# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

# FORM 10-Q



| | [X] | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the
quarterly period ended June 30, 2005
| | --- | ------------------------------------------------------------------------------------------------------------------------------------

| | [_] | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the
transition period from  to
| | --- | ---------------------------------------------------------------------------------------------------------------------------

Commission file number:
0-22693

|InfoTech USA, Inc.                                    
|------------------------------------------------------
|(Exact Name of Registrant as Specified in Its Charter)

|Delaware                                                       | 11-2889809                         
|-------------------------------------------------------------- | -----------------------------------
|(State or Other Jurisdiction of
Incorporation or Organization) | (I.R.S. EmployerIdentification No.)

|7 Kingsbridge Road, Fairfield, New Jersey  07004                          
|--------------------------------------------------------------------------
|(Address, including zip code, of registrants principal executive offices)

|Registrants telephone number, including area code:
     (973) 227-8772
|-----------------------------------------------------------------------

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  [  ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     Yes  [X]
    No  [  ]

As
of August 11, 2005, 4,895,998 shares of our common stock were outstanding.

---

# InfoTech USA, Inc.

# Table of Contents

|        |  | Item                  |  |                                                                                       |  | Page | 
|------- |  | --------------------- |  | ------------------------------------------------------------------------------------- |  | ---- | 
|        |  |                       |  |                                                                                       |  |      | 
|Part I  |  | Financial Information |  | 1                                                                                     | 
|        |  | Item 1                |  | Consolidated Condensed Financial Statements                                           |  | 1    | 
|        |  | Item 2                |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 7    | 
|        |  | Item 3                |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 13   | 
|        |  | Item 4                |  | Controls and Procedures                                                               |  | 13   | 
|        |  |                       |  |                                                                                       |  |      | 
|Part II |  | Other Information.    |  | 14                                                                                    | 
|        |  | Item 6                |  | Exhibits                                                                              |  | 14   | 

SignatureExhibits

---

# Part I      Financial
Information

# Item 1      Consolidated
Condensed Financial Statements

|InfoTech USA, Inc. and
Subsidiaries  
|-------------------------------------
|Consolidated Condensed Balance Sheets
|(in thousands, except
par value)     

---

|                                                            |  | June 30, 2005 |   | September 30, 2004 |  
|----------------------------------------------------------- |  | ------------- | - | ------------------ | -
|                                                            |  |               |   |                    |  
|                                                            |  | (unaudited)   |   |                    |  
|Assets                                                      |  |               |   |                    |  
|Current assets:                                             | 
|Cash and cash equivalents                                   |  | $        458  |   | $        291       |  
|Accounts receivable, net of allowance for doubtful accounts | 
|of $103 and $97                                             |  | 3,472         |   | 3,377              |  
|Inventories                                                 |  | 452           |   | 113                |  
|Note receivable - Parent Company                            |  | 1,000         |   | 1,000              |  
|Other current assets                                        |  | 215           |   | 414                |  
|                                                            |  |               |   |                    |  
|Total current assets                                        |  | 5,597         |   | 5,195              |  
|Property, equipment and improvements, net                   |  | 145           |   | 183                |  
|Goodwill, net                                               |  | 1,453         |   | 1,453              |  
|Other assets                                                |  | 186           |   | 174                |  
|                                                            |  |               |   |                    |  
|Total assets                                                |  | $   7,381     |   | $   7,005          |  
|                                                            |  |               |   |                    |  
|Liabilities and Stockholders Equity                        | 
|Current liabilities:                                        | 
|Line of credit - Wells Fargo                                |  | $      11     |   | $    812           |  
|Amounts due to Parent Company                               |  | 94            |   | 95                 |  
|Accounts payable                                            |  | 1,251         |   | 264                |  
|Accrued expenses and other liabilities                      |  | 1,073         |   | 921                |  
|                                                            |  |               |   |                    |  
|Total liabilities                                           |  | 2,429         |   | 2,092              |  
|                                                            |  |               |   |                    |  
|Commitments and contingencies                               |  |              |   |                   |  
|                                                            |  |               |   |                    |  
|Stockholders equity:                                       | 
|Preferred shares:                                           | 
|Authorized 5,000 shares, no par value; none issued          |  |              |   |                   |  
|Common shares:                                              | 
|Authorized 80,000 shares, $.01 par value; 5,757 shares      | 
|issued; 4,896 shares outstanding                            |  | 58            |   | 58                 |  
|Additional paid-in capital                                  |  | 6,653         |   | 6,653              |  
|Accumulated deficit                                         |  | (841          | ) | (880               | )
|Treasury stock, 861 shares, carried at cost                 |  | (918          | ) | (918               | )
|                                                            |  |               |   |                    |  
|Total stockholders equity                                  |  | 4,952         |   | 4,913              |  
|                                                            |  |               |   |                    |  
|Total liabilities and stockholders equity                  |  | $ 7,381       |   | $ 7,005            |  
|                                                            |  |               |   |                    |  

See the accompanying notes to consolidated condensed financial statements.

1

---

|InfoTech USA, Inc. and
Subsidiaries              
|-------------------------------------------------
|Consolidated Condensed Statements of Operations  
|(in thousands, except per share data)
(unaudited)

