----

----

|                                           |      |
|------------------------------------------------|-----------|
| Commission      file number     | 000-23740 |

|                                                       | INNOTRAC      CORPORATION |   |
|------------------------------------------------------------|---------------------------|--------|
| (Exact      name of registrant as specified in itscharter) |

| Georgia                                                                 |   | 58-1592285                                       |
|-------------------------------------------------------------------------|--------|--------------------------------------------------|
| (State      or other jurisdiction ofincorporation      or organization) |   | (I.R.S.      EmployerIdentification      Number) |

|   | 6655      Sugarloaf Parkway Duluth, Georgia   |   | 30097           |
|--------|-----------------------------------------------|--------|-----------------|
|   | (Address      of principal executive offices) |   | (Zip      Code) |

| Registrant’s      telephone number, including area code:  | (678)      584-4000 |
|----------------------------------------------------------------------|---------------------|

|   | Large accelerated      filer o                                                                                                                                                                   |        Accelerated filer      o |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|
|   | Non-accelerated      filer o  (Do      not check if a smaller reporting      company)          Smaller      reporting company x |

|                                       |                               |
|--------------------------------------------|------------------------------------|
|                                       | Outstanding      at August 7, 2009 |
|                                       |                               |
| Common      Stock $.10 par value per share | 12,334,804      Shares             |

----

|                               |         |   |                                                                                                       |   |   |   |
|------------------------------------|--------------|--------|------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                               |         |   |                                                                                                       |   | Page   |
|                               |         |   |                                                                                                       |   |   |   |
| Part      I. Financial Information |         |   |                                                                                                       |
|                               |         |   |                                                                                                       |   |   |   |
|                               | Item      1. |   | Financial      Statements:                                                                                 |   | 2      |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               |         |   | Condensed      Balance Sheets at June 30, 2009 (Unaudited) and December 31,      2008                      |   | 3      |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               |         |   | Condensed      Statements of Operations for the Three Months Ended June 30, 2009 and 2008      (Unaudited) |   | 4      |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               |         |   | Condensed      Statements of Operations for the Six Months Ended June 30, 2009 and 2008      (Unaudited)   |   | 5      |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               |         |   | Condensed      Statements of Cash Flows for the Six Months Ended June 30, 2009 and 2008      (Unaudited)   |   | 6      |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               |         |   | Notes      to Condensed Financial Statements (Unaudited)                                                   |   | 7      |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               | Item      2. |   | Management’s      Discussion and Analysis of Financial Condition and Results of      Operations      |   | 14     |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               | Item      3. |   | Quantitative      and Qualitative Disclosures About Market Risks                                           |   | 24     |   |
|                               |         |   |                                                                                                       |   |   |   |
|                               | Item      4. |   | Controls      and Procedures                                                                               |   | 24     |   |
|                               |         |   |                                                                                                       |   |   |   |
| Part      II. Other Information    |         |   |                                                                                                       |
|                               |         |   |                                                                                                       |   |   |   |
|                               | Item      6. |   | Exhibits                                                                                                   |   | 25     |   |
|                               |         |   |                                                                                                       |   |   |   |
| Signatures                         |         |   |                                                                                                       | 26     |   |

----

----

|                                                                                                                              |   |               |    |   |                   |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|---------|--------|------------------------|--------|
|                                                                                                                              |   | June      30, 2009 |    |   | December      31, 2008 |   |
|                                                                                                                              |   | (unaudited)        |    |   |                   |   |
| ASSETS                                                                                                                            |   |               |    |   |                   |   |
| Current      assets:                                                                                                              |   |               |    |   |                   |   |
| Cash      and cash equivalents                                                                                                    |   | $                  | 1,690   |   |                   | $      | 1,056 |   |
| Accounts      receivable (net of allowance for doubtful accounts of $248 at June 30,      2009 and $271 at December 31, 2008)     |   |               | 16,284  |   |                   |   | 25,793 |   |
| Inventories,      net                                                                                                             |   |               | 1,114   |   |                   |   | 1,855 |   |
| Prepaid      expenses and other                                                                                                   |   |               | 1,356   |   |                   |   | 1,262 |   |
| Total      current assets                                                                                                         |   |               | 20,984  |   |                   |   | 29,966 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Property      and equipment:                                                                                                      |   |               |    |   |                   |   |   |   |
| Rental      equipment                                                                                                             |   |               | 185     |   |                   |   | 207 |   |
| Computer      software and equipment                                                                                              |   |               | 42,662  |   |                   |   | 41,388 |   |
| Furniture,      fixtures and leasehold improvements                                                                               |   |               | 9,071   |   |                   |   | 9,061 |   |
|                                                                                                                              |   |               | 51,918  |   |                   |   | 50,656 |   |
| Less      accumulated depreciation and amortization                                                                               |   |               | (37,108 | )      |                   |   | (34,814 | ) |
|                                                                                                                              |   |               | 14,810  |   |                   |   | 15,842 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Goodwill                                                                                                                          |   |               | 25,169  |   |                   |   | 25,169 |   |
| Other      assets, net                                                                                                            |   |               | 981     |   |                   |   | 822 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Total      assets                                                                                                                 |   | $                  | 61,944  |   |                   | $      | 71,799 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| LIABILITIES      AND SHAREHOLDERS’ EQUITY                                                                                   |   |               |    |   |                   |   |   |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Current      liabilities:                                                                                                         |   |               |    |   |                   |   |   |   |
| Accounts      payable                                                                                                             |   | $                  | 5,203   |   |                   | $      | 9,259 |   |
| Line      of credit                                                                                                               |   |               | — |   |                   |   | 10,055 |   |
| Accrued      salaries                                                                                                             |   |               | 1,512   |   |                   |   | 2,111 |   |
| Accrued      expenses and other                                                                                                   |   |               | 3,631   |   |                   |   | 3,142 |   |
| Total      current liabilities                                                                                                    |   |               | 10,346  |   |                   |   | 24,567 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Noncurrent      liabilities:                                                                                                      |   |               |    |   |                   |   |   |   |
| Equipment      lease payable                                                                                                      |   |               | 503     |   |                   |   | — |   |
| Deferred      compensation                                                                                                        |   |               | 571     |   |                   |   | 547 |   |
| Other      noncurrent liabilities                                                                                                 |   |               | 227     |   |                   |   | 206 |   |
| Total      noncurrent liabilities                                                                                                 |   |               | 1,301   |   |                   |   | 753 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Commitments      and contingencies (see Note 5)                                                                                   |   |               |    |   |                   |   |   |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Shareholders’      equity:                                                                                                  |   |               |    |   |                   |   |   |   |
| Preferred      stock: 10,000,000 shares authorized, $0.10 par value, no      shares issued or outstanding                         |   |               | — |   |                   |   | — |   |
| Common      stock: 50,000,000 shares authorized, $0.10 par value, 12,600,759      shares issued and 12,334,804 shares outstanding |   |               | 1,260   |   |                   |   | 1,260 |   |
| Additional      paid-in capital                                                                                                   |   |               | 66,482  |   |                   |   | 66,439 |   |
| Accumulated      deficit                                                                                                          |   |               | (17,445 | )      |                   |   | (21,220 | ) |
| Total      shareholders’ equity                                                                                             |   |               | 50,297  |   |                   |   | 46,479 |   |
|                                                                                                                              |   |               |    |   |                   |   |   |   |
| Total      liabilities and shareholders’ equity                                                                             |   | $                  | 61,944  |   |                   | $      | 71,799 |   |

