**United
      States**


**Securities
      and Exchange Commission**


**Washington,
      D.C. 20549**





**FORM
      10-Q**





[X]
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**For
                the quarterly period ended: June 30, 2006[ 
                 ]
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**Commission
                File Number: 001-31584





**I-TRAX,
      INC.**


(Exact
      name of registrant as specified in its charter)





**Delaware**
            
            **23-3057155**(State
                or other jurisdiction of
              incorporation
                or organization)
            
            (I.R.S.
                Employer Identification Number)





**4
      Hillman Drive, Suite 130**


**Chadds
      Ford, Pennsylvania 19317**


(Address
      of principal executive offices)


(Zip
      Code)





**(610)
      459-2405**


(Registrant’s
      telephone number, including area code)





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


Yes
      [X]  No
      [
 ]





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of “accelerated
      filer” and large accelerated filer in Rule 12b-2 of Securities Exchange Act of
      1934. (Check one):





Large
                accelerated filer [  ]
            Accelerated
                filer [  ]
            Non-Accelerated
                filer [X]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Securities Exchange Act of 1934).  Yes
      [
      ]  No
      [X]





As
      of
      August 11, 2006, there were 36,429,951 shares of the registrant’s $0.001 par
      value common stock outstanding.











**TABLE
      OF CONTENTS**








**Item**
            
            **Page****Part
                I - Financial Information**1.
            Financial
                Statements
            3Report
                of Independent Registered Public Accounting
                Firm
            3Condensed
                Consolidated Balance Sheet at June 30, 2006 and
                December 31, 2005
            4Condensed
                Consolidated Statements of Operations for the
                three months and six months ended June 30, 2006 and 2005
            5Condensed
                Consolidated Statements of Cash Flows for the
                six months ended June 30, 2006 and 2005
            6Notes
                to Condensed Consolidated Financial Statements
            82.
            Management’s
                Discussion and Analysis of Financial Condition
                and Results of Operations
            183.
            Quantitative
                and Qualitative Disclosures About Market
                Risk
            264.
            Controls
                and Procedures
            26**Part
                II - Other Information**1.
            Legal
                Proceedings
            261A.
            Risk
                Factors
            262.
            Unregistered
                Sales of Equity Securities and
                Use of Proceeds
            263.
            Defaults
                Upon Senior Securities
            274.
            Submission
                of Matters to a Vote of Security
                Holders
            275.
            Other
                Information
            286.
            Exhibits
            28





2








**PART
      I.****FINANCIAL
      INFORMATION**





**Item
      1.**  **Financial
      Statements**








**Report
      of Independent Registered Public Accounting Firm**








To
      the
      Board of Directors and


Stockholders
      of I-trax, Inc.





We
      have
      reviewed the accompanying condensed consolidated balance sheet of I-trax, Inc.
      (a Delaware corporation) and Subsidiaries as of June 30, 2006, and the related
      condensed consolidated statement of operations for the three and six-month
      periods ended June 30, 2006 and 2005 and the condensed consolidated statement
      of
      cash flows for the six month periods ended June 30, 2006 and 2005. These interim
      financial statements are the responsibility of the company’s
      management.





We
      conducted our reviews in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). A review of interim financial
      information consists principally of applying analytical procedures and making
      inquiries of persons responsible for financial and accounting matters. It is
      substantially less in scope than an audit conducted in accordance with standards
      of the Public Company Accounting Oversight Board, the objective of which is
      the
      expression of an opinion regarding the consolidated financial statements taken
      as a whole. Accordingly, we do not express such an opinion.





Based
      on
      our reviews, we are not aware of any material modifications that should be
      made
      to the condensed consolidated financial statements referred to above for them
      to
      be in conformity with United States generally accepted accounting
      principles.





We
      have
      previously audited, in accordance with standards of the Public Company
      Accounting Oversight Board (United States), the balance sheet as of December
      31,
      2005, and the related consolidated statements of operations, stockholders’
equity and cash flows, for the year then ended (not presented herein); and
      in
      our report dated February 3, 2006, we expressed an unqualified opinion on those
      consolidated financial statements. In our opinion, the information set forth
      in
      the accompanying condensed consolidated balance sheet as of December 31, 2005,
      is fairly stated, in all material respects, in relation to the consolidated
      balance sheet from which it has been derived.





As
      disclosed in Note 4, the Company changed its method of accounting for
      stock-based compensation, effective January 1, 2006.











**GOLDSTEIN
      GOLUB KESSLER LLP**


New
      York,
      New York





July
      19,
      2006


3


**I-TRAX,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED BALANCE SHEET**


***(in
      thousands, except share data)***





**June
                30, 2006**
              **(Unaudited)**
            
            December
                31,
              2005**ASSETS**Current
                assetsCash
                and cash equivalents
            
            **$**
            **6,430**
            
            $
            5,386Accounts
                receivable, net
            
            
            **15,955**
            
            
            15,490Other
                current assets
            
            
            **2,587**
            
            
            1,899Total
                current assets
            
            
            **24,972**
            
            
            22,775Property
                and equipment, net
            
            
            **3,939**
            
            
            4,042Goodwill
            
            
            **51,620**
            
            
            51,620Customer
                list, net
            
            
            **18,900**
            
            
            19,641Other
                intangible assets, net
            
            
            **626**
            
            
            864Other
                long-term assets
            
            
            **41**
            
            
            41Total
                assets
            
            **$**
            **100,098**
            
            $
            98,983**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilitiesAccounts
                payable
            
            **$**
            **7,861**
            
            $
            8,069Accrued
                payroll and benefits
            
            
            **4,172**
            
            
            3,961Net
                liabilities of discontinued operations
            
            
            **1,299**
            
            
            1,299Accrued
                loss contracts
            
            
            **113**
            
            
            419Current
                portion of accrued restructuring charges
            
            
            **132**
            
            
            312Other
                current liabilities
            
            
            **10,031**
            
            
            11,782Total
                current liabilities
            
            
            **23,608**
            
            
            25,842Senior
                secured credit facility
            
            
            **10,227**
            
            
            8,649Note
                payable
            
            
            **157**
            
            
            --Accrued
                restructuring charges, net of current portion
            
            
            **--**
            
            
            14Other
                long-term liabilities
            
            
            **2,310**
            
            
            2,315Total
                liabilities
            
            
            **36,302**
            
            
            36,820Stockholders’
                equityPreferred
                stock - $.001 par value, 2,000,000 shares authorized, 559,960 and
                853,039
                issued and outstanding, respectively; Liquidation preference: $13,999,000
                and $21,326,000 at June 30, 2006 and December 31, 2005,
                respectively
            
            
            **1**
            
            
            1Common
                stock - $.001 par value, 100,000,000 shares authorized 36,420,791
                and
                32,818,955 shares issued and outstanding, respectively
            
            
            **36**
            
            
            32Additional
                paid in capital
            
            
            **136,281**
            
            
            134,864Accumulated
                deficit
            
            
            **(72,522**
            **)**
            
            (72,734
            )Total
                stockholders’ equity
            
            
            **63,796**
            
            
            62,163Total
                liabilities and stockholders’ equity
            
            **$**
            **100,098**
            
            $
            98,983





The
      accompanying notes are an integral part of these financial
      statements.