---

|                                                             |  | For the three months endedJune 30 |  | For the nine months endedJune 30 |  
|------------------------------------------------------------ |  | --------------------------------- |  | -------------------------------- | -
|                                                             |  |                                   |  |                                  |  
|                                                             |  | 2005                              |  | 2004                             |  
|                                                             |  |                                   |  |                                  |  
|Revenue:                                                     | 
|Product revenue                                              |  | $   3,815                         |  | $   4,022                        |  
|Service revenue                                              |  | 410                               |  | 855                              |  
|                                                             |  |                                   |  |                                  |  
|Total revenue                                                |  | 4,225                             |  | 4,877                            |  
|                                                             |  |                                   |  |                                  |  
|Cost of sales:                                               | 
|Cost of products sold                                        |  | 2,984                             |  | 3,553                            |  
|Cost of services sold                                        |  | 316                               |  | 544                              |  
|                                                             |  |                                   |  |                                  |  
|Total cost of products and services sold                     |  | 3,300                             |  | 4,097                            |  
|                                                             |  |                                   |  |                                  |  
|Gross profit                                                 |  | 925                               |  | 780                              |  
|                                                             |  |                                   |  |                                  |  
|Selling, general and administrative expenses                 |  | 852                               |  | 777                              |  
|Depreciation and amortization                                |  | 23                                |  | 46                               |  
|                                                             |  |                                   |  |                                  |  
|Income (loss) from operations                                |  | 50                                |  | (43                              | )
|Other expense                                                |  | 9                                 |  | 14                               |  
|Interest expense (income)                                    |  | 15                                |  | (29                              | )
|                                                             |  |                                   |  |                                  |  
|Income (loss) before income tax expense     (benefit)        |  | 26                                |  | (28                              | )
|Income tax expense (benefit)                                 |  | 1                                 |  | 3                                |  
|                                                             |  |                                   |  |                                  |  
|Net income (loss)                                            |  | $     25                          |  | $   (31                          | )
|                                                             |  |                                   |  |                                  |  
|Net income (loss) per common share -
      basic and diluted |  | $  0.01                           |  | $(0.01                           | )
|                                                             |  |                                   |  |                                  |  
|Weighted average number of common
      shares outstanding:  | 
|Basic                                                        |  | 4,896                             |  | 4,896                            |  
|                                                             |  |                                   |  |                                  |  
|Diluted                                                      |  | 5,303                             |  | 4,896                            |  
|                                                             |  |                                   |  |                                  |  

See the accompanying notes to consolidated condensed financial statements.

2

---

|InfoTech USA, Inc. and
Subsidiaries                     
|--------------------------------------------------------
|Consolidated Condensed Statement of Stockholders Equity
|(in thousands)
(unaudited)                              

---

|                         |  | Common Stock |  | Additional |  |             |  |          |   | Total         | 
|------------------------ |  | ------------ |  | ---------- |  | ----------- |  | -------- | - | ------------- | 
|                         |  |              |  | Paid-In    |  | Accumulated |  | Treasury |   | Stockholders' | 
|                         |  | Number       |  | Amount     |  | Capital     |  | Deficit  |   | Number        | 
|                         |  |              |  |            |  |             |  |          |   |               | 
|Balance, October 1, 2004 |  | 5,757        |  | $58        |  | $6,653      |  | $(880    | ) | 861           | 
|Net income               |  |             |  |           |  |            |  | 39       |   |              | 
|                         |  |              |  |            |  |             |  |          |   |               | 
|Balance, June 30, 2005   |  | 5,757        |  | $58        |  | $6,653      |  | $(841    | ) | 861           | 
|                         |  |              |  |            |  |             |  |          |   |               | 

See the accompanying notes to consolidated condensed financial statements.

3

---

|InfoTech USA, Inc. and
Subsidiaries            
|-----------------------------------------------
|Consolidated Condensed Statements of Cash Flows
|(in thousands)
(unaudited)                     

---

|                                                                |  | For the nine months endedJune 30, |  
|--------------------------------------------------------------- |  | --------------------------------- | -
|                                                                |  | 2005                              |  
|                                                                |  |                                   |  
|Cash flows from operating activities                            | 
|Net income (loss)                                               |  | $      39                         |  
|Adjustments to reconcile net income (loss) to net cash provided | 
|by (used in) operating activities:                              | 
|Depreciation and amortization                                   |  | 69                                |  
|Deferred income taxes                                           |  |                                  |  
|Changes in operating assets and liabilities                     | 
|Increase in accounts receivable                                 |  | (95                               | )
|(Increase) decrease in inventories                              |  | (339                              | )
|Decrease (increase) in other current assets                     |  | 199                               |  
|Increase in other assets                                        |  | (12                               | )
|Increase (decrease) in accounts payable and accrued             | 
|expenses                                                        |  | 1,139                             |  
|                                                                |  |                                   |  
|Net cash provided by (used in) operating activities             |  | 1,000                             |  
|                                                                |  |                                   |  
|Cash flows from investing activities                            | 
|Capital expenditures                                            |  | (31                               | )
|Payments received on loan to Parent Company                     |  |                                  |  
|Proceeds from disposition of property and equipment             |  |                                  |  
|                                                                |  |                                   |  
|Net cash used in investing activities                           |  | (31                               | )
|                                                                |  |                                   |  
|Cash flows from financing activities                            | 
|Net (payments) borrowings on Wells Fargo line of credit         |  | (801                              | )
|Payments of capital lease obligations                           |  |                                  |  
|Net payments on Parent Company line of credit                   |  | (1                                | )
|                                                                |  |                                   |  
|Net cash (used in) provided by financing activities             |  | (802                              | )
|                                                                |  |                                   |  
|Net increase (decrease) in cash and cash equivalents            |  | 167                               |  
|                                                                |  |                                   |  
|Cash and cash equivalents - beginning of period                 |  | 291                               |  
|                                                                |  |                                   |  
|Cash and cash equivalents - end of period                       |  | $    458                          |  
|                                                                |  |                                   |  

See the accompanying notes to consolidated condensed financial statements.

4

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|InfoTech USA, Inc. and
Subsidiaries                 
|----------------------------------------------------
|Notes to Consolidated
Condensed Financial Statements
|(in thousands, except
per share data)
(unaudited)   

---

# 1.         Basis of Presentation

In
the opinion of management, the accompanying consolidated condensed financial statements
reflect all adjustments, consisting of normal recurring adjustments, necessary to present
fairly the financial position of InfoTech USA, Inc. and its wholly-owned subsidiaries (the
Company) as of June 30, 2005, their results of operations for the three and
nine months ended June 30, 2005 and 2004, changes in stockholders equity for the
nine months ended June 30, 2005 and cash flows for the nine months ended June 30, 2005 and
2004. Information included in the consolidated condensed balance sheet as of September 30,
2004 has been derived from the audited consolidated balance sheet included in the
Companys Annual Report on Form 10-K for the year ended September 30, 2004 (the
10-K) previously filed with the Securities and Exchange Commission (the
SEC). Pursuant to the rules and regulations of the SEC, certain information
and disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been
condensed or omitted from these consolidated condensed financial statements unless
significant changes have taken place since the end of the most recent fiscal year.
Accordingly, these unaudited consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements, notes to consolidated financial
statements and the other information in the 10-K.

