SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the Quarterly Period Ended June 30, 2000

                                       OR

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

                        For the transition period from to

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

                              INNOTRAC CORPORATION
         -------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


       Georgia                                               58-1592285
     -----------------------------------------------------------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                          Identification Number)


    6655 Sugarloaf ParkwayDuluth, Georgia                          30097
    -----------------------------------------------------------------------
    (Address of principal executive offices)                     (Zip Code)

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


      Indicate by check mark  whether the  registrant  (1) has filed all reports
      required to be filed by Section 13 or 15(d) of the Securities Exchange Act
      of 1934 during the  preceding 12 months (or for such  shorter  period that
      the  registrant  was  required  to file  such  reports),  and (2) has been
      subject  to such  filing  requirements  for the  past  90  days.
                                                                  Yes X   No
                                                                     ---    ---


Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                       Outstanding at August 7, 2000
                                       -----------------------------

Common Stock at $.10 par value               11,204,995 Shares


<PAGE>

<TABLE>

                                      INDEX

<S>                                                                                                                <C>
Part I. Financial Information

       Item 1.   Financial Statements

                 Condensed Consolidated Balance Sheets -
                 June 30, 2000 (Unaudited) and December 31, 1999                                                   2

                 Condensed Consolidated Statements of Operations (Unaudited) for the
                 Three Months Ended June 30, 2000 and 1999                                                         3

                 Condensed Consolidated Statements of Operations (Unaudited) for the
                 Six Months Ended June 30, 2000 and 1999                                                           4

                 Condensed Consolidated Statements of Cash Flows (Unaudited) for the
                 Six Months Ended June 30, 2000 and 1999                                                           5

                 Notes to Condensed Consolidated Financial Statements                                              6

       Item 2.   Management's Discussion and Analysis of Financial Condition and Results of Operations             7

       Item 3.   Quantitative and Qualitative Disclosure About Market Risk                                         11

Part II. Other Information

       Item 4.   Submission of Matters to a Vote of Securities Holders                                             12

       Item 6.   Exhibits and Reports on Form 8-K                                                                  12

Signatures                                                                                                         13
</TABLE>


                                       1

<PAGE>

Part I - Financial Information

Item 1 - Financial Statements

                              INNOTRAC CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2000 AND DECEMBER 31, 1999
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                     ASSETS                                       JUNE 30 2000      DECEMBER 31, 1999
                                     ------                                     ----------------    -----------------
                                                                                  (UNAUDITED)
<S>                                                                               <C>                   <C>
Current assets:
     Cash and cash equivalents..................................................  $    3,554            $       894
     Accounts receivable, net...................................................      58,402                 52,431
     Inventories, net...........................................................      13,262                 39,503
     Prepaid expenses and other current assets..................................      10,981                  1,982
                                                                                  ----------            -----------
               Total current assets                                                   86,199                 94,810
                                                                                  ----------            -----------

Property and equipment:
     Rental equipment...........................................................       4,123                  4,986
     Computer, machinery and transportation equipment...........................      14,785                  8,711
     Furniture, fixtures and leasehold improvements.............................       3,380                  2,830
                                                                                  ----------            -----------
                                                                                      22,288                 16,527
     Less accumulated depreciation and amortization.............................       8,217                  7,605
                                                                                  ----------            -----------
                                                                                      14,071                  8,922
                                                                                  ----------            -----------

Other assets, net...............................................................         239                    486
                                                                                  ----------            -----------
                                                                                  $  100,509            $   104,218
                                                                                  ==========            ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY                      June 30, 2000       December 31, 1999
                      -------------------------------------                    ----------------     -----------------
                                                                                 (Unaudited)

Current liabilities:
     Current portion of long-term debt..........................................  $        3            $         8
     Accounts payable...........................................................      19,878                 10,530
     Accrued expenses...........................................................       8,441                  7,384
                                                                                  ----------            -----------
               Total current liabilities........................................      28,322                 17,922
                                                                                  ----------            -----------

Total noncurrent liabilities....................................................       2,350                  7,083
                                                                                  ----------            -----------
               Total liabilities................................................      30,672                 25,005
                                                                                  ----------            -----------