4


**I-TRAX,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(Unaudited)**


***(in
      thousands, except share data)***





**Three
                months ended June 30**
            
            **Six
                months ended June 30****2006**
            
            2005
            
            **2006**
            
            2005Net
                revenue
            
            **$**
            **30,042**
            
            $
            28,239
            
            **$**
            **60,567**
            
            $
            55,704Costs
                and expensesOperating
                expenses
            
            
            **22,785**
            
            
            21,855
            
            
            **46,228**
            
            
            43,006Impairment
                of long-lived assets
            
            
            **--**
            
            
            12,470
            
            
            **--**
            
            
            12,470Provision
                for loss contracts
            
            
            **--**
            
            
            2,116
            
            
            **--**
            
            
            2,116Restructuring
                expenses
            
            
            **--**
            
            
            839
            
            
            **--**
            
            
            839General
                and administrative expenses
            
            
            **5,926**
            
            
            6,341
            
            
            **11,918**
            
            
            11,844Depreciation
                and amortization
            
            
            **828**
            
            
            916
            
            
            **1,687**
            
            
            1,968Total
                costs and expenses
            
            
            **29,539**
            
            
            44,537
            
            
            **59,833**
            
            
            72,243Operating
                income (loss)
            
            
            **503**
            
            
            (16,298
            )
            
            **734**
            
            
            (16,539
            )Other
                expensesInterest
                expense
            
            
            **115**
            
            
            177
            
            
            **229**
            
            
            304Amortization
                of financing costs
            
            
            **57**
            
            
            80
            
            
            **113**
            
            
            125Other
                expenses
            
            
            **--**
            
            
            --
            
            
            **--**
            
            
            --Total
                other expenses
            
            
            **172**
            
            
            257
            
            
            **342**
            
            
            429Income
                (loss) before provision for income taxes
            
            
            **331**
            
            
            (16,555
            )
            
            **392**
            
            
            (16,968
            )Provision
                for income taxes
            
            
            **90**
            
            
            252
            
            
            **180**
            
            
            259Net
                income (loss)
            
            
            **241**
            
            
            (16,807
            )
            
            **212**
            
            
            (17,227
            )Less
                preferred stock dividend
            
            
            **(283**
            **)**
            
            (518
            )
            
            **(620**
            **)**
            
            (1,043
            )Net
                loss applicable to common stockholders
            
            **$**
            **(42**
            **)**
            **$**
            (17,325
            )
            **$**
            **(408**
            **)**
            **$**
            (18,270
            )Loss
                per common share, basic and diluted
            
            **$**
            **(0.00**
            **)**
            **$**
            (0.57
            )
            **$**
            **(0.01**
            **)**
            **$**
            (0.64
            )Weighted
                average number of shares outstanding, basic and diluted
            
            
            **36,356,928**
            
            
            30,330,570
            
            
            **35,576,926**
            
            
            28,336,239







The
      accompanying notes are an integral part of these financial
      statements.


5


**I-TRAX,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**For
      the six months ended June 30**


**(Unaudited)**


***(in
      thousands)***





**2006**
            
            2005Operating
                activities:Net
                income (loss )
            
            **$**
            **212**
            
            $
            (17,227
            )Adjustments
                to reconcile net income (loss) to net cash used in operating
                activities:Impairment
            
            
            **--**
            
            
            12,470Accrued
                loss on contracts
            
            
            **(306**
            **)**
            
            2,116Employee
                stock purchase
            
            
            **--**
            
            
            34Options
                issued below market value
            
            
            **--**
            
            
            25Depreciation
                and amortization
            
            
            **1,687**
            
            
            1,968Modification
                of warrants
            
            
            **57**
            
            
            --Stock
                based compensation
            
            
            **556**
            
            
            --Issuance
                of stock below market value
            
            
            **73**
            
            
            --Issuance
                of warrants for services
            
            
            **44**
            
            
            --Amortization
                of financing costs
            
            
            **113**
            
            
            125Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            **(465**
            **)**
            
            (3,811
            )Deferred
                tax asset
            
            
            **--**
            
            
            144Other
                current assets
            
            
            **(688**
            **)**
            
            (1,107
            )Accounts
                payable
            
            
            **(208**
            **)**
            
            363Accrued
                payroll and benefits
            
            
            **211**
            
            
            1,260Accrued
                restructuring charges
            
            
            **(194**
            **)**
            
            795Other
                current liabilities
            
            
            **(1,261**
            **)**
            
            220Other
                long term liabilities
            
            
            **(5**
            **)**
            
            797Net
                cash used in operating activities
            
            
            **(174**
            **)**
            
            (1,828
            )Investing
                activities:Acquisition
                of intangible assets
            
            
            **(4**
            **)**
            
            (34
            )Purchases
                of property, plant and equipment
            
            
            **(713**
            **)**
            
            (1,509
            )Net
                cash used in investing activities
            
            
            **(717**
            **)**
            
            (1,543
            )Financing
                activities:Principal
                payments on capital leases
            
            
            **--**
            
            
            (9
            )Proceeds
                from stock option exercises
            
            
            **120**
            
            
            --Proceeds
                from stock issuance
            
            
            **58**
            
            
            150Proceeds
                from note payable
            
            
            **184**
            
            
            --Principal
                payments on notes payable
            
            
            **(27**
            **)**
            
            --Proceeds
                from exercise of warrants
            
            
            **22**
            
            
            --Proceeds
                from bank credit facility
            
            
            **1,578**
            
            
            2,692Net
                cash provided by financing activities
            
            
            **1,935**
            
            
            2,883Net
                increase(decrease) in cash and cash equivalents
            
            
            **1,044**
            
            
            (538
            )Cash
                and cash equivalents at beginning of period
            
            
            **5,386**
            
            
            3,805Cash
                and cash equivalents at end of period
            
            **$**
            **6,430**
            
            $
            3,267




(Continued
      on following page.)


The
      accompanying notes are an integral part of these financial
      statements.


6


**I-TRAX,
      INC. AND SUBSIDIARIES**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**For
      the six months ended June 30**


**(Unaudited)**


***(in
      thousands)***





(Continued
      from previous page.)





Supplemental
                disclosure of cash flow information:Cash
                paid during the period for:Interest
            
            **$**
            **328**
            
            $
            313Income
                taxes
            
            **$**
            **295**
            
            $
            184Schedule
                of non-cash investing and financing activities:Modification
                of warrants
            
            **$**
            **57**
            
            
            --Stock
                issuance below market value
            
            **$**
            **73**
            
            
            --Issuance
                of warrants for services
            
            **$**
            **44**
            
            
            --Reduction
                in accrued purchase price
            
            
            **--**
            
            $
            1,346Preferred
                stock dividend
            
            **$**
            **620**
            
            $
            1,043Conversion
                of accrued dividends to common stock
            
            **$**
            **1,112**
            
            $
            93
















The
      accompanying notes are an integral part of these financial
      statements.


7


**I-TRAX,
        INC. AND SUBSIDIARIES**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**




**1.
      Organization**





I-trax,
      Inc. (the **“Company”** )
      was
      incorporated in the State of Delaware on September 15, 2000. On March 19, 2004,
      the Company consummated a merger with Meridian Occupational Healthcare
      Associates, Inc., a private company, which did business as CHD Meridian
      Healthcare ( **“CHD
      Meridian”** ).





The
      Company offers health-related services such as on-site health centers that
      deliver primary care, acute care corporate health, occupational health, and
      pharmacy care management services, as well as integrated disease management,
      wellness and disability management programs.





The
      Company conducts its on-site services through CHD Meridian Healthcare, LLC,
      a
      Delaware limited liability company ( **“CHD
      Meridian LLC”** ),
      and
      its subsidiary companies, and its integrated disease management and wellness
      programs through I-trax Health Management Solutions, LLC, a Delaware limited
      liability company, and I-trax Health Management Solutions, Inc., a Delaware
      corporation.





Physician
      services at the Company’s on-site locations are provided under management
      agreements with affiliated physician associations, which are organized
      professional corporations that hire licensed physicians who provide medical
      services (the **“Physician
      Groups”** ).
      The
      Physician Groups provide all medical aspects of the Company’s on-site services,
      including the development of professional standards, policies, and procedures.
      The Company provides a wide array of business services to the Physician Groups,
      including administrative services, support personnel, facilities, marketing,
      and
      other non-medical services.








**2.
      Basis of Presentation and Interim Results**





The
      condensed consolidated financial statements include the accounts of the Company
      and its subsidiaries and have been prepared by the Company, without audit,
      pursuant to the rules and regulations of the Securities and Exchange Commission.





Certain
      information and footnote disclosures normally included in annual financial
      statements prepared in accordance with generally accepted accounting principles
      have been condensed or omitted pursuant to such rules and regulations. The
      Company believes that the disclosures are adequate to make the financial
      information presented not misleading. These condensed consolidated financial
      statements should be read in conjunction with the audited consolidated financial
      statements and the notes thereto included in the Company’s Annual Report on Form
      10-K for the year ended December 31, 2005, filed with the Securities and
      Exchange Commission on March 22, 2006 ( **“2005
      Annual Report”** ).
      All
      adjustments were of a normal recurring nature unless otherwise disclosed. In
      the
      opinion of management, all adjustments necessary for a fair statement of the
      results of operations for the interim period have been included. The results
      of
      operations for such interim periods are not necessarily indicative of the
      results for the full year.