The
consolidated results of operations for the three and nine months ended June 30, 2005 are
not necessarily indicative of the results to be expected for the full year ending
September 30, 2005.

# 2.        Principles of
Consolidation

The
financial statements include the accounts of InfoTech USA, Inc. and its wholly-owned
subsidiaries. All significant intercompany accounts and transactions have been eliminated
in consolidation.

# 3.        Inventories

Inventories
at June 30, 2005 and September 30, 2004 consist of:

|                                      |  | June 30, 2005 |   | September 30, 2004 |  
|------------------------------------- |  | ------------- | - | ------------------ | -
|                                      |  |               |   |                    |  
|Finished goods                        |  | $ 480         |   | $ 142              |  
|Allowance for excess and obsolescence |  | (28           | ) | (29                | )
|                                      |  |               |   |                    |  
|Totals                                |  | $ 452         |   | $ 113              |  
|                                      |  |               |   |                    |  

# 4.        Net Income (Loss) Per Common Share

As
further explained in Note 1 to the Companys audited financial statements included in
the 10-K previously filed with the SEC, the Company presents basic net income (loss) per
common share and, if appropriate, diluted net income per common share in accordance with
the provisions of Statement of Financial Accounting Standards No. 128, Earnings per
Share.

At
June 30, 2005 and 2004, the Company had options and warrants outstanding for the purchase
of shares of common stock upon exercise as follows:

|                                           |  | June 30, | 
|------------------------------------------ |  | -------- | 
|                                           |  |          | 
|                                           |  | 2005     | 
|                                           |  |          | 
|Employee stock options                     |  | 3,825    | 
|Warrants (exercisable at $.5775 per share) |  | 300      | 
|                                           |  |          | 
|Totals                                     |  | 4,125    | 
|                                           |  |          | 

The
assumed effect of the exercise of employee stock options and warrants for the three and
nine months ended June 30, 2005 had an immaterial effect on diluted earnings per share
based on 5,303 and 5,207 diluted weighted average shares outstanding, respectively. Since
the Company had a net loss for the three and nine months ended June 30, 2004, the assumed
effects of the exercise of employee stock options and warrants would have been
anti-dilutive.

5

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# 5.        Stock-Based
Compensation

The
Company measures compensation cost related to stock options issued to employees using the
intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No.
25, Accounting for Stock Issued To Employees. The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting Standards No. 123
(SFAS 123), Accounting for Stock-Based Compensation and Statement
of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation
 Transition and Disclosures (SFAS 148) of net income or loss as if
the Black-Scholes option pricing model, which is a fair value based method of accounting
for stock options under SFAS 123, had been applied if such amounts differ materially from
the historical amounts. Accordingly, no earned or unearned compensation cost was
recognized in the accompanying consolidated condensed financial statements for the stock
options granted by the Company to its employees since all of those options have been
granted at exercise prices that equaled or exceeded the market value at the date of grant.
As a result of amendments to SFAS 123, the Company will be required to expense the fair
value of employee stock options beginning with its fiscal quarter ending December 31,
2006. The Companys historical net income (loss) and net income (loss) per common
share and pro forma net income (loss) and net income (loss) per common share assuming
compensation cost had been determined based on the fair value at the grant date for all
awards by the Company and amortized over the vesting period consistent with the provisions
of SFAS 123 are set forth below:

|                                  |  | Three Months EndedJune 30, |   | Nine Months EndedJune 30 |  
|--------------------------------- |  | -------------------------- | - | ------------------------ | -
|                                  |  |                            |   |                          |  
|                                  |  | 2005                       |   | 2004                     |  
|                                  |  |                            |   |                          |  
|Net income (loss)  as reported   |  | $   25                     |   | $  (31                   | )
|Deduct total stock-based employee | 
|compensation expense              | 
|determined under a fair value     | 
|based method for all awards,      | 
|net of related tax effects        |  | (23                        | ) | (71                      | )
|                                  |  |                            |   |                          |  
|Net income (loss)  pro forma     |  | $   2                      |   | $ (102                   | )
|                                  |  |                            |   |                          |  
|Net income (loss) per share:      | 
|Basic and diluted  as reported   |  | $ 0.01                     |   | $(0.01                   | )
|                                  |  |                            |   |                          |  
|Basic and diluted  pro forma     |  | $ 0.00                     |   | $(0.02                   | )
|                                  |  |                            |   |                          |  

There
were no options issued during the three and nine months ended June 30, 2005. There were
200 options issued during the three and nine months ended June 30, 2004.

# 6.         Related Party
Transactions

On
June 27, 2003, the Company loaned $1.0 million to its Parent Company, Applied Digital
Solutions, Inc. (Applied Digital). Under the terms of the loan agreement,
interest, which accrues at an annual rate of 16%, is due and payable on a monthly basis.
The Company earned $40 in interest income during the three months ended June 30, 2005 and
2004, and $121 during the nine months ended June 30, 2005 and 2004. The principal and any
unpaid interest is due June 30, 2006. As collateral for the loan, Applied Digital has
pledged 750 shares of common stock of Digital Angel Corporation (Digital
Angel), a majority-owned subsidiary of Applied Digital. As of June 30, 2005, the
market value of the shares of stock of Digital Angel was $2,850 based on the closing price
of Digital Angels common stock. The Company assigned its rights under the loan
receivable from Applied Digital to Wells Fargo Business Credit, Inc. (Wells
Fargo) in connection with a credit agreement.

# 7.        Financing Agreements

The
Companys financing agreement with Wells Fargo, entered into on June 30, 2004,
provides financing up to $4,000. Amounts borrowed under the credit facility bear interest
at Wells Fargos prime rate plus 3%. Unless earlier terminated, the credit facility
matures on June 29, 2007 and automatically renews for successive one-year periods
thereafter unless terminated by Wells Fargo or the Company. The Company also has a
financing agreement with IBM Credit in effect as of June 30, 2005 that provides for
inventory financing up to $600 and is secured by a letter of credit in the amount of $600.
The new wholesale financing agreement with IBM Credit was executed in connection with the
Wells Fargo credit facility and replaced the previous IBM Credit Agreement for Wholesale Financing.