Minority interest in subsidiary.................................................         954                      -
                                                                                  ----------            -----------

Shareholders' equity:
     Common stock...............................................................       1,121                  1,121
     Additional paid-in capital.................................................      59,701                 59,701
     Retained earnings..........................................................       8,061                 18,391
                                                                                  ----------            -----------
              Total shareholders' equity........................................      68,883                 79,213
                                                                                  ----------            -----------
              Total liabilities and shareholders' equity........................  $  100,509            $   104,218
                                                                                  ==========            ===========

The  accompanying  notes  are an  integral  part of  these condensed consolidated statements.
</TABLE>


                                       2

<PAGE>

Financial Statements-Continued

                              INNOTRAC CORPORATION
                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                    THREE MONTHS ENDED JUNE 30, 2000 AND 1999
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                       Three Months Ended June 30,
                                                                                          2000             1999
                                                                                       -----------      -----------
<S>                                                                                    <C>              <C>
Revenues, net...................................................................       $    50,352      $    57,496
Cost of revenues................................................................            42,240           45,776
Special charges.................................................................             7,477                -
                                                                                       -----------      -----------
               Gross margin.....................................................               635           11,720
                                                                                       -----------      -----------

Operating expenses:
       Selling, general and administrative expenses.............................             6,568            4,960
       Special charges..........................................................             8,472                -
       Depreciation and amortization............................................               932              891
                                                                                       -----------      -----------
                Total operating expenses........................................            15,972            5,851
                                                                                       -----------      -----------
Operating (loss) income.........................................................           (15,337)           5,869
                                                                                       -----------      -----------

Other expenses, net.............................................................               109              472
                                                                                       -----------      -----------

(Loss) income before income taxes...............................................           (15,446)           5,397
Income tax benefit (provision) .................................................             6,240           (2,131)
                                                                                       -----------      -----------
                Net (loss) income...............................................       $    (9,206)     $     3,266
                                                                                       ===========      ===========

Earnings per share:

Basic and diluted earnings per share (See Note 4):

       Basic....................................................................       $      (0.82)    $      0.36
                                                                                       ============     ===========

       Diluted..................................................................       $      (0.82)    $      0.36
                                                                                       ============     ===========

Weighted average shares outstanding:

       Basic....................................................................             11,215           9,000
                                                                                       ============     ===========

       Diluted..................................................................             11,215           9,170
                                                                                       ============     ===========


                The  accompanying  notes  are an  integral  part of  these condensed consolidated statements.
</TABLE>


                                       3
<PAGE>

Financial Statements-Continued

                              INNOTRAC CORPORATION
                    CONDENSED CONSOLIDATED INCOME STATEMENTS
                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                        Six Months Ended June 30,
                                                                                          2000              1999
                                                                                       ----------       -----------
<S>                                                                                    <C>              <C>
Revenues, net...................................................................       $   98,202       $   124,816
Cost of revenues................................................................           83,334           101,814
Special charges.................................................................            7,477                 -
                                                                                       ----------       -----------
               Gross margin.....................................................            7,391            23,002
                                                                                       ----------       -----------

Operating expenses:
       Selling, general and administrative expenses.............................           14,144             9,544
       Special charges..........................................................            8,472                 -
       Depreciation and amortization............................................            1,727             1,806
                                                                                       ----------       -----------
                Total operating expenses........................................           24,343            11,350
                                                                                       ----------       -----------
Operating (loss) income.........................................................          (16,952)           11,652
                                                                                       ----------       -----------

Other expenses, net.............................................................              353               825
                                                                                       ----------       -----------

(Loss) income before income taxes...............................................          (17,305)           10,827
Income tax benefit (provision) .................................................            6,975            (4,276)
                                                                                       ----------       -----------
                Net (loss) income...............................................       $  (10,330)      $     6,551
                                                                                       ==========       ===========

Earnings per share:

Basic and diluted earnings per share (See Note 4):

       Basic....................................................................       $    (0.92)      $      0.72
                                                                                       ==========       ===========