----

|                                              |   |                             |    |   |        |   |
|---------------------------------------------------|--------|----------------------------------|---------|--------|-------------|--------|
|                                              |   | Three      Months Ended June 30, |    |
|                                              |   | 2009                             |    |   | 2008        |   |
|                                              |   | (unaudited)                      |    |   | (unaudited) |   |
|                                              |   |                             |    |   |        |   |
| Service      revenues                             |   | $                                | 24,052  |   |        | $      | 23,418 |   |
| Freight      revenues                             |   |                             | 3,540   |   |        |   | 6,109 |   |
| Total      revenues                               |   |                             | 27,592  |   |        |   | 29,527 |   |
|                                              |   |                             |    |   |        |   |   |   |
| Cost      of service revenues                     |   |                             | 10,327  |   |        |   | 10,559 |   |
| Freight      expense                              |   |                             | 3,488   |   |        |   | 6,016 |   |
| Selling,      general and administrative expenses |   |                             | 10,768  |   |        |   | 10,583 |   |
| Depreciation      and amortization                |   |                             | 1,108   |   |        |   | 1,021 |   |
| Total      operating expenses                     |   |                             | 25,691  |   |        |   | 28,179 |   |
| Operating      income                             |   |                             | 1,901   |   |        |   | 1,348 |   |
|                                              |   |                             |    |   |        |   |   |   |
| Other      expense:                               |   |                             |    |   |        |   |   |   |
| Interest      expense                             |   |                             | 59      |   |        |   | 353 |   |
| Total      other expense                          |   |                             | 59      |   |        |   | 353 |   |
| Income      before income taxes                   |   |                             | 1,842   |   |        |   | 995 |   |
| Income      taxes                                 |   |                             | — |   |        |   | — |   |
|                                              |   |                             |    |   |        |   |   |   |
| Net      income                                   |   | $                                | 1,842   |   |        | $      | 995 |   |
|                                              |   |                             |    |   |        |   |   |   |
| Income      per share:                            |   |                             |    |   |        |   |   |   |
|                                              |   |                             |    |   |        |   |   |   |
| Basic                                             |   | $                                | 0.15    |   |        | $      | 0.08 |   |
|                                              |   |                             |    |   |        |   |   |   |
| Diluted                                           |   | $                                | 0.15    |   |        | $      | 0.08 |   |
|                                              |   |                             |    |   |        |   |   |   |
| Weighted      average shares outstanding:         |   |                             |    |   |        |   |   |   |
|                                              |   |                             |    |   |        |   |   |   |
| Basic                                             |   |                             | 12,601  |   |        |   | 12,586 |   |
|                                              |   |                             |    |   |        |   |   |   |
| Diluted                                           |   |                             | 12,601  |   |        |   | 12,602 |   |

----

|                                                 |
|------------------------------------------------------|
| INNOTRAC      CORPORATION                            |
| CONDENSED      STATEMENTS OF OPERATIONS              |
| For      the Six Months Ended June 30, 2009 and 2008 |
| (in      thousands, except per shareamounts)         |

|                                              |   | Six      Months Ended June 30, |    |
|---------------------------------------------------|--------|--------------------------------|---------|
|                                              |   | 2009                           |    |   | 2008 |   |
|                                              |   | (unaudited)                    |    |   | (unaudited) |   |
|                                              |   |                           |    |   |   |   |
| Service      revenues                             |   | $                              | 48,708  |   |   | $ | 48,888 |   |
| Freight      revenues                             |   |                           | 7,659   |   |   |   | 13,351 |   |
| Total      revenues                               |   |                           | 56,367  |   |   |   | 62,239 |   |
|                                              |   |                           |    |   |   |   |   |   |
| Cost      of service revenues                     |   |                           | 20,987  |   |   |   | 22,657 |   |
| Freight      expense                              |   |                           | 7,545   |   |   |   | 13,265 |   |
| Selling,      general and administrative expenses |   |                           | 21,578  |   |   |   | 21,662 |   |
| Depreciation      and amortization                |   |                           | 2,317   |   |   |   | 2,072 |   |
| Total      operating expenses                     |   |                           | 52,427  |   |   |   | 59,656 |   |
| Operating      income                             |   |                           | 3,940   |   |   |   | 2,583 |   |
|                                              |   |                           |    |   |   |   |   |   |
| Other      expense:                               |   |                           |    |   |   |   |   |   |
| Interest      expense                             |   |                           | 165     |   |   |   | 726 |   |
| Total      other expense                          |   |                           | 165     |   |   |   | 726 |   |
| Income      before income taxes                   |   |                           | 3,775   |   |   |   | 1,857 |   |
| Income      taxes                                 |   |                           | — |   |   |   | — |   |
|                                              |   |                           |    |   |   |   |   |   |
| Net      income                                   |   | $                              | 3,775   |   |   | $ | 1,857 |   |
|                                              |   |                           |    |   |   |   |   |   |
| Income      per share:                            |   |                           |    |   |   |   |   |   |
|                                              |   |                           |    |   |   |   |   |   |
| Basic                                             |   | $                              | 0.30    |   |   | $ | 0.15 |   |
|                                              |   |                           |    |   |   |   |   |   |
| Diluted                                           |   | $                              | 0.30    |   |   | $ | 0.15 |   |
|                                              |   |                           |    |   |   |   |   |   |
| Weighted      average shares outstanding:         |   |                           |    |   |   |   |   |   |
|                                              |   |                           |    |   |   |   |   |   |
| Basic                                             |   |                           | 12,601  |   |   |   | 12,586 |   |
|                                              |   |                           |    |   |   |   |   |   |
| Diluted                                           |   |                           | 12,601  |   |   |   | 12,594 |   |