6

---

Under
the terms of the credit agreement, Wells Fargo may, at its election, make advances from
time to time in the amounts requested by the Company up to an amount equal to the
difference between the borrowing base and the sum of (i) the amount outstanding under the
credit facility and (ii) the $600 letter of credit outstanding under the credit facility
which secures our obligations to IBM Credit under the wholesale financing agreement. The
borrowing base is equal to the lesser of (x) $4,000 or (y) the amounts equal to (a) 85% of
our eligible accounts receivable plus (b) the amount of available funds in our deposit
account with Wells Fargo minus (c) certain specified reserves. As of June 30, 2005, the
Company had a borrowing base of approximately $1,074 and availability of approximately
$463 under the credit facility.

The
Company had borrowings under the Wells Fargo line of credit of $11 and $1,212 at June 30,
2005 and 2004, respectively. Borrowings under the IBM Credit financing arrangement
amounted to $378 at June 30, 2005, and are included in either accounts payable or accrued
expenses and other liabilities. The Company did not have any borrowings under the IBM
Credit financing arrangement at June 30, 2004.

The
credit facility requires the Company to maintain certain financial covenants, and the
Company was in compliance with all its financial covenants under the credit facility as of
June 30, 2005.

On
May 19, 2005, the Company entered into an arrangement with one of its primary suppliers,
Ingram Micro Inc. (Ingram), pursuant to which Ingram provides the Company with
a credit line of up to $500. Payments for purchases under this credit line are due and
payable within 30 days from the date of invoice. Amounts not repaid within 10 days past
due bear interest at 11⁄2% per month. The credit line is secured by a security
interest in substantially all of the Companys equipment, inventory and accounts
receivable and by a $250 irrevocable letter of credit issued by Wells Fargo. Advances
under the credit line are subordinate and junior in right of payment to borrowings under
the Companys credit facility with Wells Fargo. As of June 30, 2005, the Company had
fully utilized the line of credit with Ingram and the borrowings are included in either
accounts payable or accrued expenses and other liabilities.

# 8.        Legal Matters

On
April 13, 2005, the Company entered into a Settlement Agreement and General Release with
its former President, Chief Executive Officer and director, Anat Ebenstein. Ms. Ebenstein
filed a complaint against the Company, Applied Digital and certain of Applied
Digitals officers and directors, on October 22, 2002 in the Superior Court of New
Jersey, Mercer County. Ms. Ebensteins complaint sought compensatory and punitive
damages of $1,000 arising from an alleged improper termination of her employment.

Under
the terms of the settlement agreement, Ms. Ebenstein agreed to release the Company and the
other defendants from any and all claims. Without admitting any wrongdoing, the Company
agreed to forgive a $20 loan payable by Ms. Ebenstein to the Company and to pay Ms.
Ebenstein $600, a portion of which will be in the form of an annuity. The Companys
employment practices liability insurance provider has agreed to cover 90% of the amount
payable by the Company under the settlement agreement less any remaining deductible under
the policy that has not been satisfied through the payment of defense costs.

In
prior periods, the Company accrued for anticipated legal and settlement costs, based on
estimates, which were in excess of the final legal and settlement costs. Accordingly, the
Company reversed the over-accrual in the quarter ended March 31, 2005, which resulted in a
favorable adjustment to the income statement for the nine months ended June 30, 2005 of
approximately $168.

# 9.        Operating Lease

On
April 14, 2005, the Company entered into an office lease with Faircorp Associates, L.L.C.
for the office space that it has been using for its headquarters, located at 7 Kingsbridge
Road, Fairfield, New Jersey. The term of the lease is five years, which is expected to
commence on the earlier of January 1, 2006 or the termination date of our existing
sublease agreement relating to the same space. The Company has a renewal option for one
additional five-year period. The monthly lease rate will be $13. The lease obligations
under this lease will be approximately $114 for fiscal 2006, $152 for fiscal 2007, $152
for fiscal 2008, $152 for fiscal 2009, $152 for fiscal 2010 and $38 thereafter.

7

---

# Item 2     Managements
Discussion and Analysis of Financial Condition and Results of Operations

This
discussion should be read in conjunction with the accompanying consolidated condensed
financial statements and related notes contained in Item 1 of this report as well as our
Annual Report on Form 10-K for the year ended September 30, 2004. Certain statements made
in this report may contain forward-looking statements. For a description of risks and
uncertainties relating to such forward-looking statements, see the section entitled
Forward-Looking Statements and Associated Risk later in this Item 2.

# Business Description

We
are a Delaware corporation incorporated in 1997. We are a full service provider of
information technology, or IT, services and products in the New York City metropolitan
area and in New Jersey. We specialize in tailoring our approach to the individual customer
needs. We provide IT consulting, networking, remote access, procurement, storage area
networks, deployment, integration and migration services. We also provide on-going system
and network maintenance services.

# Results of Operations

We
operate in a highly competitive industry, which in turn places constant pressures on
maintaining gross profit margins. Many of our sales are high volume equipment sales, which
produce lower than average gross profit margins, but are often accompanied by a service
arrangement, which yields higher than average gross profit margins.

The
following table sets forth, for the periods indicated, the percentage relationship to
total revenue of certain items in our consolidated condensed statements of operations.

|                                                     |  | Three Months EndedJune 30, |   | Nine Months EndedJune 30, |  
|---------------------------------------------------- |  | -------------------------- | - | ------------------------- | -
|                                                     |  |                            |   |                           |  
|                                                     |  | 2005                       |   | 2004                      |  
|                                                     |  |                            |   |                           |  
|Revenue:                                             | 
|Product revenue                                      |  | 90.3                       | % | 82.5                      | %
|Service revenue                                      |  | 9.7                        |   | 17.5                      |  
|                                                     |  |                            |   |                           |  
|Total revenue                                        |  | 100.0                      |   | 100.0                     |  
|                                                     |  |                            |   |                           |  
|Cost of sales:                                       | 
|Cost of products sold                                |  | 70.6                       |   | 72.9                      |  
|Cost of services sold                                |  | 7.5                        |   | 11.1                      |  
|                                                     |  |                            |   |                           |  
|Total cost of products and services sold             |  | 78.1                       |   | 84.0                      |  
|                                                     |  |                            |   |                           |  
|Gross profit                                         |  | 21.9                       |   | 16.0                      |  
|Selling, general and administrative expenses         |  | 20.2                       |   | 15.9                      |  
|Depreciation and amortization                        |  | 0.5                        |   | 1.0                       |  
|                                                     |  |                            |   |                           |  
|Income (loss) from operations                        |  | 1.2                        |   | (0.9                      | )
|Other expense                                        |  | 0.2                        |   | 0.3                       |  
|Interest expense (income)                            |  | 0.4                        |   | (0.6                      | )
|                                                     |  |                            |   |                           |  
|Income (loss) before income tax expense
   (benefit) |  | 0.6                        |   | (0.6                      | )
|Income tax expense (benefit)                         |  | 0.0                        |   | 0.0                       |  
|                                                     |  |                            |   |                           |  
|Net income (loss)                                    |  | 0.6                        |   | (0.6                      | )
|                                                     |  |                            |   |                           |  