       Diluted..................................................................       $    (0.92)      $      0.72
                                                                                       ==========       ===========

Weighted average shares outstanding:

       Basic....................................................................           11,215             9,000
                                                                                       ==========       ===========

       Diluted..................................................................           11,215             9,144
                                                                                       ==========       ===========

         The  accompanying  notes  are an  integral  part of  these condensed consolidated statements.
</TABLE>


                                       4
<PAGE>

Financial Statements-Continued


                              INNOTRAC CORPORATION
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                     SIX MONTHS ENDED JUNE 30, 2000 AND 1999
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                          2000               1999
                                                                                     ------------       -------------

<S>                                                                                  <C>                <C>
Cash flows from operating activities:
     Net (loss) income...........................................................    $   (10,330)       $     6,551
     Adjustments to reconcile net (loss) income to net cash provided by (used in)
         operating activities:
         Depreciation and amortization...........................................          1,727              1,806
         Loss on disposal of property and equipment..............................            451                302
         Minority interest in subsidiary.........................................            (46)                 -
         Deferred income taxes...................................................            372              1,302
         Increase in accounts receivable.........................................         (5,971)            (8,681)
         Decrease (increase) in inventories......................................         26,241            (14,837)
         Increase in prepaid expenses and other..................................         (8,584)              (464)
         Increase in accounts payable............................................          9,348              2,542
         Increase (decrease) in accrued expenses.................................          1,082             (6,830)
                                                                                     -----------        -----------
              Net cash provided by (used in) operating activities................         14,290            (18,309)
                                                                                     -----------        -----------

Cash flows from investing activities:
     Purchases of property and equipment.........................................          7,313)            (1,803)
     Other.......................................................................            (32)                 -
                                                                                     -----------        -----------
              Net cash used in investing activities..............................         (7,345)            (1,803)
                                                                                     -----------        -----------

Cash flows from financing activities:
     Net (repayments) borrowings under line of credit............................         (5,278)            17,166
     Repayment of long-term debt.................................................             (7)                (2)
     Proceeds from issuance of stock in subsidiary...............................          1,000                  -
     Distributions to shareholders, members and partners.........................            -                  (70)
                                                                                     -----------        -----------
              Net cash (used in) provided by financing activities................         (4,285)            17,094
                                                                                     -----------        -----------

Net increase (decrease) in cash and cash equivalents.............................          2,660             (3,018)
Cash and cash equivalents, beginning of period...................................            894              3,379
                                                                                     -----------        -----------
Cash and cash equivalents, end of period.........................................    $     3,554        $       361
                                                                                     ===========        ===========

Supplemental cash flow disclosures:

     Cash paid for interest......................................................    $       430        $       797
                                                                                     ===========        ===========

     Cash paid for income taxes, net of refunds received.........................    $        77        $     2,955
                                                                                     ===========        ===========

            The  accompanying  notes  are an  integral  part of  these condensed consolidated statements.
</TABLE>


                                       5
<PAGE>

Financial Statements-Continued


                              INNOTRAC CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             JUNE 30, 2000 AND 1999


1.    Certain  information  and  footnote   disclosures   normally  included  in
      financial  statements  prepared  in  accordance  with  generally  accepted
      accounting  principles have been condensed or omitted  pursuant to Article
      10 of  Regulation  S-X of the  Securities  and  Exchange  Commission.  The
      accompanying   unaudited  condensed   consolidated   financial  statements
      reflect,  in the  opinion of  management,  all  adjustments  necessary  to
      achieve a fair  statement  of  financial  position  and the results of its
      operations for the interim periods presented.  All such adjustments are of
      a normal and  recurring  nature  except  those  specified  otherwise.  The
      results of  operations  for the three  months  ended June 30, 2000 are not
      indicative  of the  results  to be  expected  for the  balance of the year
      ending December 31, 2000. It is suggested that these  condensed  financial
      statements  be  read  in  conjunction  with  the  consolidated   financial
      statements  and notes thereto  included in the  Company's  10-K filing and
      annual report.