8
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**2.
      Basis of Presentation and Interim Results (continued)**








The
      accompanying condensed consolidated financial statements include the
      accounts of the Company and its direct and indirect subsidiaries, which
      include CHD Meridian LLC, Green Hills Insurance Company (see Note 9), and the
      Physician Groups. All
      material intercompany accounts and transactions have been eliminated. The
      financial statements of the Physician Groups are consolidated with CHD Meridian
      LLC in accordance with the nominee shareholder model of Emerging Issues Task
      Force ( **“EITF”** )
      Issue
      No. 97-2, “Application of FASB Statement No. 94 and APB Opinion No. 16 to
      Physician Practice Management Entities and Certain Other Entities with
      Contractual Management Arrangements.” CHD Meridian LLC has unilateral control
      over the assets and operations of the Physician Groups.





Consolidation
      of the Physician Groups with CHD Meridian LLC, and consequently, the Company,
      is
      necessary to present fairly the financial position and results of operations
      of
      the Company. Control of the Physician Groups is perpetual and other than
      temporary because of the nominee shareholder model and the management agreements
      between the entities. The net tangible assets of the Physician Groups were
      not
      material at June 30, 2006 or December 31, 2005.





In
      June 2006, the Financial Accounting Standards Board ( **“FASB”** )
      issued
      FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes -
      An Interpretation of FASB Statement No. 109” ( **“FIN
      48”** ),
      which
      prescribes a recognition threshold and measurement attribute for the financial
      statement recognition and measurement of a tax position taken or expected to
      be
      taken in a tax return. FIN 48 is effective for fiscal years beginning after
      December 15, 2006. The Company is currently evaluating the impact of this new
      standard but does not believe it will have a material effect on the Company's
      financial statements.





The
      Company records pass-through pharmaceutical purchases on a net basis in
      compliance with EITF Issue No. 99-19, “Reporting Gross Revenue as a Principal
      vs. Net as an Agent.” The amounts of pass-through pharmaceuticals purchased by
      the Company for the three months ended June 30, 2006 and 2005 were $37,783,000
      and $28,964,000, respectively, and for the six months ended June 30, 2006 and
      2005 were $75,225,000 and $60,764,000, respectively.





**3.** ****** **Earnings/Loss
      Per Share**





The
      Company presents both basic and diluted earnings/loss per share on the face
      of
      the condensed consolidated statement of operations. As provided by Statement
      of
      Financial Accounting Standards ( **“SFAS”** )
      No.
      128, “Earnings per Share,” basic earnings/loss per share is calculated as income
      available to common stockholders divided by the weighted average number of
      shares outstanding during the period. Diluted
      earnings/loss per share reflects the potential dilution that could occur from
      common shares issuable through stock options, warrants and convertible preferred
      stock. As of June 30, 2006 and 2005, 11,935,519 and 18,152,740 shares,
      respectively, issuable upon exercise of options, warrants, and convertible
      securities were excluded from the diluted loss per share computation because
      their effect would be anti-dilutive.








9
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**4.
      Share-** **Based** **Compensation**





The
      Company has two equity compensation plans for employees, non-employee directors
      and certain consultants. The plans authorize the granting of stock options
      consistent with the purpose of the plans (see Note 13 to the Company’s
      consolidated financial statements included in the 2005 Annual Report). The
      number of shares authorized for issuance under the Company’s plans as of June
      30, 2006 totaled 4,800,000, of which 1,447,105 shares were available for future
      issuance. Stock options granted under these plans are typically granted with
      an
      exercise price equal to the market price of the Company’s stock at the date of
      grant. Options also generally vest over a period of three years with respect
      to
      grants made
      to
      employees and consultants and over a period of two years with respect to options
      granted to directors. Options typically expire ten years from the date of grant.





Prior
      to
      January 1, 2006, the Company accounted for its stock based compensation under
      the recognition and measurement principles of Accounting Principles Board
      ( **“APB”** )
      Opinion
      No. 25, “Accounting for Stock Issued to Employees,” and related interpretations,
      the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based
      Compensation” and the disclosures required by SFAS No. 148, “Accounting for
      Stock-Based Compensation-Transition and Disclosure.” In accordance with APB
      Opinion No. 25, no stock-based compensation cost was reflected in the Company’s
      prior year net income for grants of stock options to employees because the
      Company granted stock options with an exercise price equal to the market value
      of the stock on the date of grant.





Had
      the
      Company used the fair value based accounting method for stock compensation
      expense prescribed by SFAS Nos. 123 and 148, the Company’s consolidated net loss
      and net loss per share would have been reduced to the pro-forma amounts
      illustrated as follows:





For
                the
              threemonths
                ended
              June
                30, 2005
            
            For
                the
              six
                months ended
              June
                30, 2005Net
                loss as reported
            
            **$**
            (16,807,000
            )
            **$**
            (17,227,000
            )Deduct
                total stock-based employee compensation expense determined under
                fair
                value based methods for all awards
            
            
            (314,000
            )
            
            (653,000
            )Pro
                forma net loss
            
            **$**
            (17,121,000
            )
            **$**
            (17,880,000
            )Net
                loss per common share as reported, basic and diluted
            
            **$**
            (0.57
            )
            **$**
            (0.64
            )Pro
                forma net loss per common share, basic and diluted
            
            **$**
            (0.58
            )
            **$**
            (0.67
            )





10
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**




**4.
      Share-** **Based** **Compensation (continued)**





Before
      adoption of SFAS No. 123R, pro forma disclosures reflected the fair value of
      each option grant estimated on the date of grant using the Black-Scholes
      option-pricing model with the following weighted-average assumptions:





Dividend
                yield
            0.00%Expected
                volatility
            94.44%Risk-free
                interest rate
            3.99%Expected
                life
            5
                years





Effective
      January 1, 2006, the Company adopted the fair value recognition provisions
      of
      SFAS No. 123 (revised 2004), “Share-Based Payment,” ( **“SFAS
      123R”** )
      using
      the modified prospective method. Under this method, compensation cost in 2006
      includes the portion vesting in the period for (1) all share-based payments
      granted prior to, but not vested as of January 1, 2006, based on the grant
      date
      fair value estimated in accordance with the original provisions of SFAS No.
      123
      and (2) all share-based payments granted subsequent to January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the revised provisions
      of
      SFAS 123R.





Under
      SFAS No. 123R, however, the Company estimates expected volatility using
      historical volatility of the Company’s common stock as well as historical
      volatility of the common stock of comparable companies over the expected life
      of
      the options. The expected life of the options has been determined using the
      simplified method as prescribed in SEC Staff Accounting Bulletin No. 107
      ( **“SAB
      107”** ).
      Results of prior periods do not reflect any restated amounts and the Company
      had
      no cumulative effect adjustment upon adoption of SFAS No. 123R under the
      modified prospective method. The Company’s policy is to recognize compensation
      cost for awards with service conditions and a graded vesting schedule on a
      straight-line basis over the requisite service period for the entire award.
      The
      risk-free interest rate is based on the U.S. Treasury yield curve in effect
      at
      the time of grant for periods within the contractual life of the option. The
      expected dividend yield is based on the Company’s current dividend yield as the
      best estimate of projected dividend yield for periods within the contractual
      life of the option. Additionally, the Company’s policy is to issue new shares of
      common stock to satisfy stock option exercises.





During
      the three months ended March 31, 2006, the fair value of each option grant
      was
      estimated on the date of grant using the Black Scholes option-pricing model
      with
      the following weighted-average assumptions:





Dividend
                yield
            0.00%Expected
                volatility
            75.41%Risk-free
                interest rate
            4.45%Expected
                life
            6
                years





There
      were no option grants during the three months ended June 30,
      2006.


11
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**4.
      Share-** **Based** **Compensation (continued)**





The
      adoption of SFAS No. 123R decreased the Company’s second quarter 2006 reported
      operating income and net income by $ 271,000
      and reported basic and diluted net income by $0.01 per share. In the first
      quarter of 2006, operating income and net income decreased by $285,000 and
      reported basic and diluted net income by $0.01 per share. The expense is
      classified as general and administrative expense on the condensed consolidated
      statement of operations.