----

|                                                 |
|------------------------------------------------------|
| INNOTRAC      CORPORATION                            |
| CONDENSED      STATEMENTS OF CASH FLOWS              |
| For      the Six Months Ended June 30, 2009 and 2008 |
| (in      thousands)                                  |

|                                                                                        |   | Six      Months Ended June 30, |    |
|---------------------------------------------------------------------------------------------|--------|--------------------------------|---------|
|                                                                                        |   | 2009                           |    |   | 2008 |   |
|                                                                                        |   | (unaudited)                    |    |   | (unaudited) |   |
| Cash      flows from operating activities:                                                  |   |                           |    |   |   |   |
| Net      income                                                                             |   | $                              | 3,775   |   |   | $ | 1,857 |   |
| Adjustments      to reconcile net income to net cash provided by operating      activities: |   |                           |    |   |   |   |   |   |
| Depreciation      and amortization                                                          |   |                           | 2,317   |   |   |   | 2,072 |   |
| Provision      for bad debts                                                                |   |                           | 39      |   |   |   | (50 | ) |
| Stock      compensation expense-stock options                                               |   |                           | 6       |   |   |   | 46 |   |
| Stock      compensation expense-restricted stock                                            |   |                           | 37      |   |   |   | 37 |   |
| Changes      in operating assets and liabilities:                                           |   |                           |    |   |   |   |   |   |
| Decrease      in accounts receivable, gross                                                 |   |                           | 8,930   |   |   |   | 6,798 |   |
| Decrease      (increase) in inventory                                                       |   |                           | 741     |   |   |   | (223 | ) |
| Increase      in prepaid expenses and other                                                 |   |                           | (59     | ) |   |   | (504 | ) |
| Decrease      in accounts payable                                                           |   |                           | (4,055  | ) |   |   | (7,756 | ) |
| Decrease      in accrued expenses and other                                                 |   |                           | (349    | ) |   |   | (710 | ) |
| Net      cash provided by operating activities                                              |   |                           | 11,382  |   |   |   | 1,567 |   |
|                                                                                        |   |                           |    |   |   |   |   |   |
| Cash      flows from investing activities:                                                  |   |                           |    |   |   |   |   |   |
| Capital      expenditures                                                                   |   |                           | (674    | ) |   |   | (1,412 | ) |
| Net      change in noncurrent assets and liabilities                                        |   |                           | 2       |   |   |   | 57 |   |
| Net      cash used in investing activities                                                  |   |                           | (672    | ) |   |   | (1,355 | ) |
|                                                                                        |   |                           |    |   |   |   |   |   |
| Cash      flows used in financing activities:                                               |   |                           |    |   |   |   |   |   |
| Net      repayments under line of credit                                                    |   |                           | (10,055 | ) |   |   | (948 | ) |
| Proceeds      from Financing Lease                                                          |   |                           | 130     |   |   |   | — |   |
| Loan      commitment fees                                                                   |   |                           | (151    | ) |   |   | — |   |
| Net      cash used in financing activities                                                  |   |                           | (10,076 | ) |   |   | (948 | ) |
|                                                                                        |   |                           |    |   |   |   |   |   |
| Net      increase (decrease) in cash and cash equivalents                                   |   |                           | 634     |   |   |   | (736 | ) |
| Cash      and cash equivalents, beginning of period                                         |   |                           | 1,056   |   |   |   | 1,079 |   |
| Cash      and cash equivalents, end of period                                               |   | $                              | 1,690   |   |   | $ | 343 |   |
|                                                                                        |   |                           |    |   |   |   |   |   |
| Supplemental      cash flow disclosures:                                                    |   |                           |    |   |   |   |   |   |
|                                                                                        |   |                           |    |   |   |   |   |   |
| Cash      paid for interest                                                                 |   | $                              | 129     |   |   | $ | 381 |   |
| Non-cash      investing and financing activities:                                           |   |                           |    |   |   |   |   |   |
| Capital      lease for computer equipment                                                   |   | $                              | 628     |   |   | $ | — |   |

----

| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

| 1.     | SIGNIFICANT      ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      accounting policies followed for quarterly financial reporting are the      same as those disclosed in the Notes to Financial Statements included in      the Company’s Annual Report on Form 10-K filed with the Securities and      Exchange Commission for the year ended December 31, 2008. Certain of the      Company’s more significant accounting policies are as    follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Accounting      Estimates. The preparation of financial statements in conformity      with accounting principles generally accepted in the United States of      America requires management to make estimates and assumptions that affect      the reported amounts of assets and liabilities and the disclosures of      contingent assets and liabilities at the date of the financial statements      and the reported amounts of revenues and expenses during the reporting      period. Actual results could differ from those      estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Goodwill      and Other Acquired Intangibles. Goodwill represents the cost of an      acquired enterprise in excess of the fair market value of the net tangible      and identifiable intangible assets acquired. The Company tests goodwill      annually for impairment as of January 1 or sooner if circumstances      indicate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Impairment      of Long-Lived Assets. The Company reviews long-lived assets for      impairment when events or changes in circumstances indicate that the      carrying amount of an asset may not be recoverable. Impairment would be      measured based on a projected cash flow model. If the projected      undiscounted cash flows for the asset are not in excess of the carrying      value of the related asset, the impairment would be determined based upon      the excess of the carrying value of the asset over the projected      discounted cash flows for the asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Accounting      for Income Taxes. Innotrac utilizes the liability method of      accounting for income taxes in accordance with SFAS No. 109 “Accounting      for Income Taxes”. Under the liability method, deferred taxes are      determined based on the difference between the financial and tax basis of      assets and liabilities using enacted tax rates in effect in the years in      which the differences are expected to reverse. A valuation allowance was      recorded against the net deferred tax asset as of December 31, 2008 and      June 30, 2009 (see Note 4).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Revenue      Recognition. Innotrac derives its revenue primarily from two      sources: (1) fulfillment operations and (2) the delivery of call center      services integrated with our fulfillment operations. Innotrac’s      fulfillment services operations record revenue at the conclusion of the      material selection, packaging and shipping process. The shipping process      is considered complete after transfer to an independent freight carrier      and receipt of a bill of lading or shipping manifest from that carrier.      Innotrac’s call center service revenue is recognized according to written      pricing agreements based on the number of calls, minutes or hourly rates      when those calls and time rated services occur. All other revenues are      recognized as services are rendered.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Stock-Based      Compensation Plans. In December 2004, the Financial Accounting      Standards Board (“FASB”) issued Statement of Financial Accounting Standard      (“SFAS”) No. 123(R), “Share-Based Payment,” which revises SFAS No. 123,      “Accounting for Stock-Based Compensation.” SFAS No. 123(R) requires all      share-based payments to employees, including grants of employee stock      options, to be recognized as compensation expense in the financial      statements based on their fair values. That expense will be recognized      over the period during which an employee is required to provide services      in exchange for the award, known as the requisite service period (usually      the vesting period). The Company adopted SFAS No. 123(R) effective January      1, 2006 using the prospective application method. Under this method, SFAS      No. 123(R) applies to new awards and to awards modified, repurchased or      cancelled after the effective date. Additionally, compensation expense for      the portion of awards for which the requisite service has not been      rendered that are outstanding as of the required effective date shall be      recognized as the requisite service is performed on or after the required      effective date. Under the requirements of SFAS No. 123(R) the Company      recorded ($5,000) and $25,000 in compensation expense on stock options for      the three months ended June 30, 2009 and 2008, respectively. For the six      months ended June 30, the Company recorded $6,000 and $46,000 in 2009 and      2008, respectively. As of June 30, 2009, approximately $19,000 of      unrecognized compensation expense related to non-vested stock options is      expected to be recognized over the following 22      months. |