2.    Some  balances  relating  to the three and six months  ended June 30, 1999
      have been reclassified to conform with the three and six months ended June
      30, 2000 presentation.

3.    Basic  earnings  per  share is  computed  by  dividing  net  income by the
      weighted average number of common shares outstanding. Diluted earnings per
      share  includes  the  effect of the  Company's  stock  options  (using the
      treasury  stock method) for 1999.  For 2000,  such effects are excluded as
      their effect is antidilutive. The following table shows the computation of
      the number of shares outstanding:

<TABLE>
<CAPTION>
                                       Three Months Ended June 30,          Six Months Ended June 30,
                                         2000              1999               2000              1999
                                      -----------      -----------         -----------       ----------
<S>                                        <C>               <C>                <C>               <C>
         Basic Shares                      11,215            9,000              11,215            9,000
         Stock Options                          -              170                   -              144
                                      -----------      -----------         -----------       ----------
         Diluted Shares                    11,215            9,170              11,215            9,144
                                      ===========      ===========         ===========       ==========
</TABLE>

4.    During the  quarter  ended June 30,  2000,  the Company  incurred  special
      charges of $15.9 million.  The majority of the charge was associated  with
      the  Company's  migration  towards fee for service  business  and included
      charges for inventory,  accounts  receivable and other items.  This charge
      equated to ($0.85) loss per share.  On a pro forma basis,  excluding these
      special charges, the Company's earnings per share was $0.03.




                                       6
<PAGE>


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  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  reliance  on a small  number  of  major  clients;  risks
associated  with buying,  warehousing and renting  products to customers;  risks
associated  with  the term of our  contracts;  risks of  entering  new  lines of
businesses,   particularly   e-commerce;   reliance  on  the  telecommunications
industry;  the impact of the trend toward  outsourcing;  dependence on qualified
managers and labor force;  risks  associated  with  changing  technology;  risks
associated with competition; risks associated with fluctuations in operating and
quarterly  results;  compliance  with government  regulation;  and other factors
discussed in more detail under "Business" in the Company's annual report on Form
10-K for the year ended December 31, 1999.

OVERVIEW

Innotrac provides customized, technology-based marketing support and fulfillment
services to large  corporations  that outsource these functions.  Since 1994, we
have had a high focus on the  telecommunications  industry because of its growth
characteristics  and increasing  marketing needs. We provide  marketing  support
services  and   fulfillment   of  Caller  ID  equipped   telephones   and  other
telecommunications  products to  BellSouth,  Pacific  Bell,  Southwestern  Bell,
Ameritech Services, Inc., Bell Atlantic and US West and their customers. For the
six  months  ended  June  30,  2000  and  1999,  the  Company's   three  largest
telecommunications   clients   represented   66%  and  93%  of  total   revenues
respectively.  During 1999, we began distributing Digital Subscriber Line Modems
(DSL modems) for BellSouth and other internet service providers  (ISPs).  During
2000,  the Company  began to expand its  e-commerce  business with the Coca-Cola
Company,  Kodak,  Haggar and others.  This continues to be a major initiative of
the  Company and will help  further  reduce  reliance on its  telecommunications
clients.

We have begun to convert our clients to a fee for service model.  For a majority
of our clients,  the Company will no longer purchase and sell Caller ID equipped
phones and other  telecommunications  equipment from third party  manufacturers.
Instead the Company will warehouse  products on a consignment  basis and fulfill
equipment on behalf of our  customers for a fee.  Management  believes that this
new model will substantially reduce revenue,  however, since the Company will no
longer  have  inventory  risk or cost of  equipment,  gross  margins,  and  more
importantly, operating cash flows should improve.

The Company receives most of its orders either through  electronic data exchange
(EDI) or the internet.  On a same day basis,  depending on product availability,
the Company picks, packs and ships the item, tracks inventory levels  through an
automated,  integrated perpetual  inventory  system, warehouses data and handles
customer support and level one technical inquiries.