A
      summary
      of the Company’s stock option activity as of June 30, 2006, and changes during
      the six month period ended June 30, 2006 is presented in the following table:





Number
                of Shares
            
            Weighted
                Average Exercise Price
            
            Options
                Exercisable
            
            Weighted
                Average Exercise PriceDecember
                31, 2005
            
            
            3,675,466
            
            $
            1.72
            
            
            1,239,604
            
            $
            2.21Exercised
            
            
            (113,997
            )
            $
            0.71Granted
            
            
            140,000
            
            $
            2.65Forfeited
            
            
            (128,197
            )
            $
            1.42March
                31, 2006
            
            
            3,573,272
            
            $
            1.80
            
            
            1,590,977
            
            $
            2.09Exercised
            
            
            (23,855
            )
            $
            1.64Forfeited
            
            
            (118,101
            )
            $
            3.03June
                30, 2006
            
            
            3,431,316
            
            $
            1.76
            
            
            1,854,515
            
            $
            1.92





The
      weighted average remaining contractual term of options outstanding and
      exercisable at June 30, 2006, was 8.12 years and 7.56 years, respectively.
      The
      aggregate intrinsic value of options outstanding and exercisable at June 30,
      2006, was $5,013,000 and $2,553,000, respectively. The total intrinsic value
      of
      options exercised for the three months and six months ended June 30, 2006,
      was
      $29,000 and $405,000, respectively. The weighted-average grant date fair value
      of options granted during the six months ended June 30, 2006, was
      $1.83.





As
      of
      June 30, 2006, there was $1,497,000 of total unrecognized compensation cost
      related to unvested share-based compensation arrangements that is expected
      to be
      recognized over a weighted-average period of 1.89 years. During the second
      quarter of 2006, cash received from options exercised was $120,000. The total
      fair value of shares vested during the three month and six month period ended
      June 30, 2006 was $388,000 and $839,000, respectively.


12
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**4.
      Share-Based Compensation (continued)**





Information
      regarding options outstanding at June 30, 2006 was as follows:





Options
                Outstanding
            
            Options
                ExercisableRange
                of Exercise Price
            
            Number
                Outstanding
            
            Weighted
                Average
              Remaining
                Contractual Life
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable
            
            Weighted
                Average Exercise Price$0.00-$2.00
            
            2,842,253
            
            8.50
            
            $1.42
            
            1,420,877
            
            $1.40$2.01-$4.00
            
            492,303
            
            6.65
            
            $2.85
            
            342,718
            
            $2.91$4.01-$6.00
            
            54,160
            
            5.11
            
            $4.79
            
            48,320
            
            $4.83$6.01-$8.00
            
            24,000
            
            4.06
            
            $6.52
            
            24,000
            
            $6.52$8.01-$10.00
            
            18,600
            
            2.92
            
            $10.00
            
            18,600
            
            $10.003,431,316
            
            8.12
            
            $1.76
            
            1,854,515
            
            $1.92





A
      summary
      of the Company’s non vested shares as of June 30, 2006, and changes during the
      six month period ended June 30, 2006 is presented below:





Number
                of
              Shares
            
            Weighted
              Average
              Grant
                Date
              Fair
                ValueNon
                vested at January 1, 2006
            2,435,861
            
            $1.00Granted
            140,000
            
            $1.83Vested
            (465,671
            )
            $0.97Forfeited
            (127,895
            )
            $0.94Non
                vested at March 31, 2006
            1,982,295
            
            $1.06Granted
            --
            
            $0.00Vested
            (371,136
            )
            $1.09Forfeited
            (34,358
            )
            $0.94Non
                vested at June 30, 2006
            1,576,801
            
            $1.07








13
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**5.
      Restructuring and Related Activities**





During
      2005, the Company completed an in-depth analysis of its structure and product
      development efforts. This analysis led to the conclusion that certain products
      and services that the Company had been offering were no longer essential to
      its
      integrated business model. The Company then implemented a restructuring of
      its
      operations and related activities, which was substantially completed as of
      June
      30, 2005. A summary of the activity and balances of the restructuring and
      provision for loss contract reserve accounts was as follows:





Balance
                at December 31, 2005
            
            Cash
                Payments
            
            Balance
                at June 30, 2006RestructuringOne-time
                termination benefits
            
            $
            185,000
            
            
            (181,000
            )
            $
            4,000Contract
                termination costs
            
            
            141,000
            
            
            (13,000
            )
            
            128,000Restructuring
                total
            
            $
            326,000
            
            
            (194,000
            )
            $
            132,000Provision
                for loss contracts
            
            $
            419,000
            
            
            (306,000
            )
            $
            113,000








**6.
      Long Term Debt**





The
      Company’s senior credit facility with Bank of America, N.A., which is secured by
      substantially all of the Company’s tangible assets, provides financing up to
      $15,000,000 through a revolving credit line.





The
      Company amended the facility on May 4, 2006. Under the amendment, the maturity
      of the facility was extended from April 1, 2007 to October 1, 2007. The
      amendment also reset the “Fixed Charge Coverage Ratio” and redefined “EBITDA” to
      exclude non-cash stock-based compensation expense. Minimum EBITDA targets for
      periods ending June 30, 2006 through December 31, 2006 remain:





Period
            Minimum
                EBITDALast
                four fiscal quarters ending June 30, 2006
            3,580,000Last
                four fiscal quarters ending September 30, 2006
            3,960,000Last
                four fiscal quarters ending December 31, 2006
            4,450,000





At
      June
      30, 2006, the Company had $10,227,000 of debt outstanding under the senior
      credit facility and was in compliance with all covenants included in the
      facility. In addition, based on the borrowing base calculation, the Company
      had
      available an additional $3,117,000 under the revolving line of
      credit.





14
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**7.
      Stockholders’ Equity**





***Common
      Stock***





During
      the three months ended June 30, 2006, the Company issued 38,333 shares of stock
      at $1.51 to former employees in satisfaction of termination commitments. This
      issuance resulted in a charge of $73,000 which has been included in the
      statement of operations for the quarter ended June 30, 2006.





***Warrants***





On
      May
      17, 2006, the Company’s board of directors voted to extend the expiration date
      of certain warrants previously issued to an executive. The original expiration
      date of June 25, 2006 was extended to June 25, 2007 in consideration of the
      executive’s contribution to the Company’s performance. This resulted in a charge
      of $57,000 which has been included in general and administrative expenses for
      the three months ended June 30, 2006.





The
      following table summarizes the Company’s activity as it relates to
      warrants:





Shares
                Underlying WarrantsBalance
                outstanding at December 31, 2005
            
            
            3,069,514Granted
            
            
            100,000Exercised
            
            
            (112,911
            )Expired
            
            
            (12,000
            )Balance
                outstanding at March 31, 2006
            
            
            3,044,603Exercised
            
            
            (30,000
            )Expired
            
            
            (110,000
            )Balance
                outstanding at June 30, 2006
            
            
            2,904,603





At
      June
      30, 2006, all outstanding warrants were exercisable at a weighted average
      exercise price of $2.79 per share.





***Series
      A Convertible Preferred Stock***





During
      the three months ended June 30, 2006, 10,293 shares of Series A Convertible
      Preferred Stock, and $43,618 in dividends accrued on such stock, were converted
      into an aggregate of 116,771 shares of common stock.





As
      of
      June 30, 2006, 559,960 shares of Series A Convertible Preferred Stock were
      issued and outstanding. Each share of Series A Convertible Preferred Stock
      converts into 10 shares of common stock. Each share of Series A Convertible
      Preferred Stock also accrues dividends at the rate of 8% per year on $25.00
      per
      share, the original sale price. The Company accrued dividends of $283,000 for
      the three months ended June 30, 2006.


15
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**








**7.
      Stockholders’ Equity (continued)**





As
      of
      June 30, 2006, the Company had accrued aggregate dividends of $2,556,000, which
      at the Company’s option are payable in cash (subject to the consent of the
      senior secured creditor) or common stock valued at market price. If such
      dividends were paid in common stock at $3.13, the closing price of the common
      stock on June 30, 2006, the Company would be required to issue approximately
      817,000 additional shares of common stock.