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| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

|   | The      fair value of each option was estimated on the date of grant using the      Black-Scholes option-pricing model with the following weighted average      assumptions: |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                         |   | Three      months ended |   |
|------------------------------|--------|-------------------------|--------|
|                         |   | June      30, 2009      |   | June      30, 2008 |   |
| Risk-free      interest rate |   | 3.7%                    |   | 4.1% |   |
| Expected      dividend yield |   | 0%                      |   | 0% |   |
| Expected      lives          |   | 2.2      Years          |   | 2.3      Years |   |
| Expected      volatility     |   | 83.3%                   |   | 75.9% |   |

|   | Fair      Value Measurements. Effective January 1, 2008, the Company adopted      SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) for all      financial and non-financial assets and liabilities accounted for at fair      value on a recurring basis. Effective January 1, 2009, the Company adopted      SFAS No. 157 for all non-financial assets and liabilities accounted for at      fair value on a non-recurring basis. SFAS No. 157 defines fair      value, establishes a framework for measuring fair value in accordance with      accounting principles generally accepted in the United States, and expands      disclosures about fair value measurements. There was no impact on the      Company’s financial statements upon  adoption. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      Company determined the fair values of certain financial instruments based      on the fair value hierarchy established in SFAS No. 157, “Fair Value      Measurements” (“SFAS No. 157”). SFAS No. 157 requires an entity to      maximize the use of observable inputs and minimize the use of unobservable      inputs when measuring fair value. The standard describes three levels of      inputs that may be used to measure fair value.                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Level      1: quoted price (unadjusted) in active markets for identical      assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Level      2: inputs to the valuation methodology include quoted prices for similar      assets and liabilities in active markets, and inputs that are observable      for the asset or liability, either directly or indirectly, for      substantially the full term of the instrument                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Level      3: inputs to the valuation methodology are unobservable for the asset or      liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | SFAS      No. 157 defines fair value as the exchange price that would be received      for an asset or paid to transfer a liability (exit price) in the principal      or most advantageous market for the asset or liability in an orderly      transaction between market participants on the measurement      date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The      carrying value of our debt instrument approximates fair value since our      debt instrument consists of a revolving credit line, which under certain      conditions can mature within one year of June 30, 2009, and because of its      short term nature. The interest rate is equal to the market rate for such      instruments of similar duration and credit  quality.                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

|   | We      did not have any assets or liabilities measured at fair value on a      recurring basis using quoted market prices in active markets (Level 1),      significant other observable inputs (Level 2) or significant unobservable      inputs (Level 3) during the period. Non-financial assets and liabilities      measured at fair value on a non-recurring basis are summarized      below: |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        |   | As      of June 30, 2009Fair      Value Measurements Using(in      000’s) |    |
|-------------|--------|---------------------------------------------------------------------------------|---------|
| Description |   | QuotedPrices      inActiveMarketsforIdenticalAssets(Level      1)               |    | SignificantOtherObservableInputs(Level      2) |   | SignificantUnobservableInputs(Level      3) |   | Total |   |
|        |   |                                                                            |    |   |   |   |   |   |   |   |   |   |   |
| Goodwill    |   | $                                                                               | — |   | $ | — |   | $ | 25,169 |   | $ | 25,169 |   |
|        |   |                                                                            |    |   |   |   |   |   |   |   |   |   |   |
| Total       |   | $                                                                               | — |   | $ | — |   | $ | 25,169 |   | $ | 25,169 |   |

|   | In      accordance with the provisions of SFAS No. 142, “Goodwill and Other      Intangible Assets”, (“SFAS No. 142”), the Company tests goodwill annually      for impairment. The annual impairment test is based on fair value      measurements using Level 3 inputs primarily consisting of estimated      discounted cash flows expected to result from the use of the asset. Upon      completion of its analysis for impairment as of January 1, 2009, no      impairment was determined to exist at that time.                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | Subsequent      Events. Effective June 30, 2009, the Company adopted SFAS No. 165,      “Subsequent Events” which establishes general standards of accounting for      and disclosure of events that occur after the balance sheet date but      before financial statements are issued or are available to be issued. SFAS      No. 165 identifies the period after a balance sheet date, the      circumstances under which an entity should recognize events or      transactions and the disclosures an entity should make regarding events      which occur after the balance sheet date.                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | For      the purposes of accounting and disclosure requirements, the Company      evaluated subsequent events through August 14, 2009, the issuance date of      the condensed financial statements, and noted there were no significant      events that occurred subsequent to the balance sheet date but prior to      issuance that would have a material impact on the condensed financial      statements.                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 2.     | FINANCING      OBLIGATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   | The      Company has a revolving credit facility (the “Credit Facility”) with      Wachovia Bank, National Association (the “Bank”) which has a maximum      borrowing limit of $15.0 million. The Credit Facility is used to fund the      Company’s capital expenditures, operational working capital and seasonal      working capital needs. The Credit Facility was renewed on March 27, 2009      when the Company entered into a Fourth Amended and Restated Loan and      Security Agreement (the “2009 Credit Agreement”) with the Bank, setting      forth the new terms of the Credit Facility including a maturity date of      June 30, 2012. There was no outstanding balance on June 30, 2009 under the      Credit Facility. |