Historically,  the Company experienced significant growth in units and revenues.
This growth stemmed  primarily from growth in Caller ID market  penetration  and
our  consultative  selling  with  respect  to  product-based  marketing  support
services.  Due to the  conversion to our fee for service  inventory  consignment
model,  management  believes  that in the future  revenues will decline but unit
growth should  continue,  although at a more modest pace.  According to industry
sources,  market  penetration  of Caller ID services in the United  States as of
December 31, 1999 was approximately 36.4% and is expected to reach approximately
75% by 2007.  Caller ID equipment sales have begun to level off as the Caller ID
market has matured.  We believe that by  distributing  other  telecommunications
products  such as DSL  modems  for  new and  existing  customers  and  expanding
customer distribution channels through e-commerce, we will be able to offset the
maturity in our Caller ID business.



                                       7


<PAGE>


On May 17, 2000, the Company invested in a new venture,  Return.com Online, Inc.
(Return.com) with its equity partner,  Mail Boxes Etc. (MBE), to process product
returns for online and catalog  retailers.  Return.com is the first full-service
returns  portal  supported  by the  convenience  of  3,400  physical  locations.
Customers  returning  merchandise  purchased online, or by catalog or phone, can
simply take the item to any participating MBE location in the U.S. for packaging
and shipping.  Return.com's Instacredit (TM) service, available later this year,
will allow many customers to receive  authorization for an immediate merchandise
credit on their  credit  card--rather  than  waiting  weeks for the return to be
processed by the merchant.

Return.com  operates  a Web  portal  that  will  leverage  MBE's  locations  and
Innotrac's customer care centers and reverse logistics  operations.  Information
from all these  entities will be entered into  Return.com's  database,  enabling
quick,  accurate and informative  customer  service.  When buyers wish to return
merchandise,  they simply click on the  Return.com  icon on the  merchant's  Web
site,  go  directly  to  the  Return.com  portal  or  call a  toll-free  number.
Return.com  will  then  verify  the  information  about  the  merchandise  to be
returned, and direct the customer to a MBE location where an Instacredit will be
authorized and the returned  merchandise  will be dropped off for shipping.  The
merchant can then have the return sent to either its  warehouse,  Innotrac or to
the manufacturer, or sold through the Return.com disposition network.

Innotrac has invested $3.0 million in this  subsidiary and has committed to fund
an  additional  $3.0 million when needed.  MBE has invested $1.0 million and has
the right to invest an  additional  $3.0  million  through  December  31,  2000.
Currently,  Innotrac owns 86% of this subsidiary.  However,  should MBE elect to
further invest, the Company's ownership position could be diluted down to as low
as 60%. We anticipate that the further  investment by MBE will occur,  but there
are no guarantees or requirements.  As a result of this ownership structure, the
Company has  consolidated  the results of operations  and financial  position of
Return.com  in the attached  condensed  consolidated  financial  statements.  We
expect  Return.com to generate  significant  operating losses for the balance of
2000 and into 2001.

In the quarter  ended June 30, 2000,  the Company  incurred  special  charges of
$15.9  million.  The majority of the charges were associated  with the Company's
migration  towards fee for service  business and included charges for inventory,
accounts receivable and other items.

Revenues  are  recognized  on the  accrual  basis as  services  are  provided to
customers or as units are shipped (including  installment  sales).  Revenues are
reduced for estimated  product  returns and  allowances,  which are based on our
historical experience.

The  largest  component  of our  expenses  is our  cost of  revenues  which  are
primarily variable in nature and which includes the following:

         o   the product costs of telecommunications equipment;
         o   the costs of labor associated with marketing support services;
         o   telecommunications services costs;
         o   materials and freight charges; and
         o   directly allocable facilities costs.


A second component of our expenses includes selling, general and administrative,
or SG&A,  expenses.  This expense item is comprised of  information  technology,
financial, human resources,  administrative and marketing functions that are not
allocable to specific client services. SG&A expenses tend to be fixed in nature.
A significant investment, beyond normal levels, is being expended on information
technology  during  2000 to  complete  the  Company's  migration  to a new fully
integrated warehouse  management,  procurement,  inventory,  billing and general
ledger  system.  This  migration  should  be  completed  in 2000  and  therefore
management expects such expenditures to return to normal levels in 2001.