**8.
      Commitments and Contingencies**





***Litigation***





The
      Company is involved in legal disputes on a variety of matters related to the
      ordinary course of the Company’s business. After reasonable diligence, the
      Company’s management believes that the estimated losses of the Company from such
      legal disputes have been adequately provided for in other current and other
      long-term liabilities to the extent probable and reasonably estimable and
      management expects these disputes will be resolved without a material adverse
      effect on the Company’s consolidated financial position or results of
      operations. Nonetheless, it is possible that the Company’s future results of
      operations for any particular quarterly or annual period may be materially
      affected by changes in the status of such legal disputes.





***Compliance
      with Healthcare Regulations***





Because
      the Company operates in the healthcare industry, it is subject to numerous
      laws
      and regulations of Federal, state, and local governments. These laws and
      regulations include, but are not limited to, matters regarding licensure,
      accreditation, government healthcare program participation requirements,
      reimbursement for patient services, and Medicare and Medicaid fraud and abuse.
      Government activity has stayed high with respect to investigations and
      allegations concerning possible violations of fraud and abuse laws and
      regulations by healthcare providers. Violations of these laws and regulations
      could result in, among other things, expulsion from government healthcare
      programs, fines, penalties, and restitution for billed services.





The
      Company’s management believes that the Company is in compliance with laws and
      regulations applicable to the Company’s business. Further, compliance with such
      laws and regulations is subject to future government review and interpretation
      as well as regulatory actions unknown or unasserted at this
      time.


16
 **I-TRAX,
          INC. AND SUBSIDIARIES**
 **NOTES
          TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **(Unaudited)**







**8.
      Commitments and Contingencies (continued)**





***Significant
      Customers***





As
      of
      June 30, 2006, one customer represented 19% of the Company’s accounts
      receivable. As of June 30, 2005, two customers represented 19% and 11% of the
      total accounts receivable.





For
      the
      three months ended June 30, 2006, one customer accounted for 11% of the
      Company’s revenue. For the three months ended June 30, 2005, one customer
      accounted for 12% of the Company’s revenue.





For
      the
      six months ended June 30, 2006, one customer accounted for 11% of the Company’s
      revenue. For the six months ended June 30, 2005, one customer accounted for
      12%
      of the Company’s revenue.








**9.
      Professional Liability and Related Reserves**





Since
      2004, the Company has secured medical malpractice and general liability
      insurance for certain of its direct and indirect subsidiaries through Green
      Hills Insurance Company, a Risk Retention Group ( **“GHIC”** ),
      incorporated as a subsidiary of CHD Meridian LLC under the laws of the State
      of
      Vermont. In years prior to 2004, the Company secured such insurance in the
      commercial market.





On
      an
      annual basis, the Company uses independent actuaries to estimate its exposures
      for claims obligations (for both asserted and unasserted claims) related to
      deductibles and exposures in excess of coverage limits. The Company maintains
      reserves for these obligations. Loss and loss adjustment expense reserves are
      recorded monthly and represent management’s best estimate of the ultimate net
      cost of all reported and unreported losses incurred. The reserves for unpaid
      losses and loss adjustment expenses are estimated using individual case-basis
      valuations and statistical analyses. Those estimates are subject to the effects
      of trends in claim severity and frequency. Although considerable variability
      is
      inherent in such estimates, management believes the reserves for losses and
      loss
      adjustment expenses are adequate. The estimates are reviewed and adjusted
      continuously as experience develops or new information becomes known; such
      adjustments are included in current operations.





At
      June
      30, 2006, the Company’s estimated loss reserve for cost and settlement of
      reported claims predating GHIC was $1,234,000, which is included in other
      current liabilities on the condensed consolidated balance sheet. The Company
      also maintains a reserve for incurred but not reported losses and loss
      adjustment expense predating or otherwise not assumed by GHIC. At June 30,
      2006,
      this reserve was $2,000,000 ,
      which
      is included in other long-term liabilities on the condensed consolidated balance
      sheet.





During
      the three months ended June 30, 2006, GHIC increased its reserves for reported
      claims and incurred but not reported losses and loss adjustment expense by
      $316,000 to $2,495,000, which is included in other current liabilities on the
      condensed consolidated balance sheet.





17







**Item
                2.**
            **Management’s
                Discussion and Analysis of Financial Condition and
                Results of Operations**





The
      following Management’s Discussion and Analysis of Financial Condition and
      Results of Operations of I-trax, Inc. and its subsidiaries should be read in
      conjunction with our unaudited condensed consolidated financial statements
      and
      related notes appearing on the preceding pages as well as our audited financial
      statements and related notes included in our Annual Report on Form 10-K for
      the
      year ended December 31, 2005 filed on March 22, 2006 ( **“2005
      Annual Report”** ).





***Forward
      Looking Statements***





The
      following discussion also contains forward-looking statements. All statements,
      other than statements of historical facts, included in this quarterly report
      regarding our strategy, future operations, financial position, future revenues,
      projected costs, prospects, plans and objectives of management are
      forward-looking statements. The words “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar
      expressions are intended to identify forward-looking statements, although not
      all forward-looking statements contain these identifying words. We cannot
      guarantee that we actually will achieve the plans, intentions or expectations
      disclosed in our forward-looking statements, and readers of this report should
      not place undue reliance on our forward-looking statements. Actual results
      or
      events could differ, possibly materially, from the plans, intentions and
      expectations disclosed in our forward-looking statements. We have identified
      important factors in the cautionary statements below and in our 2005 Annual
      Report that we believe could cause actual results or events to differ, possibly
      materially, from our forward-looking statements. Our forward-looking statements
      do not reflect the potential impact of any future acquisitions, mergers,
      dispositions, joint ventures or investments we may make. We undertake no duty
      to
      update these forward-looking statements, even though our situation may change
      in
      the future.





***Risk
      Considerations***





You
      are
      cautioned not to place undue reliance on the statements and other discussion
      set
      forth in this quarterly report. These statements and other discussion speak
      only
      as of the date this quarterly report is filed with the Securities and Exchange
      Commission, and these statements are based on management’s current expectations
      and are subject to uncertainty and changes in circumstances. Factors that may
      cause actual results to differ materially from management expectations include,
      but are not limited to:





·
            effects
                of increasing competition for contracts to establish and manage
                employer-dedicated pharmacies and clinics;





·
            loss
                of advantageous pharmaceutical pricing;





·
            inability
                to meet covenants and financial tests related to our senior secured
                credit
                facility;





·
            long
                and complex sales cycles;





·
            loss
                of a major client;





·
            cost
                pressures in the healthcare industry;





18


·
            exposure
                to professional liability claims and a failure to manage effectively
                our
                professional liability risks;





·
            economic
                uncertainty; and





·
            each
                of the factors discussed under “Item 1A. - Risk Factors” in our 2005
                Annual Report.





***Basis
      of Presentation***





The
      accompanying unaudited condensed consolidated financial statements have been
      prepared in accordance with accounting principles
      generally accepted in the United States of America for interim financial
      information, the instructions to Form 10-Q and Regulation S-X. In our
      opinion, the unaudited condensed consolidated financial statements have been
      prepared on the same basis as the annual financial statements and reflect all
      adjustments necessary to present fairly our financial position as of June 30,
      2006 and the results of the operations and cash flows for the three and six
      months ended June 30, 2006. The preparation of these financial statements
      requires us to make estimates and judgments that affect the reported amounts
      of
      assets and liabilities and the reported amounts of revenues and expenses during
      the covered periods. We base our estimates and judgments on our historical
      experience and on various other factors that we believe are reasonable under
      the
      circumstances. We evaluate our estimates and judgments, including those related
      to revenue recognition, bad debts, and goodwill and other intangible assets
      on
      an ongoing basis. Notwithstanding these efforts, there can be no assurance
      that
      actual results will not differ from the respective amount of those estimates.





***Business
      Overview***





I-trax
      is
      an integrated health and productivity management company formed by the merger
      on
      March 19, 2004 of I-trax, Inc. and Meridian Occupational Healthcare Associates,
      Inc., which did business as CHD Meridian Healthcare. We offer a range of health
      and productivity-related services to large, self-insured employers. Our services
      can be integrated or blended as necessary or appropriate based on each client’s
      needs. The
      services include on-site health centers, which deliver primary care, acute
      care
      corporate health, occupational health and pharmacy care management services,
      as
      well as integrated disease management, wellness, and disability management
      programs. We
      believe we are the nation’s largest provider of on-site healthcare on an
      outsourced basis.





