid interest at February 28, 2002.

In March 2002, ITIS executed a demand note for $250,000 in favor of George A.
Roberts, a member of its board of directors. The note bore interest at the rate
of prime plus two percent per year and was payable in cash on demand after one
year. At the option of the holder and with 30 days written notice, the note
could be repaid in common stock of ITIS at a discounted price based on the
lowest price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option. On May 22, 2002, this note was renewed
and consolidated with other notes payable to Dr. Roberts. In connection with the
new note, ITIS issued detachable warrants to Dr. Roberts to purchase up to
21,073,520 shares of common stock at $.096 per share and cancelled any and all
rights to convert principal and interest of the prior note to common stock. The
new note bears interest at 18% per year, and is payable on demand after one
year.

In March 2002, ITIS wholly owned subsidiary National Law Library executed a
promissory note for $425,000 in favor of Houston RPM, L.C. The note bore
interest at 18% per year and was payable in monthly installments including
principal and interest commencing April 1, 2002. On April 17, 2002, National Law
Library executed a new promissory note for $675,441 in favor of Houston RPM,
L.C. This note refinanced $325,441 of the note dated March 1, 2002 in the
original amount of $425,000, and provided $350,000 in new funding to National
Law Library. The note bears interest at 18% per year and is payable in monthly


                                       26
<PAGE>
installments including principal and interest commencing May 17, 2002. The
amount of each monthly installment shall equal the total amount of credit card
receipts generated by National Law Library, but in no event shall the monthly
installment be less than $65,000. Any unpaid principal and accrued interest is
due in full on April 17, 2003. A Security Agreement covering all proceeds paid
or otherwise due from credit card companies and others pursuant to a Continuing
Service Agreement between Litidex(R) and National Law Library secures the note,
as do guarantees from ITIS Inc. and Litidex(R). At June 30, 2002, the total
principal amount owed to Houston RPM, L.C. was $545,269. During the three months
ended June 30, 2002, National Law Library paid $152,732 in principal and $26,176
in interest related to this note.

In April 2002, ITIS executed a demand note for $50,000 in favor of W. Paul
Thayer, a member of its board of directors. The note bore interest at the rate
of prime plus two percent per year and was payable in cash on demand after one
year. At the option of the holder and with 30 days written notice, the note
could be repaid in common stock of ITIS at a discounted price based on the
lowest price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option. On May 22, 2002, this note was renewed
and consolidated with other notes payable to Mr. Thayer. In connection with the
new note, ITIS issued detachable warrants to Mr. Thayer to purchase up to
2,041,020 shares of common stock at $.096 per share and cancelled any and all
rights to convert principal and interest of the prior note to common stock. The
new note bears interest at 18% per year, and is payable on demand after one
year.

ITIS's financial statements are prepared using principles applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. While the sale of a net revenue
interest in the first 14 PharmHouse stores in July 2002 has provided $2.5
million in available cash to ITIS, we do not at this time have an established
source of revenues, working capital or cash flow to cover operating costs to
allow the Company to remain in business. Management's business plan realizes
that anticipated revenues to be generated by the automated litigation support
services of Litidex(R) and the PharmHouse stores will be critical in providing
some of the funds necessary to continue company operations and to remain in
business. However, cash provided by the automated litigation support services of
Litidex(R) is not received on a scheduled basis, and PharmHouse has not yet
commenced pharmacy operations. While management believes that revenues provided
by these subsidiaries may be adequate to fund company operations, it is possible
that such revenues may never be sufficient to meet company needs. While
additional automated litigation support contracts are anticipated by management,
the revenues of Litidex(R) cannot be sustained if no additional contracts are
obtained. If this should be the case, management plans to continue to utilize
additional loans from Mr. Carr (President and Chairman of the Board of Directors
of ITIS) and other directors and investors as long as funds from these sources
remain available. If the receivables associated with the litigation services
contracts are not collected timely, or at all, cash flow will be severely
restricted and additional reliance will have to be placed on other sources of
cash, if available when needed. Although management believes that the
receivables will be collected, collections to date have been minimal. If
adequate funding from the operations of Litidex(R), PharmHouse or other sources
is not available, ITIS will be unable to remain in business.