                                       8

<PAGE>

RESULTS OF OPERATIONS

The following table sets forth unaudited summary operating data,  expressed as a
percentage  of  revenues,  for the three and six months  ended June 30, 2000 and
1999,  respectively.  The data has been prepared on the same basis as the annual
consolidated  financial statements.  In the opinion of the Company's management,
it reflects all  adjustments,  consisting of both a $15.9 million special charge
recorded  in  the  quarter   ended  June  30,  2000  and  normal  and  recurring
adjustments,  necessary  for a fair  presentation  of the  information  for  the
periods  presented.  Operating  results  for  any  period  are  not  necessarily
indicative of results for any future period.

The financial  information  provided below has been rounded in order to simplify
its  presentation.  However,  the  percentages  below are  calculated  using the
detailed  information   contained  in  the  condensed   consolidated   financial
statements.

<TABLE>
<CAPTION>
                                                            Three Months                Six Months
                                                           Ended June 30,              Ended June 30,
                                                           --------------              --------------
                                                          2000          1999          2000          1999
                                                          ----          ----          ----          ----
<S>                                                       <C>           <C>           <C>           <C>
Revenues.............................................     100.0%        100.0%        100.0%        100.0%
Cost of revenues.....................................      83.9          79.6          84.9          81.6
Special charges......................................      14.8           0.0           7.6           0.0
                                                         ------        ------        ------        ------
Gross margin.........................................       1.3          20.4           7.5          18.4
Selling, general and administrative expenses.........      13.0           8.6          14.4           7.7
Special charges......................................      16.9           0.0           8.6           0.0
Depreciation and amortization........................       1.9           1.6           1.8           1.4
                                                         ------        ------        ------        ------
Operating (loss) income..............................     (30.5)         10.2         (17.3)          9.3
Other expense, net...................................       0.2           0.8           0.3           0.7
                                                         ------        ------        ------        ------
(Loss) income before income taxes....................     (30.7)          9.4         (17.6)          8.7
Income tax benefit (provision).......................      12.4          (3.7)          7.1         (3.4)
                                                         ------        ------        ------        ------
Net (loss) income....................................     (18.3)%         5.7%        (10.5)%        5.3%
                                                         ======        ======        ======        ======
</TABLE>

THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999

REVENUES.  The Company's net revenues  decreased  12.4% to $50.4 million for the
three months  ended June 30, 2000 from $57.5  million for the three months ended
June 30, 1999. The decrease in revenue was primarily due to a decrease in Caller
ID units  distributed  plus a decrease  in average  per unit prices of Caller ID
units offset by an increase in our e-commerce business,  which included sales or
fulfillment of approximately 37,000 DSL modems.

COST OF REVENUES. The Company's cost of revenues decreased 7.7% to $42.2 million
for the three months ended June 30, 2000 compared to $45.8 million for the three
months  ended June 30, 1999.  Cost of revenues  decreased  primarily  due to the
decrease in units sold or fulfilled by the Company.

SPECIAL  CHARGES. The  Company  recorded  special  charges of $7.5  million  for
inventory writedowns and write-offs during the three months ended June 30, 2000.

GROSS  MARGIN.  For the three months ended June 30, 2000,  the  Company's  gross
margin  decreased  94.6% to  $635,000  compared  to $11.7  million for the three
months  ended June 30, 1999.  The decrease in gross margin was due  primarily to
special  charges of $7.5 million  plus the decrease in units sold or  fulfilled.
Exclusive  of the  special  charges,  gross  margins  decreased  to 16.1% of net
revenues from 20.4% of net revenues, respectively.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses for the three months
ended  June 30,  2000  increased  32.4%  to $6.6  million  or 13.0% of  revenues
compared to $5.0 million or 8.6% of revenues for the three months ended June 30,
1999.  This increase is due to  significant  investments,  beyond normal levels,


                                       9
<PAGE>

being expended on information  technology  during 2000 to complete the Company's
migration  to  a  new  fully  integrated  warehouse   management,   procurement,
inventory, billing and general ledger system.