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| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

|   | The      2009 Credit Agreement continues the Bank’s security interest in all of the      Company’s assets, but releases the Bank’s previously granted security      interest in certain personal assets of Scott Dorfman, the Company’s      Chairman, President and CEO, which were treated as additional collateral      under the prior credit agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Interest      on borrowings pursuant to the 2009 Credit Agreement is payable monthly at      specified rates of either, at the Company’s option, the Base Rate (as      defined in the 2009 Credit Agreement) plus between 2.00% and 2.50%, or the      LIBOR Rate (as defined in the 2009 Credit Agreement) plus between 3.00%      and 3.50%, in each case with the applicable margin depending on the      Company’s Average Excess Availability (as defined in the 2009 Credit      Agreement). The Company will pay a specified fee on undrawn amounts under      the Credit Facility. After an event of default, all loans will bear      interest at the otherwise applicable rate plus 2.00% per      annum.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | The      2009 Credit Agreement contains financial, affirmative and negative      covenants by the Company as are usual and customary for financings of this      kind which can result in the acceleration of the maturity of amounts      borrowed under the Credit Facility, including, without limitation, a      change in ownership control covenant, a subjective material adverse change      covenant and financial covenants establishing a minimum Fixed Charge      Coverage Ratio of 1.35 to 1.00, maximum annual Capital Expenditures, and      minimum Excess Availability (as each of these terms is defined in the 2009      Credit Agreement). The 2009 Credit Agreement also defines as an event of      default any termination of the employment of the Chief Financial Officer      of the Company, if the Company fails to fill such position with a      replacement acceptable to the Bank within 90 days. The provisions of the      2009 Credit Agreement require that the Company maintain a lockbox      arrangement with the Bank, and allows the Bank to declare any outstanding      borrowings to be immediately due and payable as a result of noncompliance      with any of the covenants. Accordingly, in the event of noncompliance, the      Company’s payment obligations with respect to such borrowings could be      accelerated. Therefore, when the Company has a balance on its line of      credit, it is classified as a current liability. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | Although      the maximum borrowing limit is $15.0 million, the Credit Facility limits      borrowings to a specified percentage of eligible accounts receivable and      inventory, which totaled $13.5 million at June 30, 2009. Additionally, the      terms of the Credit Facility provide that the amount borrowed and      outstanding at any time combined with certain reserves for rental      payments, letters of credit outstanding and general reserves be subtracted      from the Credit Facility limit or the value of the total collateral to      arrive at an amount of unused availability to borrow. The total collateral      under the Credit Facility at June 30, 2009 amounted to $13.5 million. At      June 30, 2009, there were no borrowings outstanding under the Credit      Facility, however, the value of reserves and letters of credit outstanding      totaled $3.1 million. As a result, the Company had $10.4 million of      borrowing availability under the Credit Facility at June 30,      2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | On      May 29, 2009, the Company entered into a $758,000 three year financing      agreement for the purchase of computer equipment. The lease was recorded      as a capital lease at June 30, 2009 with the first installment under the      lease due in July2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

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| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

|   | During      the three and six months ended June 30, 2008, the Company also had a $5.0      million second lien loan outstanding to a finance company (the “Second      Lien Credit Agreement”). The $5.0 million second lien loan was outstanding      from September 28, 2007 through September 26, 2008, and was entered into      when we determined that the completion of capital expenditure projects in      late 2007 and forecasted working capital requirements to support our      seasonal volume increase during the fourth quarter of 2007 required      additional short term funding. The 2007 seasonal working capital needs      were significant as a result of our 48% growth in annual revenue to $121.8      million in 2007. The $5.0 million second lien loan was repaid on September      26, 2008 from a combination of funds generated by operating income and      additional borrowing under the Credit Facility.                                                                                                                                                                                                |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | For      the three months ended June 30, 2009, we recorded interest expense of      $36,000 on the Credit Facility at a weighted average interest rate of      3.62%. The rate of interest being charged on the Credit Facility at June      30, 2009 was 3.56%. For the three months ended June 30, 2008, we recorded      interest expense of $57,000 on the Credit Facility at a weighted average      interest rate of 4.05% and $190,000 of interest expense on the Second Lien      Credit Agreement at a constant rate of 15.0% for the period. Our weighted      average interest rate for the three months ended June 30, 2009 and 2008,      including amounts borrowed under both the Credit Facility and the Second      Lien Credit Agreement, was 3.66% and 9.16% respectively. The Company also      incurred unused Credit Facility fees of approximately $11,000 and $4,000      for the three months ended June 30, 2009 and 2008, respectively.      Additionally, the Company reported $12,000 and $104,000 of amortized loan      costs as interest expense during the three months ended June 30, 2009 and      2008, respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | For      the six months ended June 30, 2009, we recorded interest expense of      $91,000 on the revolving credit agreement at a weighted average interest      rate of 3.18%. For the six months ended June 30, 2008, we recorded      interest expense of $135,000 at a weighted average rate of 4.76% on the      revolving credit agreement and $379,000 on the Second Lien Credit      Agreement at a constant rate of 15% for the period. Our weighted average      interest rate for the six months ended June 30, 2008, including amounts      borrowed under both the revolving credit agreement and the Second Lien      Credit Agreement, was 9.54%. The Company also incurred unused revolving      credit facility fees of approximately $23,000 and $9,000 for the six      months ended June 30, 2009 and 2008, respectively. Additionally, the      Company reported $50,000 and $208,000 of amortized loan coasts as interest      expense during the three months ended June 30, 2009 and 2008,      respectively.                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 3.     | EARNINGS      PER SHARE                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | The      following table shows the shares (in thousands) used in computing diluted      earnings per share (“EPS”) in accordance with Statement of Financial      Accounting Standards No. 128, “Earnings per  Share”:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

|                                           |   | Three      MonthsEnded      June 30, |    | Six      MonthsEnded      June 30, |   |
|------------------------------------------------|--------|--------------------------------------|---------|------------------------------------|--------|
|                                           |   | 2009                                 |    | 2008                               |   | 2009 |   | 2008 |   |
| Diluted      earnings per share:               |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Weighted      average shares outstanding       |   |                                 | 12,601  |                               |   | 12,586 |   |   | 12,601 |   |   | 12,586 |   |
|                                           |   |                                 |    |                               |   |   |   |   |   |   |   |   |   |
| Employee      and director stock options       |   |                                 | — |                               |   | 16 |   |   | — |   |   | 8 |   |
| Weighted      average shares assuming dilution |   |                                 | 12,601  |                               |   | 12,602 |   |   | 12,601 |   |   | 12,594 |   |