ITIS may be required to obtain additional financing or equity capital to remain
in business, and that capital, if available, may have provisions that could
further suppress current and future stock prices and cause significant dilution
to current shareholders. Our internally generated cash flows from operations
have historically been insufficient for our cash needs and will continue to be
for the foreseeable future. While management projects that the internal source
of liquidity may improve, this objective may not be achieved in the near term,
if ever. As of August 15, 2002, sources of external and internal financing are
very limited. It is not expected that the internal source of liquidity will
improve until significant net cash is provided by operating activities (which


                                       27
<PAGE>
may not be achieved), and until such time, ITIS will rely upon external sources
for liquidity. ITIS's current working capital is not sufficient to cover cash
requirements for the balance of the 2002 fiscal year or to bring the Company to
a positive cash flow position. ITIS may not ever become profitable and could
fail as a going concern.

We may in the future experience significant fluctuations in the results of our
operations. Such fluctuations may result in significant volatility in the price
and/or value of ITIS's common stock. Shortfalls in revenues, financing or
capital may adversely and disproportionately affect the results of operations
because a high percentage of current operating expenses are relatively fixed and
are primarily financed through loans and capital contributions. These funds are
not guaranteed and may not continue in the future. Accordingly, management
believes that period-to-period comparisons of results of operations should not
be relied upon as an indication of future results of operations.

As reflected in note 14-Subsequent Events and elsewhere in these footnotes and
Form 10-Q, management is currently pursuing alternatives in its attempt to
provide the cash necessary to remain in business. Alternatives being considered
include the sale of other ITIS subsidiaries.

As of June 30, 2002, ITIS's regular monthly cash operating expenditures exceeded
monthly cash receipts, not including cash receipts related to the automated
litigation support services of Litidex(R), by approximately $225,000. Cash
receipts related to the automated litigation support services are received on an
inconsistent basis and are therefore not included in the above negative cash
flow calculation.

Obtaining additional automated litigation support contracts through Litidex(R)
and the success of the PharmHouse stores are critical to the success of the
Company's business plan. Management hopes to continue reductions in operating
costs and to increase revenues through the pursuit of additional litigation
service contracts and aggressive marketing of our PharmHouse stores. While many
factors can impact future operations and these improvements cannot be assured of
success, the management of ITIS intends to take all actions deemed prudent and
necessary.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

ITIS is exposed to interest rate risk because additional financing may be
required. The interest rate that ITIS will be able to obtain on debt financing
will depend, among other things, on the financial and operational condition of
ITIS and external market conditions at the time such financing is sought.

At June 30, 2002 and December 31, 2001, ITIS holds investments that include
available-for-sale securities reflected at fair market value. While we have
recorded unrealized gain or loss on these securities in other comprehensive
income, ITIS is subject to market volatility in holding these securities in that
the actual gain or loss to be realized will depend on the market value of the
securities at the time of disposition.

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On January 26, 2001, in order to protect ITIS and its stockholders, ITIS filed a
lawsuit in United States District Court for the Southern District of Texas,
Houston Division, against Southridge Capital Management and several other
defendants, including Cootes Drive LLC, an alleged "straw man," for damages
resulting from alleged stock manipulation, federal securities law violations,
civil RICO, fraud, violations of Texas securities laws and other Texas statutes,
and conspiracy. The case also alleges misrepresentations by co-conspirators in
connection with certain funding transactions by the defendants with ITIS.  All
defendants filed a joint motion to transfer this case to New York to be
consolidated with the lawsuit filed against us as described below.  The United


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<PAGE>
States District Judge granted this motion and the case has been transferred to
the Southern District of New York. The defendants filed motions to dismiss the
case, and on July 17, 2002, the Judge issued an opinion refusing dismissal. The
case is ongoing, and discovery is underway. We intend to prosecute the case
vigorously. Our litigation counsel has advised us that the case is not
sufficiently advanced to evaluate the outcome, but that resolution of the suit
is anticipated in accordance with the Judge's July 17, 2002 ruling which states,
"the court is fully prepared to assist the parties in moving this case forward
to trial without undue delay."