SPECIAL  CHARGES.  The  Company  recorded  special  charges of $8.4  million for
accounts  receivable and other  write-offs  during the six months ended June 30,
2000.  The majority of these special charges were related to the fee for service
conversion.

INCOME TAXES.  The Company's  effective tax rate for the three months ended June
30, 2000 and 1999 was 39.5%, respectively.


SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED 1999

REVENUES.  The Company's net revenues  decreased  21.3% to $98.2 million for the
six months ended June 30, 2000 from $124.8 million for the six months ended June
30,  1999.  The  decrease in revenue was  primarily  due to a 45.2%  decrease in
Caller ID units distributed plus a decrease in average per unit prices of Caller
ID units offset by an increase in our e-commerce business,  which included sales
and fulfillment of approximately 72,000 DSL modems.

COST OF  REVENUES.  The  Company's  cost of  revenues  decreased  18.2% to $83.3
million for the six months  ended June 30, 2000  compared to $101.8  million for
the six months ended June 30, 1999. Cost of revenues decreased  primarily due to
the decrease in units sold by the Company.

SPECIAL  CHARGES.  The  Company  recorded special  charges of $7.5  million  for
inventory writedowns and write-offs during the three months ended June 30, 2000.

GROSS MARGIN. For the six months ended June 30, 2000, the Company's gross margin
decreased  67.9% to $7.4  million  compared to $23.0  million for the six months
ended June 30, 1999.  The decrease in gross margin was due  primarily to special
charges of $7.5 million plus the decrease in units sold and fulfilled. Exclusive
of the special  charges,  gross margins  decreased to 15.1% of net revenues from
18.4% of net revenues, respectively.

SELLING,  GENERAL AND ADMINISTRATIVE  EXPENSES. SG&A expenses for the six months
ended  June 30,  2000  increased  48.2% to $14.1  million  or 14.4% of  revenues
compared to $9.5  million or 7.7% of revenues  for the six months ended June 30,
1999.  This increase is due to a significant  investment,  beyond normal levels,
being expended on information  technology  during 2000 to complete the Company's
migration  to  a  new,  fully  integrated  warehouse  management,   procurement,
inventory, billing and general ledger system. This migration should be completed
in 2000 and therefore such expenditures will return to normal levels in 2001.

SPECIAL  CHARGES.  The  Company  recorded  special  charges of $8.4  million for
accounts  receivable and other  write-offs  during the six months ended June 30,
2000.  The  majority of the special  charges were related to the fee for service
conversion.

INCOME TAXES.  The Company's  effective tax rate for the three months ended June
30, 2000 and 1999 was 39.5%, respectively.


                                       10

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

The Company funds its operations and capital expenditures primarily through cash
flow from  operations  and borrowings  under a credit  facility with a bank and,
from time to time, equity  offerings.  The Company had cash and cash equivalents
of approximately $3.6 million at June 30, 2000, including $3.0 million, which is
committed to the startup and development of Return.com.  The Company maintains a
$40.0  million  revolving  line of credit  with a bank,  maturing  in June 2002.
Borrowings under the line of credit bear interest at the Company's option at the
bank's prime rate,  as adjusted from time to time, or LIBOR plus up to 225 basis
points. At June 30, 2000, the interest rate on the line of credit was 7.93%, and
the weighted  average  interest  rate for the six months ended June 30, 2000 was
6.29%. At June 30, 2000, $1.7 million was outstanding under the line of credit.

During the six months ended June 30, 2000, the Company  generated  $14.3 million
in cash flow from operating  activities  compared to the use of $18.3 million in
cash flow from  operating  activities in the same period in 1999. The generation
of cash flow from  operating  activities  for the six months ended June 30, 2000
compared to the use of cash flow from operating activities in the same period in
1999 was due primarily to the decrease in inventory  levels  attributable to the
Company's migration towards a fee for service business model.

During the six months ended June 30, 2000, net cash used in investing activities
was $7.3 million in 2000 as compared to $1.8 million in 1999.  This increase was
primarily  due  to an  increase  in  technology  purchases  for  our  e-commerce
applications and internal systems development.