Three Months Ended June 30, 2005
Compared to the Three Months Ended June 30, 2004(in thousands unless otherwise noted)

Sales
for the quarter ended June 30, 2005 decreased $652, or 13.4%, to $4,225 from $4,877, for
the same quarter last year. The decrease was primarily due to a decrease in product sales
to some of our large customers compared to last year combined with a significant reduction
in service sales as a result of a drop in volume from a large service contract with IBM
Corporation. Product sales decreased by $207, or 5.1%, in the third quarter of 2005 to
$3,815, compared to $4,022 in the third quarter last year. Service sales decreased $445,
or 52.0%, from $855 in the quarter ended June 30, 2004 compared to $410 in the same
quarter this year. The decrease was primarily due to a drop in time and material services
sales related to a service contract with IBM Corporation. We do not expect the sales
volume from the IBM Corporation contract to return to last years levels. However, we
expect our overall sales volume for the last quarter of fiscal year 2005 to return to
levels at or above last year due to the improved IT market conditions and our continued
focus on high-end, Intel-based products and related services.

8

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Gross
profit increased by $145, or 18.6%, to $925 in the quarter ended June 30, 2005 compared to
$780 in the same quarter last year. The increase in gross profit was primarily due to
higher than usual product margins which was somewhat offset by low service gross margins.
Total gross margin increased to 21.9% from 16.0% in the third quarter of 2004. The
increase was due to a combination of favorable pricing from our vendors, stemming from
price drops and negotiated terms, and an increase in high-end product sales. This was
somewhat offset by low service margins stemming from an underutilization of technicians
and engineers during the third quarter. Product margins rose to 21.8% in the quarter ended
June 30, 2005 compared to 11.7% in the same quarter last year, while service margins
declined to 22.9% for the third quarter of 2005 from 36.4% in the third quarter of 2004.
We expect the service margins to improve during the last quarter of 2005 as a result of
improved utilization of our engineers due to upcoming projects, and our continued focus on
selling high-end products and related services.

Selling,
general and administrative expenses increased $75, or 9.7%, to $852 in the quarter ended
June 30, 2005, compared to $777 for the same quarter last in 2004. The increase was
primarily due to salary increases given to non-management personnel, higher selling
expense and commissions related to higher gross profit, and increased accounting expenses
associated with evaluation of our internal control required by Section 404 of the
Sarbanes-Oxley Act of 2002. We expect our management and administrative staff to be
sufficient to meet customer demand, however we may need to add additional personnel in the
sales and technical areas of the business as sales volume dictates. Accounting fees in
2005 are expected to remain higher than last year due to expenses related to Section 404
of the Sarbanes-Oxley Act of 2002.

Depreciation
and amortization expense for the third quarter of 2005 decreased $23, or 50.0%, from $46
in the third quarter of 2004 to $23 in the third quarter of 2005. The decrease was
primarily a result of certain assets being fully depreciated as of the end of fiscal year
2004.

Operating
income for the third quarter of 2005 was $50 compared to an operating loss of $43 for the
third quarter of 2004.

Interest
expense was $15 in the third quarter of 2005 compared to interest income of $29 in the
third quarter of 2004. The net interest expense for the quarter ended June 30, 2005 was a
result of interest expense of $55 incurred in connection with the Wells Fargo credit
facility, which was largely offset by interest income of $40 earned in connection with the
loan made to Applied Digital. The net interest income in the third quarter of last year
was a result of interest income of $41 earned in connection with the loan made to Applied
Digital and interest expense of $12 which was primarily interest expense in connection
with the IBM Credit financing arrangement.

Income
tax expense was $1 for the third quarter of 2005 compared to an income tax expense of $3
for the same period last year. The income tax expense in the third quarter of 2005 was the
result of minimum state income tax payments made and the income tax expense recorded in
the third quarter of 2004 was a result of adjustments made to deferred taxes.

Our
net income for the quarter ended June 30, 2005 was $25, compared to a net loss of $31 in
the quarter ended June 30, 2004.

Nine Months Ended June 30, 2005
Compared to the Nine Months Ended June 30, 2004(in thousands unless otherwise noted)

Revenue
for the first nine months of fiscal year 2005 decreased $135 or 1.0% to $12,991 from
$13,126 in the first nine months of fiscal year 2004. The decrease was due to a decline in
services sales which, was largely offset by an increase in product sales. Product sales
during the nine months ended June 30, 2005 increased by $784, or 7.4%, to $11,340 from
$10,556 for the same period last year. Service sales decreased $919, or 35.8%, from $2,570
during the first nine months of fiscal year 2004 to $1,651 during the first nine months of
fiscal year 2005. This decrease was primarily a result of the drop in time and material
services sales due to a significant reduction in volume in our IBM Corporation service
contract. We do not expect the sales volume from the IBM Corporation contract to return to
last years levels. However, we expect our overall sales volume for the last quarter
of fiscal year 2005 to return to levels at or above last year due to the improved IT
market conditions and our continued focus on high-end, Intel-based products and related
services.

9

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Gross
profit increased $428 or 18.9%, for the nine months ended June 30, 2005, to $2,687 from
$2,259 in the same period last year. The increase in gross profit was primarily due
improved product margins which was somewhat offset by lower service margins. Total gross
margin increased to 20.7% from 17.2% in the first nine months of 2005 compared to 2004.
Product margin increased to 19.6% for the nine months ended June 30, 2005 compared to
13.1% for the same period last year due to the increase in sales of high-end products,
which yield higher profit margins and favorable product pricing from our vendors in the
third quarter of 2005. Service margins decreased to 28.3% in the first nine months of 2005
from 34.0% in 2004. This decrease was primarily due to the underutilization of technicians
and engineers during the second and third quarters of 2005. We expect margins to be steady
for the balance of the fiscal year due to our focus on high-end products and related
services and our efforts made during the end of the second and third quarters, to improve
the utilization of our technicians and engineers.