We
      believe our services improve the health status of employees and mitigate the
      upward cost trend experienced by employers, employees, and government agencies
      with respect to health and wellness costs. By proactively managing the
      healthcare needs of our clients’ employees and their families, we believe our
      programs improve health, increase productivity, reduce absenteeism, reduce
      the
      need for future critical care, and manage overall costs. We
      also
      believe the breadth of our services allows our clients the flexibility to meet
      each of the following needs in a cost-effective and professional manner:
      pharmacy; primary care; occupational health; corporate health; wellness;
      lifestyle management; and disease management.





We
      deliver our services at or near the client’s work site by opening, staffing and
      managing a health center or pharmacy dedicated to the client and its eligible
      population. We also provide support services to enhance our on-site health
      centers by using the Internet and our call center services. In all, we provide
      care “face to face,” telephonically, and via the Internet. We believe that our
      integrated care delivery model enhances the trusted relationship established
      by
      our clinical providers on-site with their patients, using the support services
      of our call center and our Internet programs.




19


As
      of
      June 30, 2006, we were providing services to clients that include large
      financial institutions, consumer products manufacturers, health plans,
      integrated delivery networks, automotive and automotive parts manufacturers,
      and
      diversified industrial companies. For 94 of these clients, we operated 201
      on-site facilities in 32 states, providing a variety of health management
      programs. Our client retention rate is high due to strong client relationships
      that are supported by the critical nature of our services, the benefits achieved
      by employer and employee constituents, and the utilization of multi-year service
      contracts.





***Critical
      Accounting Policies***





A
      summary
      of significant accounting policies is disclosed in Note 2 to the consolidated
      financial statements included in our 2005 Annual Report. Our critical accounting
      policies are further described under the caption “Critical Accounting Policies”
in Management’s Discussion and Analysis of Financial Condition and Results of
      Operations in our 2005 Annual Report.





Effective
      January 1, 2006, we adopted Statement of Financial Accounting Standards No.
      123
      (revised 2004), “Share-Based Payment” ( **“SFAS
      123R”** ),
      using
      the modified prospective method. Under this method, compensation cost during
      2006 included the portion vesting in the period for (1) all share-based payments
      granted prior to, but not vested as of January 1, 2006, based on the grant
      date
      fair value estimated in accordance with the original provisions of SFAS No.
      123
      and (2) all share-based payments granted subsequent to January 1, 2006, based
      on
      the grant date fair value estimated in accordance with the revised provisions
      of
      SFAS 123R. Prior to adoption of SFAS 123R, we accounted for stock based
      compensation under the recognition and measurement principles of Accounting
      Principles Board ( **“APB”** )
      Opinion
      No. 25, “Accounting for Stock Issued to Employees,” and related interpretations,
      the disclosure-only provisions of SFAS No. 123, “Accounting for Stock-Based
      Compensation” and the disclosures required by SFAS No. 148, “Accounting for
      Stock-Based Compensation-Transition and Disclosure.” In accordance with APB
      Opinion No. 25, no stock-based compensation cost was reflected in prior year
      net
      loss for grants of stock options to employees because we granted stock options
      with an exercise price equal to the market value of the stock on the date of
      grant.





As
      of
      June 30, 2006, there was $1,497,000 of total unrecognized compensation cost
      related to unvested share-based compensation arrangements that is expected
      to be
      recognized over a weighted-average period of 1.89 years.





Other
      than the adoption of SFAS 123R, there have been no changes in the nature of
      our
      critical accounting policies or the application of those policies since December
      31, 2005.





***Key
      Financial Trends and Analytical Points***





***Milestones.*** During
      the quarter ended June 30, 2006, we:


·
              reported
                  net revenue of $30,042,000, an increase of 6.4%, from $28,239,000
                  for the
                  quarter ended June 30, 2005;
 
 ·
              generated
                  $503,000 of operating income as compared to last year’s operating loss of
                  $(16,298,000) for the comparable period;
 
 ·
              increased
                  our earnings before interest, taxes, depreciation and amortization,
                  or
                  EBITDA, to $1,331,000 from $(16,807,000) for last year’s first quarter
                  (2006 EBITDA includes $271,000 of share-based
                  compensation);
 
 20
 ·
              reduced
                  our net loss applicable to common shareholders to $(42,000) in
                  the second
                  quarter of 2006 from $(17,325,000) for the second quarter of 2005;
                  and
 
 ·
              recognized
                  general and administrative expense of $271,000 for SFAS 123R stock-based
                  compensation during this quarter.




In
      managing our business, we make ** use
      of
      EBITDA, which is a non-GAAP financial measure. We believe that EBITDA is a
      reliable and useful performance indicator for measuring the growth of our core
      operations. It also allows us to monitor the trend in our core operations.
      O ur
      results of operations for the three and six months ended June 30, 2006 and
      2005
      and reconciliation of net income to EBITDA for those periods follows (in
      thousands):





Three
                Months
              Ended
                June 30, 2006
            
            Three
                Months
              Ended
                June 30,
              2005
            
            Six
                Months
              Ended
                June 30,
              2006
            
            Six
                Months
              Ended
                June 30,
              2005Revenue
            
            $
            30,042
            
            $
            28,239
            
            $
            60,567
            
            $
            55,704Total
                costs and expenses
            
            
            29,539
            
            
            44,537
            
            
            59,833
            
            
            72,243Operating
                income (loss)
            
            
            503
            
            
            (16,298
            )
            
            734
            
            
            (16,539
            )Other
                expenses
            
            
            172
            
            
            257
            
            
            342
            
            
            429Income
                before taxes
            
            
            331
            
            
            (16,555
            )
            
            392
            
            
            (16,968
            )Provision
                for taxes
            
            
            90
            
            
            252
            
            
            180
            
            
            259Net
                income (loss)
            
            $
            241
            
            $
            (16,807
            )
            $
            212
            
            $
            (17,227
            )Reconciliation
                of net income to EBITDANet
                income (loss)
            
            
            241
            
            
            (16,807
            )
            
            212
            
            
            (17,227
            )Add:
                Depreciation and amortization
            
            
            885
            
            
            996
            
            
            1,800
            
            
            2,093Add:
                Provision for income taxes
            
            
            90
            
            
            252
            
            
            180
            
            
            259Add:
                Interest
            
            
            115
            
            
            177
            
            
            229
            
            
            304EBITDA
            
            $
            1,331
            
            $
            (15,382
            )
            $
            2,421
            
            $
            (14,571
            )





***Working
      Capital.*** We rely
      on our senior credit facility to meet our working capital needs. At June 30,
      2006, we had $3,117,000 available under our credit facility and a working
      capital surplus of $1,364,000. Our working capital deficit at December 31,
      2005
      was $3,067,000. During the six months ended June 30, 2006, we increased the
      outstanding balance under our credit facility by $1,578,000, from $8,649,000
      at
      December 31, 2005 to $10,227,000 at June 30, 2006.




***Results
      of Operations***





***Three
      Months ended June 30, 2006 Compared to Three Months ended June 30, 2005***





Revenue
      for the three months ended June 30, 2006 was $30,042,000,
      an increase of $ 1,803,000,
      or 6.4%, from $28,239,000 for the three months ended June 30, 2005. Our sites
      under management have increased from 183 as of June 30, 2005 to 201 as of June
      30, 2006.





Operating
      expenses, which represent our direct costs of servicing our clients, amounted
      to $22,785,000
      for the three months ended June 30, 2006, an increase of $ 930,000,
      or 4.3%, from $21,855,000 for the three months ended June 30, 2005. This
      increase is primarily attributable to expenses associated with revenue growth
      quarter over quarter. Operating expenses as a percentage of revenue improved
      to
      75.8% for the second quarter of 2006 from 77.4% for the second quarter of 2005.





21


General
      and administrative expenses, which represent our corporate costs, decreased
      by
      $ 415,000 to
      $ 5,926,000 for
      the
      three months ended June 30, 2006 from $ 6,341,000 for
      the
      three months ended June 30, 2005. Our general and administrative expenses as
      a
      percentage of revenue decreased from 22.5% to 19.7% for the three months ended
      June 30, 2005 and 2006, respectively. The implementation of SFAS 123R resulted
      in additional general and administrative expenses of $271,000 or 0.9% of revenue
      for the three months ended June 30, 2006. Other contributing factors to the
      decrease were reductions in consulting expenses and legal fees.