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| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

|   | Options      outstanding to purchase 1.2 million shares of the Company’s common stock      for both the three and six months ended June 30, 2009 and 945,000 shares      for the three months ended June 30, 2008 and 1.0 million shares for the      six months ended June 30, 2008 were not included in the computation of      diluted EPS because their effect was anti-dilutive. On January 1, 2009 the      Company adopted FSP EITF No. 03-6-1, which requires the inclusion of all      unvested stock awards which contain non-forfeitable rights to dividends or      dividend equivalents, whether paid or unpaid, in the number of shares      outstanding in our basic and diluted EPS calculations. As a result, we      have included the 265,956 restricted shares issued on April 16, 2007 in      our calculation of basic and diluted EPS for current and prior periods.      These shares, which are not vested, were issued under the terms provided      in the Executive Retention Plan which plan was ratified on June 5, 2005 at      the Company’s 2005 annual meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 4.     | INCOME      TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Innotrac      utilizes the liability method of accounting for income taxes in accordance      with SFAS No. 109, “Accounting for Income Taxes”. Under the liability      method, deferred taxes are determined based on the difference between the      financial and tax basis of assets and liabilities using enacted tax rates      in effect in the years in which the differences are expected to reverse. A      valuation allowance is recorded against deferred tax assets if the Company      considers it is more likely than not that deferred tax assets will not be      realized. Innotrac’s gross deferred tax asset as of June 30, 2009 and      December 31, 2008 was approximately $17.2 million and $18.7 million,      respectively. This deferred tax asset was generated primarily by net      operating loss carryforwards created mainly by a special charge of $34.3      million recorded in 2000 and the net losses generated in 2002, 2003, 2005      and 2006. Innotrac has a net operating loss carryforward of $48.3 million      at December 31, 2008 that expires between 2020 and2027.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | Innotrac’s      ability to generate the expected amounts of taxable income from future      operations is dependent upon general economic conditions, competitive      pressures on sales and margins and other factors beyond management’s      control. These factors, combined with tax losses in recent years, create      uncertainty about the ultimate realization of the gross deferred tax asset      in future years. Therefore, a valuation allowance of approximately $10.8      million and $12.4 million has been recorded as of June 30, 2009 and      December 31, 2008, respectively. Income taxes associated with future      taxable earnings will be offset by the utilization of the net operating      loss carryforward resulting in a reduction in the valuation allowance. For      the three and six months ended June 30, 2009, deferred tax expense of      $730,000 and $1.6 million, respectively, was offset by a corresponding      decrease of the deferred tax asset valuation allowance. When, and if, the      Company can return to consistent profitability, and management determines      that it is likely it will be able to utilize the net operating losses      prior to their expiration, then the valuation allowance can be reduced or      eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | In      June 2006, the FASB issued FASB Interpretation No. 48, Accounting      for Uncertainty in Income Taxes—an interpretation of FASB Statement No.      109 (“FIN No. 48”), which clarifies the accounting for uncertainty      in tax      positions. This Interpretation requires that the Company determine whether      it is more likely than not that a tax position will be sustained upon      audit, based on the technical merits of the position. A tax position that      meets the more likely than not recognition threshold is measured to      determine the amount of benefit to recognize in the financial statements.      The tax position is measured at the largest amount of benefit that is      greater than 50 percent likely of being realized upon ultimate settlement.      The Company adopted FIN No. 48 effective January 1, 2007. The Company has      a gross deferred tax asset of approximately $18.7 million at December 31,      2008, which is estimated to have been reduced by $1.5 million to $17.2      million due to taxable earnings recorded during the six months ended June      30, 2009. As discussed in Note 6 to the financial statements in the 2008      Form 10-K, the Company has a valuation allowance against the full amount      of its deferred tax asset. The Company currently provides a valuation      allowance against deferred tax assets when it is more likely than not that      deferred tax assets will not be realized. The Company has recognized tax      benefits from all tax positions we have taken, and there has been no      adjustment to any net operating loss carryforwards as a result of FIN No.      48 and there are no unrecognized tax benefits and no related FIN No. 48      tax liabilities at June 30, 2009. |

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| INNOTRAC      CORPORATION                    |
|----------------------------------------------|
| NOTES      TO CONDENSED FINANCIAL STATEMENTS |
| June      30, 2009 and 2008                  |
| (Unaudited)                                  |

|   | The      Company generally recognizes interest and/or penalties related to income      tax matters in general and administrative expenses. As of June 30, 2009,      we have no accrued interest or penalties related to uncertain tax      positions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| 5.     | COMMITMENTS      AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Legal      Proceedings. The Company is subject to various legal proceedings      and claims that arise in the ordinary course of business. There are no      material pending legal proceedings to which the Company is a      party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | Employment      Commitment. In June 1999, in conjunction with the opening of a new      call center facility, the Company entered into an employment commitment      agreement with the City of Pueblo, Colorado, whereby the Company received      cash incentives of $968,000. These funds were accounted for as a reduction      in the basis of the assets acquired. In return for this consideration, the      Company is obligated to employ a minimum number of full-time employees at      its Pueblo facility, measured on a quarterly basis. This obligation became      effective June 2002 and continued through June 2009. In the event that the      number of full-time employees fails to meet the minimum requirement, the      Company will incur a quarterly penalty of $96.30 for each employee less      than the minimum required amount. During the three months ended June 30,      2009 and 2008, the Company did not meet the minimum employee requirements      of 359 full-time employees, as measured on a quarterly basis, incurring a      penalty of approximately $1,000 and $4,000 respectively. The Company      incurred a penalty of approximately $4,000 in each of the six months ended      June 30, 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 6.     | RELATED      PARTY TRANSACTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|   | In      early 2004, the Company learned that certain trading activity of the IPOF      Fund L.P., an owner of more than 5% of the outstanding Common Stock, may      have violated the short-swing profit rules under Section 16(b) of the      Securities Exchange Act of 1934. The Company promptly conducted an      investigation of the matter. IPOF Fund L.P. and its affiliates entered      into a settlement agreement with the Company on March 4, 2004 regarding      the potential Section 16(b) liability issues that provided for the      Company’s recovery of $301,957 no later than March 3, 2006. In December      2005, the United States District Court in Cleveland, Ohio appointed a      receiver to identify and administer the assets of the IPOF Fund, L.P. and      its general partner, David Dadante. The Company informed the IPOF receiver      of such agreement, but the likelihood of recovering such amount from the      receiver is doubtful. The Company has not recorded any estimated      receivable from this settlement. Additionally, the Federal Court has      prohibited the financial institutions holding Company stock owned by the      IPOF Fund L.P. and Mr. Dadante in margin accounts from selling any of      these shares through September 4, 2009. The court has permitted open      market sales by the receiver as he may in his sole discretion determine to      be consistent with his duty to maximize the value of the assets of IPOF      Fund, L.P. and as warranted by market conditions. The receiver has      indicated to the Company that he does not intend to direct any open market      sales during this period except in circumstances in which he believes that      there would be no material adverse impact on the market price for the      Company’s shares. |