On February 5, 2001, Cootes Drive LLC filed a suit against ITIS in the Southern
District of New York alleging breach of one of the financing agreements with us
for our failure to honor a conversion of its preferred shares to common stock.
The suit seeks monetary damages of $10,000 per day and seeks to compel ITIS to
issue shares of common stock to Cootes Drive LLC.  ITIS filed an answer to this
lawsuit. Cootes Drive LLC amended their complaint in order to add allegations
that ITIS is in default on a $500,000 promissory note in favor of Cootes Drive
LLC (the alleged default occurring after the filing of ITIS's suit against
Cootes Drive LLC and others); that ITIS has not honored a notice of redemption
of preferred shares held by Cootes Drive LLC in the amount of $2,214,012
(allegedly occurring after the filing of ITIS's suit against Southridge Capital
Management, Cootes Drive LLC, and others); and that ITIS defrauded Cootes Drive
by failing to disclose material information with respect to the background of a
key officer at ITIS.  ITIS's answer was timely filed on July 20, 2001. The
preferred shares and the associated funding transactions at issue are the
subject matter of ITIS's suit against Southridge Capital Management and others.
ITIS intends to defend this case vigorously.  This case has been consolidated
with the ITIS case (above) and the parties have been realigned so that ITIS is
the plaintiff and Cootes Drive is the defendant. Litigation counsel has advised
us that the case is not sufficiently advanced to evaluate the outcome, but that
resolution of the suit is anticipated in accordance with the Judge's July 17,
2002 ruling which states, "the court is fully prepared to assist the parties in
moving this case forward to trial without undue delay."

John M. O'Quinn, our Texas-based litigation counsel, has agreed to represent
ITIS and our directors, if necessary, in all of these lawsuits on a 50%
contingent fee basis, with his law firm paying all expenses of the litigation.
The fee will be calculated after all expenses have been reimbursed to Mr.
O'Quinn's law firm.

On June 4, 2001, Cootes Drive LLC filed a suit in Delaware against certain
directors of ITIS on behalf of itself as a holder of preferred stock and
allegedly derivatively on behalf of ITIS, alleging that the directors breached
their fiduciary duty to the stockholders by approving repayment in common stock
of loans made to ITIS by its directors. This suit was filed in the Court of
Chancery of Delaware in and for New Castle County. The suit has been dismissed
by Order of the Court entered February 15, 2002.

On July 18, 2002 HEB Grocery Company, LP, the previous landlord of ITIS, filed a
lawsuit in Texas District Court in Houston seeking damages in a presently
unspecified amount for alleged breach by ITIS of the lease for its prior
location. The answer date for ITIS has not yet been reached. ITIS intends to
answer and vigorously defend this suit on the grounds that HEB did not perform
its obligations, including repairing the roof, preventing mold, providing
adequate and accurately measured utilities, and others.

ITIS is also a defendant in other lawsuits related to matters normally
incidental to the Company's business. No individual case, or group of related
cases presenting substantially similar issues of law or fact, exceeds 10% of the
Company's current assets or is expected to have a material effect on the manner
in which the Company conducts its business.


                                       29
<PAGE>
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

During the three months ended June 30, 2002 ITIS issued unregistered shares of
its common stock to the persons described below:

     1.   In April 2002, we issued 1,601,565 shares of our common stock to
          Phoenix Energy Consulting Services, Inc., representing full payment of
          principal and interest due on a demand promissory note in the
          principal amount of $100,000.

     2.   In April 2002, we issued 257,143 shares of our common stock to a
          vendor as consideration for professional services rendered.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits


EXHIBIT        DESCRIPTION
NUMBER
-------        -----------

2.1            Agreement and Plan of Reorganization dated March 25, 1999,
               between Planet Resources, National Law Library and the
               stockholders of National Law Library (incorporated by reference
               to Exhibit A to ITIS's Form 8-K filed on April 2, 1999).