During
      the second quarter of 2005, we completed an in-depth analysis of our business
      structure and product development efforts and determined that certain products
      and services that we offered were no longer essential to our core business.
      Consequently, we impaired goodwill and long-lived assets by $12,470,000,
      primarily related to goodwill and capitalized software development costs. We
      also recorded $2,116,000 as a provision for loss contracts related to customer
      contracts that we determined would continue to be unprofitable. In the third
      quarter of 2005 we reversed $1,453,000 of this provision. In addition, we
      also recorded $839,000 of restructuring charges. There were no charges of this
      nature recorded in the second quarter of 2006.





Depreciation
      and amortization expenses were $ 828,000 for the
      three months ended June 30, 2006, a decrease of $ 88,000 as
      compared to $ 916,000 for the
      three months ended June 30, 2005. During
      the second quarter of 2005, we amortized software development costs, which
      were
      subsequently impaired in our restructuring activities during the second quarter
      of 2005. The remaining difference is due to fully depreciated or amortized
      assets.





Interest
      expense for the three months ended June 30, 2006 was $115,000, representing
      a
      decrease of $62,000, from $177,000 for the three months ended June 30, 2005.
      Interest expense primarily includes interest payable under our senior secured
      credit facility. Our weighted average balance outstanding during the three
      months ended June 30, 2006, was $7,666,000 as compared to $8,828,000 for the
      comparable period in 2005.





Amortization
      of financing costs for the three months ended June 30, 2006 was $57,000,
      representing a decrease of $23,000 from $80,000 for the three months ended
      June
      30, 2005. The decrease is due to financing costs which were being amortized
      during 2005 being fully amortized during the second quarter of
      2006.





The
      provision for income taxes was $90,000 for the three months ended June 30,
      2006,
      a $162,000 decrease from $252,000 for the three months ended June 30, 2005.





For
      the
      three months ended June 30, 2006, our net income was $241,000, as compared
      to a
      net loss of $16,807,000 for the three months ended June 30, 2005. Excluding
      the
      impact of $15,425,000 of restructuring-related charges in the second quarter
      of
      2005, our net loss was $1,382,000. Our improvement is primarily attributed
      to
      our focus on managing general and administrative expenses and our improvement
      in
      cash and tax positions.





***Six
      Months ended June 30, 2006 Compared to Six Months ended June 30, 2005***





Revenue
      for the six months ended June 30, 2006 was $60,567,000, an increase of
      $4,863,000, or 8.7%, from $55,704,000 for the six months ended June 30, 2005.
      We
      have added 18 net new sites under management subsequent to June 30,
      2005.





22


Operating
      expenses, which represent our direct costs of servicing our clients, amounted
      to
      $46,228,000 for the six months ended June 30, 2006, an increase of $3,222,000,
      or 7.5%, from $43,006,000 for the six months ended June 30, 2005. This increase
      is attributable to expenses associated with revenue growth quarter over quarter.
      Operating expenses as a percentage of revenue improved to 76.3% for the second
      quarter of 2006 from 77.2% for the second quarter of 2005.





General
      and administrative expenses, which represent our corporate costs, increased
      by
      $ 74,000 to
      $ 11,918,000 for the
      six months ended June 30, 2006 from $ 11,844,000 for the
      six months ended June 30, 2005. Our general and administrative expenses as
      a
      percentage of revenue decreased from 21.3% to 19.7% for the six months ended
      June 30, 2005 and 2006, respectively. The implementation of SFAS 123R resulted
      in additional general and administrative expenses of $556,000, or 0.9% of
      revenue, in 2006.





During
      the second quarter of 2005, we completed an in-depth analysis of our business
      structure and product development efforts and determined that certain products
      and services we offered were no longer essential to our core business.
      Consequently, we impaired goodwill and long-lived assets by $12,470,000,
      primarily related to goodwill and capitalized software development costs. We
      also recorded $2,116,000 as a provision for loss contracts related to customer
      contracts that we determined would continue to be unprofitable. In the third
      quarter of 2005 we reversed $1,453,000 of this provision. In addition, we also
      recorded $839,000 of restructuring charges. There were no charges of this nature
      recorded in the second quarter of 2006.





Depreciation
      and amortization expenses were $ 1,687,000 for the
      six months ended June 30, 2006, a decrease of $ 281,000 as
      compared to $ 1,968,000 for the
      six months ended June 30, 2005. In 2005,
      we amortized software development costs, which were subsequently impaired in
      our
      restructuring activities during the second quarter of 2005. The remaining
      difference is due to fully depreciated or amortized assets.





Interest
      expense for the six months ended June 30, 2006 was $229,000, representing a
      decrease of $75,000, from $304,000 for the six months ended June 30, 2005.
      Interest expense primarily includes interest payable under our senior secured
      credit facility. Our weighted average balance outstanding during the six months
      ended June 30, 2006, was $7,489,000 as compared to $8,451,000 for the comparable
      period in 2005.





Amortization
      of financing costs for the six months ended June 30, 2006 was $113,000,
      representing a decrease of $12,000 from $125,000 for the six months ended June
      30, 2005.





The
      provision for income taxes was $180,000 for the six months ended June 30, 2006,
      a $79,000 decrease from $259,000 for the six months ended June 30, 2005.





For
      the
      six months ended June 30, 2006, our net income was $212,000, as compared to
      a
      net loss of $17,227,000 for the six months ended June 30, 2005. Excluding the
      impact of $15,425,000 of restructuring-related charges in the second quarter
      of
      2005, our net loss was $1,802,000. Our improvement is primarily attributable
      to
      additional site locations, as well as reductions in general and administrative
      expenses.





23


***Liquidity
      and Capital Resources***





***Operating
      Activities***





Cash
      used
      in operating activities during the six months ended June 30, 2006 was $174,000
      consisting of the following factors:





(1)  Our
      net
      income was $212,000, which included non-cash charges of $556,000 for stock-based
      compensation, $1,800,000 of non-cash depreciation and amortization and $174,000
      for other non-cash charges.





(2)  Our
      accounts receivable and other current assets balances increased by $1,153,000
      reflecting continued growth in pharmaceutical purchases, revenue, and prepaid
      insurance related to Green Hills Insurance Company, our Risk Retention Group.





(3)  Our
      liabilities (which include accounts payable, accrued payroll and benefits,
      accrued restructuring charges, accrued loss on contracts and other current
      and
      long term liabilities) decreased by $1,763,000.





***Investing
      Activities***





Net
      cash
      used in investing activities was $ 717,000 for the
      six months ended June 30, 2006, which consists primarily of capital expenditures
      on technology upgrades.





***Financing
      Activities***





Net
      cash
      provided by financing activities was $ 1,935,000 for
      the
      six months ended June 30, 2006, driven primarily by additional draws of
      $ 1,762,000 under
      our senior secured credit facility and cash received upon stock option exercises
      of $ 120,000 .
      We used
      these funds to finance our working capital requirements (which increased due
      to
      additional revenue, expenses and accounts receivable generated from increases
      in
      same-site operations, as well as the addition of new facilities during the
      quarter), capital expenditures and software development expenses.





Our
      senior secured credit facility provides financing up to the lesser of
      $15,000,000 or the credit facility base calculation, in each case less
      outstanding letters of credit. We amended the facility on May 4, 2006. The
      amendment (1) extended that maturity date of the facility from April 1, 2007
      to
      October 1, 2007, (3) re-set the “Fixed Charge Coverage Ratio” covenant, and (3)
      redefined “EBITDA” to exclude non-cash stock-based compensation expense. Minimum
      EBITDA requirements for periods ending June 30, 2006 through December 31, 2006
      are as follows:





Period
            Minimum
                EBITDALast
                four fiscal quarters ending June 30, 2006
            3,580,000Last
                four fiscal quarters ending September 30, 2006
            3,960,000Last
                four fiscal quarters ending December 31, 2006
            4,450,000





As
      of
      June 30, 2006, we were in compliance with our credit facility covenants. As
      of
      June 30, 2006, $ 10,227,000 was
      outstanding under the credit facility, which was classified as long-term, and
      $1,000,000 was outstanding under a letter of credit. We had $ 3,117,000 available
      under the credit facility at June 30, 2006.