Selling,
general and administrative expenses increased $156, or 6.6%, to $2,537 for the first nine
months of 2005, compared to $2,381 for the same period in fiscal year 2004. The increase
in expense was primarily due to an increase in sales expense and commissions related to
higher gross profit, an increase in salaries to non-management personnel made in the
second quarter and an increase in accounting expenses associated with the evaluation of
our internal control required by Section 404 of the Sarbanes-Oxley Act of 2002. These
increases were somewhat offset as a result of settling a law suit with our former
President, Chief Executive Officer and director, Anat Ebenstein (see Note 8 to the
condensed consolidated financial statements) at an amount less than previously expected.
Accounting fees in 2005 are expected to remain higher than last year due to the expenses
related to Section 404 of the Sarbanes-Oxley Act of 2002. We expect our management and
administrative staff to be sufficient for the balance of the fiscal year; however, we may
need to add additional personnel in the sales and technical areas of the business as sales
volume dictates.

Depreciation
and amortization expense for first nine months of 2005 decreased $69, or 50.0%, to $69 in
2005 from $138 in the first nine months of 2004. The decrease was primarily a result of
certain assets being fully depreciated as of the end of fiscal year 2004.

Operating
income for the first nine months of 2005 was $81 compared to an operating loss of $260
during the same period last year.

Net
interest expense was $43 in the first nine months of 2005, compared to a net interest
income of $106 in the same period of 2004. The net interest expense was a result of
interest expense of $164 incurred in connection with the Wells Fargo credit facility and
was largely offset by interest income of $121 earned from the loan made to our majority
stockholder, Applied Digital Solutions. The interest income earned in 2004 was primarily a
result of the loan made to Applied Digital Solutions.

Our
net income for the nine months ended June 30, 2005 was $39, compared to a net loss of $136
for the same period last year.

Liquidity and Capital Resources(in thousands unless otherwise noted)

Our
current ratio at June 30, 2005 was 2.30 compared to 2.48 at September 30, 2004. Working
capital at June 30, 2005 was $3,168 up from $3,103 at September 30, 2004, an increase of
$65.

Cash
provided by operating activities in the first nine months of fiscal year 2005 was $1,000,
compared to cash used in operating activities in the first nine months of fiscal year 2004
of $1,792. The cash provided by operating activities in 2005 was primarily due to an
increase in accounts payable resulting from a product purchased for a large sale at the
end of the quarter, and a decrease in other current assets. This was somewhat offset by an
increase in inventories on hand at June 30, 2005 for orders that did not ship until July
2005, and an increase in accounts receivable. The cash used in operating activities during
2004 was primarily a result of an increase in accounts receivable resulting from sales
volume increases, a decrease in accounts payable and accrued expenses and our loss for the
nine-month period.

Cash
used in investing activities was $31 for the first nine months of fiscal 2005, compared to
cash used in investing activities of $18 for the first nine months of fiscal 2004. Cash
used in investing activities of $31 for the nine months ended June 30, 2005 was a result
of capital expenditures. Cash used in investing activities of $18 for the nine months
ended June 30, 2004 was primarily a result of capital expenditures of $37, which was
largely offset by an interest payment of $13 made on the loan to Applied Digital.

Cash
used in financing activities for the nine months ended June 30, 2005 was $802 compared to
cash provided by financing activities of $1,193 for the nine months ended June 30, 2004.
The use of cash in 2005 was primarily a result of payments made to reduce the outstanding
amount due on the Wells Fargo line of credit. The net cash provided by financing
activities for the nine months ended June 30, 2004 was mainly due to the net borrowings on
the Wells Fargo line of credit.

10

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Our
business activities are capital-intensive and, consequently, we finance our operations
through arrangements with Wells Fargo and IBM Credit. Our financing agreement with Wells
Fargo, entered into on June 30, 2004, provides us with a $4,000 credit facility. Amounts
borrowed under the credit facility bear interest at Wells Fargos prime rate plus 3%.
Unless earlier terminated, the credit facility matures on June 29, 2007 and automatically
renews for successive one-year periods thereafter unless terminated by Wells Fargo or us.
Our financing agreement with IBM Credit in effect as of June 30, 2005 provides for
inventory financing up to $600 and is secured by a letter of credit in the amount of $600.
The new wholesale financing agreement with IBM Credit was executed in connection with the
Wells Fargo credit facility and replaced the prior IBM Credit Agreement for Wholesale
Financing.

Under
the terms of the credit agreement, Wells Fargo may, at its election, make advances from
time to time in the amounts requested by us up to an amount equal to the difference
between the borrowing base and the sum of (i) the amount outstanding under the credit
facility and (ii) the $600 letter of credit outstanding under the credit facility which
secures our obligations to IBM Credit under the wholesale financing agreement. The
borrowing base is equal to the lesser of (x) $4,000 or (y) the amount equal to (a) 85% of
our eligible accounts receivable plus (b) the amount of available funds in our deposit
account with Wells Fargo minus (c) certain specified reserves. As of June 30, 2005, we had
a borrowing base of approximately $1,074 and availability of approximately $463 under the
credit facility.

In
connection with the execution of the credit agreement, we paid Wells Fargo an origination
fee of $40. Each year, we will pay Wells Fargo a facility fee of $15 and an unused line
fee of 0.5% of the daily, unused amount under the credit facility. In addition, we must
pay Wells Fargo minimum monthly interest based on minimum borrowings of $1,500. We will
incur additional fees if Wells Fargo terminates the credit facility upon default or if we
terminate the credit facility prior to its termination date. These fees were $120 through
June 30, 2005, the first year of the credit facility,  $60 during the second year
of the credit facility and $20 after the second year of the credit facility.

The
obligations under the credit agreement have been guaranteed by both of our subsidiaries
and by us. In addition, we have pledged the stock of our subsidiaries and assigned our
rights under the loan agreement to Applied Digital. The credit facility is further secured
by a first priority security interest in substantially all of our assets.