2.2            First Amendment to Agreement and Plan of Reorganization dated as
               of March 30, 1999, between Planet Resources, National Law Library
               and the stockholders of National Law Library (incorporated by
               reference to Exhibit 2.2 to ITIS's Form 10-K filed on October 13,
               1999).

2.3            Agreement and Plan of Distribution dated as of March 25, 1999,
               between Planet Resources, New Planet Resources, Inc. and National
               Law Library (incorporated by reference to Annex B to ITIS's
               Information Statement Pursuant to Section 14(c) of the Securities
               Exchange Act of 1934 filed on April 19, 1999).

2.4            Contract for Sale of Stock, dated November 8, 1999, by and
               between John R. Marsh, Ronald W. Hogan, and Charles E. Bowen,
               Jr., as Sellers, and ITIS, as Buyer (incorporated by reference to
               Exhibit 2.1 to ITIS's Form 8-K filed on November 30, 1999).

2.5            Option Agreement to Purchase Stock, dated November 8, 1999, by
               and between ITIS, as Seller, and Ronald W. Hogan, as Optionee
               (incorporated by reference to Exhibit 2.2 to ITIS's Form 8-K
               filed on November 30, 1999).

2.6            Option Agreement to Purchase Stock, dated November 8, 1999, by
               and between ITIS, as Seller, and Charles E. Bowen, Jr., as
               Optionee (incorporated by reference to Exhibit 2.3 to ITIS's Form
               8- K filed on November 30, 1999).

2.7            Option Agreement to Purchase Stock, dated November 8, 1999, by
               and between ITIS, as Seller, and John R. Marsh, as Optionee
               (incorporated by reference to Exhibit 2.4 to ITIS's Form 8-K
               filed on November 30, 1999).


                                       30
<PAGE>
EXHIBIT        DESCRIPTION
NUMBER
-------        -----------

2.8            Contract of Sale, dated December 8, 1999, by and between David P.
               Harriman, Andrew Wyszkowski, Eugene Meyung, Suzanne Meyung, and
               Christina Brown, as Sellers, and ITIS, as Buyer (incorporated by
               reference to Exhibit 2.7 to ITIS's Form 8-K filed December 23,
               1999).

2.9            Stock Exchange Agreement by and among ITIS and the shareholders
               of ITIS relating to the acquisition of all of the outstanding
               stock of ITIS, dated April 30, 2000 (incorporated by reference to
               Exhibit 2.9 to ITIS's Form 10-K/A filed on May 24, 2000).

2.10           Stock Purchase Agreement by and between ITIS and Jeremiah Kane,
               dated July 27, 2000, as amended by that amendment dated effective
               October 1, 2000 (Incorporated by reference to Exhibit 2.10 to the
               Registrant's Form 8-K filed with the SEC on October 16, 2000).

2.11           Stock Purchase Agreement by and between ITIS and John McHugh,
               dated July 27, 2000, as amended by that amendment dated effective
               October 1, 2000 (Incorporated by reference to Exhibit 2.11 to the
               Registrant's Form 8-K filed with the SEC on October 16, 2000).

2.12           Stock Purchase Agreement by and between ITIS and Jack Ben Ezra,
               dated July 27, 2000, as amended by that amendment dated effective
               October 1, 2000 (Incorporated by reference to Exhibit 2.12 to the
               Registrant's Form 8-K filed with the SEC on October 16, 2000).

2.13           Stock Exchange Agreement by and among ITIS and all of the
               shareholders of Venco Compliance, Inc., a Texas corporation,
               dated effective October 1, 2000 (Incorporated by reference to
               Exhibit 2.13 to the Registrant's Form 8-K filed with the SEC on
               October 16, 2000).

2.14           Amended and Restated Agreement and Plan of Distribution dated as
               of March 13, 2001, between Planet Resources, National Law Library
               and the stockholders of National Law Library.