24


Our
      ratio
      of current assets to current liabilities (excluding dividends payable on Series
      A Convertible Preferred Stock in shares of common stock) was 1.19 at June 30,
      2006, as compared to 1.00 at December 31, 2005. We believe that this ratio
      demonstrates adequate financial liquidity and we believe that availability
      under
      our credit facility and our cash and cash equivalents of $ 6,430,000 at June
      30, 2006 (which includes approximately $ 6,153,000 held at
      Green Hills Insurance Company) will be sufficient to meet our anticipated cash
      needs for the next 12 months.





***Future
      Capital Requirements***





Our
      primary future cash needs will be to fund working capital and pay for
      anticipated capital expenditures. We had
      capital expenditures totaling $713,000 during the six months ended June 30,
      2006
      and anticipate similar capital expenditures throughout the remainder of 2006.





We
      cannot, however, provide assurances that our actual cash requirements will
      not
      be greater than we currently anticipate. We will, from time to time, consider
      the acquisition of, or investment in, complementary businesses, products,
      services and technologies which would most likely affect our liquidity
      requirements or cause us to issue additional equity or debt securities.





If
      sources of liquidity are not available or if we cannot generate sufficient
      cash
      flow from operations during the next 12 months, we might be required to obtain
      additional sources of funds through additional operating improvements, capital
      market transactions (including the sale of common stock), asset sales or
      financing from third parties, or a combination thereof. We cannot provide
      assurance that these additional sources of funds will be available or, if
      available, would have reasonable terms.





***Material
      Commitments***





We
      have
      various contractual obligations which are recorded as liabilities in our
      condensed consolidated financial statements. Other items, such as operating
      lease contract obligations are not recognized as liabilities in our condensed
      consolidated financial statements but are required to be disclosed.





The
      following table summarizes our significant contractual obligations at June
      30,
      2006, and the effect such obligations are expected to have on our liquidity
      and
      cash in future periods:





Payments
                due by periodContractual
                obligations:
            
            Total
            
            Less
                than
              1
                year
            
            1-3
                years
            
            3-5
                years
            
            More
                than
              5
                yearsOperating
                leases
            
            $
            5,347,000
            
            $
            1,158,000
            
            $
            2,648,000
            
            $
            1,540,000
            
            $
            1,000Less:
                Amounts reimbursed by clients
            
            
            691,000
            
            
            411,000
            
            
            252,000
            
            
            28,000
            
            
            --$
            4,656,000
            
            $
            747,000
            
            $
            2,396,000
            
            $
            1,512,000
            
            $
            1,000




From
      time
      to time, we enter into operating leases for offices and equipment leases on
      behalf of our clients in order to facilitate the delivery of our services at
      client locations. In such cases, our clients agree to reimburse us for the
      expenses incurred related to these operating leases.


25








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




As
      of
      June 30, 2006, we did not own any derivative instruments, but we were exposed
      to
      market risks, primarily due to changes in U.S. interest rates. Our credit
      facility bears a variable interest rate, and accordingly, the fair market value
      of the debt is sensitive to changes in interest rates.





**Item
      4.**  **Controls
      and Procedures**





Our
      management, under the supervision and with the participation of the principal
      executive officer and principal financial officer, has evaluated the
      effectiveness of our controls and procedures related to our reporting and
      disclosure obligations as of June 30, 2006, which is the end of the period
      covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the
      principal executive officer and principal financial officer have concluded
      that
      our disclosure controls and procedures are effective.





There
      were no changes that occurred during the fiscal quarter ended June 30, 2006
      that
      have materially affected, or are reasonably likely to materially affect, our
      internal controls over financial reporting.








**PART
      II.****OTHER
      INFORMATION**





**Item
      1.**  **Legal
      Proceedings**





Certain
      of our subsidiaries are involved in various claims and legal actions arising
      in
      the ordinary course of business. In the opinion of management, the ultimate
      disposition of these matters will not have a material adverse effect on our
      overall consolidated financial position, results of operations or
      liquidity.





**Item
      1A.**  **Risk
      Factors**





There
      were no material changes during the quarter ended June 30, 2006 from the risk
      factors as previously disclosed in our 2005 Annual Report.





**Item
      2.**  **Unregistered
      Sales of Equity Securities and Use of Proceeds**





**Issuance
      of Unregistered Securities**





On
      April
      17, 2006, a former employee exercised warrants to purchase an aggregate of
      16,800 shares of our common stock at an exercise price of $2.50 per share.
      In
      lieu of paying the exercise price in cash, the former employee used the
      warrants’ cashless exercise feature, such that the former employee received
      3,944 shares of our common stock and surrendered to us for cancellation 12,856
      shares of our common stock. In undertaking this issuance, we relied on an
      exemption from registration under Section 4(2) of the Securities Act of 1933,
      as
      amended ( **“Securities
      Act”** ).





On
      May 4,
      2006, a former employee exercised warrants to purchase an aggregate of 13,200
      shares of our common stock at an exercise price of $2.50 per share. In lieu
      of
      paying the exercise price in cash, the former employee used the warrants’
cashless exercise feature, such that the former employee received 2,835 shares
      of our common stock and surrendered to us for cancellation 10,365 shares of
      our
      common stock. In undertaking this issuance, we relied on an exemption from
      registration under Section 4(2) of the Securities Act.





26


On
      April
      20 and 27 and June 6, 2006, as part of a conversion of the Series A Convertible
      Preferred Stock, we issued an aggregate of 13,840 shares of our common stock
      to
      four investors in payment of accrued dividends on shares of our Series A
      Convertible Preferred Stock. The shares issued upon conversion, including the
      shares representing payment of the dividends, were exempt from registration
      under Section 3(a)(9) of the Securities Act.




**Item
      3.****Defaults
      Upon Senior Securities**





None.





**Item
      4.****Submission
      of Matters to a Vote of Security Holders**





We
      held
      an annual meeting of stockholders in Philadelphia, Pennsylvania on May 17,
      2006
      to elect directors and ratify the selection of Goldstein Golub Kessler LLP
      as
      I-trax’s independent auditors for the fiscal year ending December 31, 2006. Of
      the 41,970,916 shares eligible to vote at the meeting, which includes shares
      of
      common stock and shares of common stock issuable upon conversion of shares
      of
      Series A Convertible Preferred Stock, 34,236,077 shares were present or
      represented by proxy at the meeting.





The
      vote
      of the holders of common stock issued or issuable upon conversion of outstanding
      shares of Series A Convertible Preferred Stock for election of our directors
      for
      a term of one year expiring on the date of the 2007 annual meeting of
      stockholders was as follows:





For
            WithheldHaywood
                D. Cochrane, Jr.
            33,617,983
            618,094Philip
                D. Green
            33,283,844
            952,233Gail
                F. Lieberman
            34,181,489
            54,588Frank
                A. Martin
            33,631,207
            604,870Gerald
                D. Mintz
            34,195,089
            40,988Dr.
                David Nash
            33,219,034
            1,017,043Jack
                A. Smith
            34,182,389
            53,688R.
                Dixon Thayer
            33,632,107
            603,970





The
      ratification of Goldstein Golub Kessler LP as I-trax’s independent auditors for
      the fiscal year ending December 31, 2006 was as follows:





For
            Against
            Withheld34,202,955
            22,426
            10,696


27





**Item
      5.****Other
      Information**





None.





**Item
      6.****Exhibits**





**Number**
            **Exhibit
                Title**15
            Awareness
                letter of Goldstein, Golub Kessler LLP regarding
                unaudited interim financial information.31.1
            Chief
                Executive Officer Certification Pursuant to Rule
                13a-14(a) and 15d-14(a) of the Securities Exchange Act of
                1934.31.2
            Chief
                Financial Officer Certification Pursuant to Rule
                13a-14(a) and 15d-14(a) of the Securities Exchange Act of
                1934.32.1
            Certification
                Pursuant to 18 U.S.C. Section 1350, as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.32.2
            Certification
                Pursuant to 18 U.S.C. Section 1350, as
                Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.











28


**SIGNATURE**





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








I-TRAX,
                INC.Date:
                August 14, 2006
            By:/s/
                R. Dixon ThayerR.
                Dixon Thayer, Chief ExecutiveOfficerDate:
                August 14, 2006
            By:/s/
                David R. BockDavid
                R. Bock, Executive VicePresident
                and Chief Financial Officer





29