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|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     | Item      2 – Management’s Discussion and Analysis of Financial Condition and      Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|     | The      following discussion may contain certain forward-looking statements that      are subject to conditions that are beyond the control of the Company.      Actual results may differ materially from those expressed or implied by      such forward-looking statements. Factors that could cause actual results      to differ include, but are not limited to, the Company’s reliance on a      small number of major clients; risks associated with the terms and pricing      of our contracts; reliance on the telecommunications and direct marketing      industries and the effect on the Company of the downturns, consolidation      and changes in those industries in recent years; risks associated with the      fluctuations in volumes from our clients; risks associated with upgrading,      customizing, migrating or supporting existing technology; risks associated      with competition; and other factors discussed in more detail in “Item 1A –      Risk Factors” in our Annual Report on Form 10-K. We undertake no      obligation to update any forward-looking statements, whether as a result      of new information, future events or otherwise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| Overview |
|     |
|     | Innotrac      Corporation (“Innotrac” or the “Company”), founded in 1984 and      headquartered in Atlanta, Georgia, is a full-service fulfillment and      logistics provider serving enterprise clients and world-class brands. The      Company employs sophisticated order processing and warehouse management      technology and currently operates eight fulfillment centers and a call      center in six cities spanning all time zones across the continental United      States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|     | During      the three months ended June 30, 2009, we completed the transfer of the DSL      Fast Access portion of fulfillment services we provide AT&T to      AT&T’s in-house fulfillment house. We also completed the shut down and      consolidation of our Reno, Nevada call center operation into our existing      call center in Pueblo, Colorado. Additionally during the second quarter,      we decided to close one of our less automated facilities in Romeoville,      Illinois, the lease for which expires in November 30, 2009. The Romeoville      facility was primarily used to provide services to two departing customers      whose sales volumes were seasonally concentrated in the fourth quarter. At      June 30, 2009, we recorded a $579,000 reserve for future costs related to      the closing of the Romeoville facility and employee severance resulting      from these events.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|     | On      July 5, 2009, the parent company of Smith and Hawken, Ltd. announced its      decision to liquidate the operations of Smith and Hawken resulting in the      Company ceasing to provide services to Smith and Hawken by a projected      date of the end of 2009. One of our two facilities in Hebron, Kentucky was      nearly exclusively used to provide fulfillment services for Smith and      Hawken and as a result, unless we identify new clients to be serviced in      that facility, we will close the facility in July 2010 at the end of its      current lease term. Based on our current expectations regarding the terms      of the liquidation plans and wind down of our services for Smith and      Hawken, we do not currently expect the shut down costs of our operations      and the facility, net of recoverable costs from the client, to be      material. As Smith and Hawken’s wind down plans become more developed, we      expect to be better able to assess whether any reserve for future costs      related to this event is needed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|     | The      combined effect of the loss of the DSL fast access portion of AT&T      fulfillment, the loss of the clients serviced from the Romeoville,      Illinois facility and the expected loss of Smith and Hawken as a customer      at the end of 2009 is projected to result in a significant reduction in      our revenue and operating profit in 2010 unless we identify new business      services to replace these lost clients. The combined revenue generated      from the AT&T DSL fast access account, the Romeoville, Illinois      customers and Smith and Hawken represented approximately $27.1 million or      25.9% of our total service revenue of $104.5 million for the year ended      December 2008. The loss of the Romeoville clients business and partial      loss of our AT&T business will cause a significant reduction in      revenues and operating profit during the second half of 2009. This      projected reduction in future revenue compared to our recently reported      revenue will be evaluated on an ongoing basis to determine if any      impairment in the carrying value of our equipment or goodwill is      appropriate. In reaction to these events, we have already consolidated the      call center operations and identified reductions in facility and general      and administrative expenses which will result from closing the Romeoville      and Smith and Hawken facilities to partially offset the reduced profit      contribution in future periods. Additionally, we have increased our      marketing staffing and will increase our business development efforts      going forward in an effort to replace these lost  accounts. |

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               |    |                                                   |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|---------|--------------------------------------------------------|
|   | We      receive most of our clients’ orders either through inbound call center      services, electronic data interchange (“EDI”) or the Internet. On a      same-day basis, depending on product availability, the Company picks,      packs, verifies and ships the item, tracks inventory levels through an      automated, integrated perpetual inventory system, warehouses data and      handles customer support inquiries. Our fulfillment and customer support      services interrelate and are sold as a package, however they are      individually priced. Our clients may utilize our fulfillment services, our      customer support services, or both, depending on their individual      needs. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               |    |                                                   |
|   | Our      core service offerings include the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               |    |                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Fulfillment      Services:         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | sophisticated      warehouse management technology     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | automated      shipping solutions                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | real-time      inventory tracking and order status     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | purchasing      and inventory management               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | channel      development                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | zone      skipping for shipment cost reduction         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | product      sourcing and procurement                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | packaging      solutions                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | back-order      management; and                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | returns      management.                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Customer      Support Services:    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | inbound      call center services                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | technical      support and order status                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | returns      and refunds processing                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | call      centers integrated into fulfillment platform |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | cross-sell/up-sell      services                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | collaborative      chat; and                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               | ● | intuitive      e-mail response.                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               |    |                                                   |
|   | The      Company is primarily focused on five diverse lines of business, or      industry verticals. This is a result of a significant effort made by the      Company to diversify both its industry concentration and client base over      the past several years.                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                               |    |                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Business Mix –      Revenues |

|                                          |   | Three      Months EndedJune      30, |   |   | Six      Months EndedJune      30, |   |
|-----------------------------------------------|--------|--------------------------------------|--------|--------|------------------------------------|--------|
| Business      Line/Vertical                   |   | 2009                                 |   |   | 2008                               |   |   | 2009 |   |   | 2008 |   |
| eCommerce      / Direct to Consumer           |   |                                 | 41.2   | %      |                               |   | 36.3 | % |   |   | 38.2 | % |   |   | 35.4 | %  |
| Direct      Marketing                         |   |                                 | 27.9   |   |                               |   | 35.8 |   |   |   | 29.9 |   |   |   | 36.4 |   |
| Modems                                        |   |                                 | 19.0   |   |                               |   | 18.6 |   |   |   | 20.8 |   |   |   | 18.4 |   |
| Business-to-Business      (“B2B”) |   |                                 | 7.1    |   |                               |   | 5.5 |   |   |   | 6.8 |   |   |   | 6.2 |   |
| Telecommunications                            |   |                                 | 4.8    |   |                               |   | 3.8 |   |   |   | 4.3 |   |   |   | 3.6 |   |
|                                          |   |                                 | 100.0  | %      |                               |   | 100.0 | % |   |   | 100.0 | % |   |   | 100.0 | % |