The
credit facility requires us to maintain certain financial covenants, including (i) a debt
to book net worth ratio, as defined in the credit agreement, of not more than 1.5 to 1.0
for each fiscal quarter, (ii) a minimum book net worth, as defined in the credit
agreement, of at least $3,100 for each fiscal quarter and (iii) a minimum net income, as
defined in the credit agreement, of at least $2 for the three fiscal quarters ended June
30, 2005 and a net loss not to exceed $60 for the year ended September 30, 2005, in order
to accommodate the slower summer months. In addition, the credit facility prohibits us
from incurring or contracting to incur capital expenditures exceeding $50 in the aggregate
during any fiscal year or more than $10 in any one transaction. The credit agreement
contains other standard covenants related to our operations, including prohibitions on the
creation of additional liens, the incurrence of additional debt, the payment of dividends,
the sale of assets and other corporate transactions by us, without Wells Fargos
consent. At June 30, 2005, we were in compliance with these covenants.

We
had borrowings of $11 under the Wells Fargo line of credit as of June 30, 2005. Borrowings
under the IBM Credit financing arrangement amounted to $378 at June 30, 2005, and are
included in either accounts payable or accrued expenses and other liabilities. We did not
have any borrowings under the IBM Credit arrangement at June 30, 2004.

On
May 19, 2005, we entered into an arrangement with one of our primary suppliers, Ingram
Micro Inc. pursuant to which Ingram Micro provides us with a credit line of up to $500.
Payments for purchases under this credit line are due and payable within 30 days from the
date of invoice. Amounts not repaid within 10 days past due bear interest at 11⁄2%
per month. The credit line is secured by a security interest in substantially all of our
equipment, inventory and accounts receivable and by a $250 irrevocable letter of credit
issued by Wells Fargo. Advances under the credit line are subordinate and junior in right
of payment to borrowings under our credit facility with Wells Fargo. As of June 30, 2005,
we had fully utilized the credit line with Ingram and the borrowings are included in
either accounts payable or accrued expenses and other liabilities.

11

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We
believe that our present financing arrangements with Wells Fargo, IBM Credit and Ingram
Micro, and current cash position will be sufficient to fund our operations and capital
expenditures through at least June 30, 2006. Our long-term capital needs may require
additional sources of credit. There can be no assurances that we will be successful in
negotiating additional sources of credit for our long-term capital needs. Our inability to
have continuous access to such financing at reasonable costs may materially and adversely
impact our financial condition, results of operations and cash flows.

On
April 14, 2005, we entered into an office lease with Faircorp Associates, L.L.C. The lease
relates to approximately 10,143 square feet of office space located at 7 Kingsbridge Road,
Fairfield, New Jersey, which is currently serving as office space for our headquarters.
The term of the lease is five years, which is expected to commence on the earlier of
January 1, 2006 or the termination date of our existing sublease agreement relating to the
same space. We have a renewal option for one additional five-year period. The monthly
lease rate will be $13. Our lease obligations under this lease will be approximately $114
for fiscal 2006, $152 for fiscal 2007, $152 for fiscal 2008, $152 for fiscal 2009, $152
for fiscal 2010 and $38 for fiscal 2011.

# Recent Accounting
Pronouncements

In December
2004, the Financial Accounting Standards Board (the FASB) issued SFAS No.
123(R) (revised 2004), Share-Based Payment, which amends SFAS No. 123. The new
standard will require us to expense employee stock options and other share-based payments
over the related service period beginning with our fiscal quarter ending December 31, 2006.
The FASB believes the use of a binomial lattice model for option valuation is capable of
more fully reflecting certain characteristics of employee share options compared to the
Black-Scholes options pricing model. The new standard may be adopted in one of three ways
 the modified prospective transition method, a variation of the modified prospective
transition method or the modified retrospective transition method. We are currently
evaluating how we will adopt the standard and the effect that the adoption of SFAS No.
123(R) will have on our financial position and results of operations.

In
November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of ARB
No. 43, Chapter 4. This statement amends the guidance in ARB No. 43, Chapter 4,
Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage). Paragraph 5 of
ARB No. 43, Chapter 4, previously stated that ...under some circumstances, items
such as idle facility expense, excessive spoilage, double freight, and rehandling costs
may be so abnormal as to require treatment as current period charges... SFAS No. 151
requires that those items be recognized as current-period charges regardless of whether
they meet the criterion of so abnormal. In addition, this statement requires
that allocation of fixed production overheads to the costs of conversion be based on the
normal capacity of the production facilities. The provisions of SFAS No. 151 shall be
applied prospectively and are effective for inventory costs incurred during fiscal years
beginning after June 15, 2005, with earlier application permitted for inventory costs
incurred during fiscal years beginning after the date this statement was issued. The
adoption of SFAS No. 151 is not expected to have a material impact on our financial
position or results of operations.

In
December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets, an
amendment of APB Opinion No. 29. The guidance in APB Opinion No. 29,
Accounting for Nonmonetary Transactions, is based on the principle that
exchanges of nonmonetary assets should be measured based on the fair value of assets
exchanged. The guidance in that opinion, however, included certain exceptions to that
principle. This statement amends Opinion 29 to eliminate the exception for nonmonetary
exchanges of similar productive assets that do not have commercial substance. A
nonmonetary exchange has commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange. SFAS No. 153 is effective
for nonmonetary exchanges occurring in fiscal periods beginning after June 15, 2005. The
adoption of SFAS No. 153 is not expected to have a material impact on our financial
position or results of operations.

# Forward-Looking
Statements and Associated Risk

Certain
statements in this report, constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. We intend
that such forward-looking statements be subject to the safe harbors created thereby. Such
forward-looking statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the following:

12

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- our continued ability to develop our service offerings;
- the successful completion and integration of future acquisitions;
- the ability to hire and retain skilled personnel;
- the continued development of our technical, manufacturing, sales, marketing and management capabilities;
- relationships with and dependence on technological partners;
- uncertainties relating to economic conditions where we operate;
- uncertainties relating to government and regulatory policies;
- uncertainties relating to customer plans and commitments;
- rapid technological developments and obsolescence in the industries in which we operate and compete;
- potential performance issues with suppliers and customers;
- governmental export and import policies, global trade policies, worldwide political stability and economic growth;
- the highly competitive environment in which we operate;
- potential entry of new, well-capitalized competitors into our markets;
- our ability to maintain available sources of financing; and
- changes in our capital structure and cost of capital.