3.1            Amended and Restated Certificate of Incorporation of ITIS
               (incorporated by reference to the Annex A of ITIS's Definitive
               Proxy Statement on Schedule 14A filed on January 31, 2000).

3.2            Bylaws of ITIS, as amended (incorporated by reference to Exhibit
               3.2 to ITIS's Form 10-K filed on October 13, 1999).

3.3            Certificate of Designation for ITIS's 5% Series A Convertible
               Preferred Stock (incorporated by reference to Exhibit 3.3 to
               ITIS's Form 10-K/A filed on May 24, 2000).

3.4            2001 Executive Stock Option Plan dated effective March 15, 2001
               (incorporated by reference to Exhibit 4.4 to ITIS's Registration
               Statement on Form S-8 filed on March 30, 2001).

10.1           Stock Option Agreement between ITIS and Hunter M.A. Carr
               (incorporated by reference to Exhibit D to Schedule 13D filed on
               October 12, 1999, by Hunter M.A. Carr).

10.2           Stock Option Agreement between ITIS and Jack I. Tompkins
               (incorporated by reference to Exhibit D to Schedule 13D filed on
               October 12, 1999, by Jack I. Tompkins).

10.3           Consulting Agreement between National Law Library and Castle
               Development, Ltd. (incorporated by reference to Exhibit 4(A) to
               ITIS's Registration Statement on Form S-8 filed on April 2,
               1999).


                                       31
<PAGE>
EXHIBIT        DESCRIPTION
NUMBER
-------        -----------

10.4           Continuing Service Agreement between National Law Library and
               ITIS, effective December 1, 1998 (incorporated by reference to
               Exhibit 10.4 to Internet Law's Form 10-K filed on October 13,
               1999).

10.5           Management and Financial Services Agreement between National Law
               Library and ITIS, effective March 1, 1999 (incorporated by
               reference to Exhibit 10.5 to ITIS's Form 10-K filed on October
               13, 1999).

10.6           Software Development and Consulting Agreement between National
               Law Library and ITIS, dated March 24, 1999 (incorporated by
               reference to Exhibit 10.6 to ITIS's Form 10-K filed on October
               13, 1999).

10.7           Option Agreement to Purchase Stock, effective March 30, 1999, by
               and between ITIS and Jonathan Gilchrist (incorporated by
               reference to Exhibit 10.7 to ITIS's Form 10-K filed on October
               13, 1999).

10.8           Planet Resources 1999 Stock Option Plan (incorporated by
               reference to Exhibit 10.1 to ITIS's Form 10-K/A filed on October
               28, 1999).

10.9           Planet Resources Employee Stock Purchase Plan (incorporated by
               reference to Exhibit 10.2 to ITIS's Form 10-K/A filed on October
               28, 1999).

10.10          New Planet Resources, Inc. Stock Incentive Plan (incorporated by
               reference to Exhibit 10.3 to ITIS's Form 10-K/A filed on October
               28, 1999).

10.11          Planet Resources 1999 Director Option Plan (incorporated by
               reference to Exhibit 10.4 to ITIS's Form 10-K/A filed on October
               28, 1999).

10.12          Consulting and Option Agreement by and between ITIS, Frank Fisher
               and Steve Tebo, dated January 22, 2000, as amended (incorporated
               by reference to Exhibit 10.12 to ITIS's Form 10-K/A filed on May
               24, 2000).

10.13          Convertible Preferred Stock Purchase Agreement by and among ITIS
               and Cootes Drive LLC, dated May 11, 2000 (incorporated by
               reference to Exhibit 10.13 to ITIS's Form 10-K/A filed on May 24,
               2000).

10.14          Registration Rights Agreement by and among ITIS and Cootes Drive
               LLC, dated May 11, 2000 (incorporated by reference to Exhibit
               10.15 to ITIS's Form 10-K/A filed on May 24, 2000).