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|                                              |   |                                 |    |   |                               |   |    |   |   |   |    |   |
|---------------------------------------------------|--------|--------------------------------------|---------|--------|------------------------------------|--------|---------|--------|--------|--------|---------|--------|
|                                              |   | Three      Months EndedJune      30, |    |   | Six      Months EndedJune      30, |   |
|                                              |   | 2009                                 |    |   | 2008                               |   |    | 2009   |   |   | 2008    |   |
|                                              |   |                                 |    |   |                               |   |    |   |   |   |    |   |
| Service      revenues                             |   |                                 | 87.2    | %      |                               |   | 79.3    | %      |   |   | 86.4    | %      |   |   | 78.5 | % |
| Freight      revenues                             |   |                                 | 12.8    |   |                               |   | 20.7    |   |   |   | 13.6    |   |   |   | 21.5 |   |
| Total      Revenues                               |   |                                 | 100.0   | %      |                               |   | 100.0   | %      |   |   | 100.0   | %      |   |   | 100.0 | % |
|                                              |   |                                 |    |   |                               |   |    |   |   |   |    |   |   |   |   |   |
| Cost      of service revenues                     |   |                                 | 37.4    |   |                               |   | 35.8    |   |   |   | 37.2    |   |   |   | 36.4 |   |
| Cost      of freight expense                      |   |                                 | 12.7    |   |                               |   | 20.4    |   |   |   | 13.4    |   |   |   | 21.3 |   |
| Selling,      general and administrative expenses |   |                                 | 39.0    |   |                               |   | 35.8    |   |   |   | 38.3    |   |   |   | 34.8 |   |
| Depreciation      and amortization                |   |                                 | 4.0     |   |                               |   | 3.4     |   |   |   | 4.1     |   |   |   | 3.3 |   |
| Operating      income (loss)                      |   |                                 | 6.9     |   |                               |   | 4.6     |   |   |   | 7.0     |   |   |   | 4.2 |   |
| Other      expense, net                           |   |                                 | (0.2    | )      |                               |   | (1.2    | )      |   |   | (0.3    | )      |   |   | (1.2 | ) |
| Income      (loss) before income taxes            |   |                                 | 6.7     |   |                               |   | 3.4     |   |   |   | 6.7     |   |   |   | 3.0 |   |
| Income      tax benefit                           |   |                                 | — |   |                               |   | — |   |   |   | — |   |   |   | — |   |
| Net      income (loss)                            |   |                                 | 6.7     | %      |                               |   | 3.4     | %      |   |   | 6.7     | %      |   |   | 3.0 | % |

|   | Three      Months Ended June 30, 2009 Compared to Three Months Ended June 30,      2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Service      Revenues. Net service revenues increased 2.7% to $24.1 million for      the three months ended June 30, 2009 from $23.4 million for the three      months ended June 30, 2008. This increase was primarily attributable to a      $1.2 million increase in revenues from our eCommerce vertical due to      increased volumes from existing clients, a $195,000 increase in revenue      from our Telecom vertical offset by a $559,000 decrease in revenue from      our direct marketing vertical and a $177,000 reduction in revenue      from our DSL clients due to reduced volumes resulting from the transition      of a portion of the AT&T fulfillment business to AT&T’s in-house      fulfillment as previously      discussed.                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Freight      Revenues. The Company’s freight revenues decreased 42.1% to $3.5      million for the three months ended June 30, 2009 from $6.1 million for the      three months ended June 30, 2008. The $2.6 million decrease in      freight revenues is primarily attributable to the transition of      Company owned freight accounts to client owned freight accounts. This      transition to client owned accounts has no material impact on our      operating profitability due to pricing practices for direct freight      costs.                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Cost      of Service Revenues. Cost of service revenues decreased 2.2% to      $10.3 million for the three months ended June 30, 2009, compared to $10.6      million for the three months ended June 30, 2008. The cost of service      revenue decrease was primarily due to the decrease in labor costs      associated with the combined effect of increased employee rosters      resulting from decreasing the use of higher cost temporary labor services      and operating efficiencies resulting from adjusting labor shifts to      correspond with client volumes and fulfillment equipment installed during      2008. As a result of these operating improvements, cost of service      revenues as a percent of service revenues decreased by 2.2% to 42.9% from      45.1% for the three months ended June 30, 2009 and 2008      respectively. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Freight      Expense. The Company’s freight expense decreased 42.0% to $3.5      million for the three months ended June 30, 2009 compared to $6.0 million      for the three months ended June 30, 2008 due to the decrease in freight      revenue for the reason listed  above.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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|   |                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------|
| 31.1   | Certification      of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d –      14(a).     |
| 31.2   | Certification      of principal financial officer Pursuant to Rule 13a-14(a)/15d –      14(a). |
| 32.1   | Certification      of Chief Executive Officer Pursuant to 18 U.S.C. §1350.                      |
| 32.2   | Certification      of principal financial officer Pursuant to 18 U.S.C. §    1350.              |

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|                       |                                                                                                 |                      |   |   |
|----------------------------|------------------------------------------------------------------------------------------------------|---------------------------|--------|--------|
|                       | INNOTRAC      CORPORATION                                                                            |                      |
|                       | (Registrant)                                                                                         |
|                       |                                                                                                 |                      |
| Date:      August 14, 2009 | By:                                                                                                  | /s/      Scott D. Dorfman |   |
|                       | Scott      D. Dorfman                                                                                |
|                       | President,      Chief Executive Officer and Chairmanof      the Board (Principal Executive  Officer) |

| Date:      August 14, 2009 | By:                                                                                            | /s/      George M. Hare |   |
|----------------------------|------------------------------------------------------------------------------------------------|-------------------------|--------|
|                       | George      M. Hare                                                                            |
|                       | Chief      Financial Officer (Principal FinancialOfficer and      Principal AccountingOfficer) |