The
words believe, expect, anticipate, intend
and plan and similar expressions identify forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date the statement was made.

# Item 3     Quantitative and
Qualitative Disclosures About Market Risk

We
presently do not use any derivative financial instruments to hedge our exposure to adverse
fluctuations in interest rates, foreign exchange rates, fluctuations in commodity prices
or other market risks, nor do we invest in speculative financial instruments. For InfoTech
USA, borrowings under the financing agreement with Wells Fargo are at Wells Fargos
prime rate plus 3%. We do not have any investments in any instruments that are sensitive
to changes in the general level of U.S. interest rates.

Due
to the nature of our borrowings, we have concluded that there is no material market risk
exposure and, therefore, no quantitative tabular disclosures are required.

# Item 4     Controls and
Procedures

As
of the end of the period covered by this report, management, including our principal
executive officer and principal financial officer, evaluated the effectiveness of the
design and operation of our disclosure controls and procedures with respect to the
information generated for use in our reporting system. Based upon, and as of the date of
that evaluation, our principal executive officer and principal financial officer concluded
that our disclosure controls and procedures were effective to provide reasonable assurance
that information required to be disclosed in the reports that we file or submit under the
Securities Exchange Act of 1934 are recorded, processed, summarized and reported within
the time periods specified by the Commissions rules and forms.

There
was no change in our internal control over financial reporting during the quarter ended
June 30, 2005 that has materially affected, or that is reasonably likely to materially
affect, our internal control over financial reporting.

It
should be noted that our management, including our principal executive officer and
principal financial officer, does not expect that our disclosure controls and procedures
or internal controls over financial reporting will prevent all error and all fraud. A
control system, no matter how well conceived or operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further, the design
of a control

13

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system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, have been detected.
These inherent limitations include the realities that judgments in decision-making can be
faulty, and that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the controls. The design of any system of
controls is based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions; over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.

# Part II     Other Information

# Item 6     Exhibits

See
list of exhibits attached hereto.

14

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# Signature

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.

| | InfoTech USA, Inc.
| | ------------------

| | By: | /s/ J. Robert Patterson                                                                                                                 
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------
| |     | J. Robert PattersonVice President, Chief Financial Officer and Treasurer
 (Principal Financial Officer and Principal Accounting Officer)

| | Date:   August 12, 2005
| | -----------------------

---

# Exhibits

|ExhibitNumber |  | Description
|------------- |  | -----------

| |  | 
| |  | 

|3.1 |  | Amended and Restated Certificate of Incorporation dated April 21, 1997 (incorporated by
reference to Exhibit 3.1 to the registrants Quarterly Report on Form 10-Q filed with
the Commission on May 14, 2003)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2 |  | Certificate of Amendment of Certificate of Incorporation dated March 22, 2002
(incorporated by reference to Exhibit 3.2 to the registrants Quarterly Report on
Form 10-Q filed with the Commission on May 14, 2003)
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.3 |  | Certificate of Amendment of Certificate of Incorporation dated April 9, 2003 (incorporated
by reference to Exhibit 3.3 to the registrants Quarterly Report on Form 10-Q filed
with the Commission on May 14, 2003)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.4 |  | Amended and Restated By-Laws (incorporated by reference to Exhibit 3.4 to the
registrants Quarterly Report on Form 10-Q filed with the Commission on May 14, 2003)
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 |  | Settlement Agreement and General Release, effective as of April 13, 2005, by and among
SysComm International Corp., Applied Digital Solutions, Inc., Jerome Artigliere, Richard
Sullivan, Scott Silverman, Kevin McLaughlin and Anat Ebenstein (incorporated by reference
to Exhibit 10.1 to the registrants Current Report on Form 8-K filed with the
Commission on April 19, 2005)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 |  | Office Lease Agreement, dated as of April 15, 2005, by and between Faircorp Associates,
L.L.C. and InfoTech USA, Inc. (incorporated by reference to Exhibit 10.2 to the
registrants Current Report on Form 8-K filed with the Commission on April 19, 2005)
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Letter Agreement, dated May 13, 2005, from Ingram Micro Inc. to InfoTech USA, Inc. (incorporated by
               reference to Exhibit 10.1 to the registrants Current Report on Form 8-K filed with the Commission on
               May 19, 2005)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 |  | Security Agreement, dated May 3, 2005, by and between InfoTech USA, Inc. and Ingram Micro Inc.
               (incorporated by reference to Exhibit 10.2 to the registrants Current Report on Form 8-K filed with
               the Commission on May 19, 2005)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 |  | Guaranty, dated May 3, 2005, by and between InfoTech USA, Inc. and Ingram Micro Inc. (incorporated by
               reference to Exhibit 10.3 to the registrants Current Report on Form 8-K filed with the Commission on May
               19, 2005)
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 |  | Guaranty, dated May 3, 2005, by and between Information Technology Services, Inc. and Ingram Micro
               Inc. (incorporated by reference to Exhibit 10.4 to the registrants Current Report on Form 8-K filed ;with
               the Commission on May 19, 2005)
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 |  | Intercreditor and Subordination Agreement, dated May 16, 2005, by and between Ingram Micro Inc. and
               Wells Fargo Business Credit, Inc. (incorporated by reference to Exhibit 10.5 to the registrants
               Current Report on Form 8-K filed with the Commission on May 19, 2005)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.8 |  | Second Amendment to Loan Documents, dated June 28, 2005, by and between Applied Digital Solutions,
               Inc. and InfoTech USA, Inc. (incorporated by reference to Exhibit 10.1 to the registrants Current Report
on Form 8-K filed with the Commission on June 28, 2005)
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|31.1 |  | Certification by Chief Executive Officer of the registrant pursuant to Section 302 of the
               Sarbanes-Oxley Act of 2002
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------

|31.2 |  | Certification by Chief Financial Officer of the registrant pursuant to Section 302 of the
               Sarbanes-Oxley Act of 2002
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------

|32.1 |  | Certification by Chief Executive Officer of the registrant pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------

|32.2 |  | Certification by Chief Financial Officer of the registrant pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------