During  the six  months  ended  June 30,  2000,  the net cash used in  financing
activities  was $4.3  million  compared to $17.1  million  provided by financing
activities  in the same period in 1999.  This use of cash was  primarily  due to
repayments of borrowings under the Company's line of credit.

The Company estimates that its cash and financing needs through 2000 will be met
by cash flows from operations and its line of credit  facility.  The Company may
need to raise  additional  funds in order  to take  advantage  of  unanticipated
opportunities.  These opportunities could include  acquisitions of complementary
businesses  or  the  development  of  new  products,  or  otherwise  respond  to
unanticipated competitive pressures.  There can be no assurance that the Company
will be able to raise any such capital on terms  acceptable to the Company or at
all.


RECENT ACCOUNTING PRONOUNCEMENTS

The FASB has issued Statement No. 133, Accounting for Derivative Instruments and
Hedging  Activities,  as amended by Statement No. 138,  which must be adopted by
January 1, 2001. This statement  establishes  accounting and reporting standards
for derivative instruments--including certain derivative instruments embedded in
other contracts--and for hedging activities. Adoption of this statement will not
have a material impact on our consolidated financial statements.

ITEM 3- QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

We believe our  exposure to market risks is  immaterial.  We hold no market risk
sensitive  instruments for trading  purposes.  At present,  we do not employ any
derivative  financial  instruments,  other  financial  instruments or derivative
commodity  instruments to hedge any market risks and we do not currently plan to
employ them in the future.  To the extent  that we have  borrowings  outstanding
under our credit  facility,  we have market risk  relating to the amounts of our
borrowings  because  interest rates under the credit facility are variable.  Our
exposure is immaterial due to the short-term nature of these borrowings.



                                       11
<PAGE>


PART II - OTHER INFORMATION

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

On May 17, 2000 the Company held its annual meeting of shareholders. A quorum of
10,977,089  out  of  11,214,995   shares  eligible  to  be  voted  (97.9%)  were
represented  at the  meeting  either in person or by proxy.  The  purpose of the
meeting was to re-elect two directors  whose terms expired in 2000,  approve the
Company's  2000 Stock Option and Incentive  Award Plan and approve the Company's
Senior Executive  Compensation Plan. At the meeting,  Messrs.  William H. Scott,
III and  Martin J. Blank  were both  re-elected  for a  three-year  term,  which
expires 2003,  and both the 2000 Stock Option and  Incentive  Award Plan and the
Senior Executive  Compensation Plan were approved. For both nominees, the number
of votes cast in favor was  10,352,819,  against was 624,270,  and the number of
abstentions and broker non-votes was zero. With respect to the 2000 Stock option
and Incentive Plan, 9,485,392 shares were voted in favor,  1,460,407 shares were
voted against and 31,290 shares abstained.  With respect to the Senior Executive
Compensation  Plan,  10,167,934  shares were voted in favor, 771,905 shares were
voted against and 37,250 shares abstained.

ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)     Exhibits

            Exhibit
            Number         Descripton
            ------         ----------

             10.1          Return.com Online, Inc. Shareholder Agreement
               27          Financial Data Schedule (for SEC use only)

(b)     Reports on Form 8-K -  There were no Form 8-K filings during the quarter
        ended June 30,2000.



                                       12
<PAGE>


                                   SIGNATURES

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


                                           INNOTRAC CORPORATION
                                           ........................
                                           (Registrant)



        Date:  August 14, 2000             By: /s/ Scott D. Dorfman
                                               Scott D. Dorfman
                                               President and Chief Executive
                                               Officer and Chairman of the Board


        Date:  August 14, 2000             By: /s/ David L. Gamsey
                                               David L. Gamsey
                                               Senior Vice President , Chief
                                               Financial Officer and Secretary
                                               (Principal Financial Officer)


                                       13

<PAGE>

                                 EXHIBIT INDEX
                                 -------------

            Exhibit
            Number         Descripton
            ------         ----------

             10.1          Return.com Online, Inc. Shareholder Agreement
               27          Financial Data Schedule (for SEC use only)