10.15          Warrant to purchase 200,000 shares of ITIS's common stock issued
               to Aspen Capital Partners, Inc., dated May 19, 2000 (incorporated
               by reference to Exhibit 10.16 to ITIS's Form 10-K/A filed on May
               24, 2000).

10.16          Securities Purchase Agreement by and between ITIS and Cootes
               Drive LLC, dated November 20, 2000.


                                       32
<PAGE>
EXHIBIT        DESCRIPTION
NUMBER
-------        -----------

10.17          Amended and Restated Registration Rights Agreement by and between
               ITIS and Cootes Drive LLC, dated November 20, 2000.

10.18          Warrant to purchase 250,000 shares of ITIS's common stock issued
               to Cootes Drive LLC, dated May 11, 2000.

10.19          Warrant to purchase 250,000 shares of ITIS's common stock issued
               to Cootes Drive LLC, dated November 20, 2000.

10.20          Minimum Commitment Warrant to purchase up to 100,000 shares of
               ITIS's common stock issued to Cootes Drive LLC, dated November
               20, 2000.

10.21          Vesting Warrant to purchase 1,000 shares of ITIS's common stock
               per $100,000 invested issued to Cootes Drive LLC, dated November
               20, 2000.

10.22          Convertible Promissory Note made by ITIS in favor of Cootes Drive
               LLC in the principal amount of $500,000, dated December 5, 2000.

10.23          Warrant to purchase 41,650 shares of ITIS's common stock issued
               to Cootes Drive, LLC, dated December 5, 2000.

10.24          Side Letter Agreement dated December 5, 2000, by and between ITIS
               and Cootes Drive LLC to enter into a convertible Promissory Note
               financing arrangement for $500,000.

10.25          Consulting Agreement by and between Venco Compliance, Inc. and
               Cathryn Tull d/b/a First Choice Consulting, dated October 1, 2000
               (incorporated by reference to Exhibit 10.17 to the Registrant's
               Form 8-K filed with the SEC on October 16, 2000).

10.26          Consulting Agreement by and between Venco Compliance, Inc. and
               Cathryn Tull d/b/a First Choice Consulting, dated October 1, 2000
               (incorporated by reference to Exhibit 10.17 to ITIS's Form 8-K
               filed with the SEC on October 16, 2000).

10.27          Warrant to purchase 300,000 shares of ITIS's common stock issued
               to James W. Christian dated February 22, 2001 (incorporated by
               reference to Exhibit 10.27 to ITIS's Form 10-Q filed with the SEC
               on May 15, 2001).

10.28*         Warrant to purchase 24,649,771 shares of ITIS's common stock
               issued to Hunter M.A. Carr dated May 22, 2002.

10.29*         Warrant to purchase 21,073,520 shares of ITIS's common stock
               issued to George A. Roberts dated May 22, 2002.

10.30*         Warrant to purchase 2,041,020 shares of ITIS's common stock
               issued to W. Paul Thayer dated May 22, 2002.

16.1           Letter, dated April 5, 2000, from Harper & Pearson Company to the
               Securities and Exchange Commission (incorporated by reference to
               Exhibit 16.1 to ITIS's Form 8-K/A filed on April 5, 2000).


                                       33
<PAGE>
EXHIBIT        DESCRIPTION
NUMBER
-------        -----------

16.2           Letter, dated February 21, 2001 from Arthur Andersen LLP to the
               Securities and Exchange Commission (incorporated by reference to
               Exhibit 16.2 to ITIS's Form 8-K filed on February 23, 2001)

21*            Subsidiaries of ITIS.

     *Filed herewith

     (b)  Reports on Form 8-K

     No reports on Form 8-K were filed during the quarter for which this report
     is filed.


                                       34
<PAGE>
                                   SIGNATURES

     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.


                                    ITIS INC.




August 19, 2002                     /s/ Hunter M.A. Carr
                             -------------------------------
                                    Hunter M.A. Carr
                                    President and Chief Executive Officer

                                   /s/ Joanna Hoover
                             -------------------------------
August 19, 2002                    Joanna Hoover
                                   Principal Accounting Officer


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<PAGE>