UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X]      QUARTERLY  REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT OF 1934

         For the quarterly period ended: September 30, 2004

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
         ACT

                         Commission File Number: 0-30275


                                  I-TRAX, INC.
    ------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

                                    Delaware
    ------------------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   23-3057155
    ------------------------------------------------------------------------
                      (I.R.S. Employer Identification No.)

                           4 Hillman Drive, Suite 130
                         Chadds Ford, Pennsylvania 19317
    ------------------------------------------------------------------------
                    (Address of principal executive offices)

                                 (610) 459-2405
    ------------------------------------------------------------------------
                           (Issuer's telephone number)

                One Logan Square, 130 N. 18th Street, Suite 2615
                        Philadelphia, Pennsylvania 19103
    ------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practicable date: As of November 11, 2004, the number
of  outstanding  shares  of  common  stock,  par  value  $.001  per  share,  was
28,655,871.

Transitional Small Business Disclosure Format (check one):   Yes [ ]    No [X]




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<S>                                                                                                         <C>

                                      INDEX



                                                                                                         Page No.

PART I.   FINANCIAL INFORMATION..............................................................................3

Item 1.           Financial Statements ......................................................................3

Item 2.           Management's Discussion and Analysis of Financial Condition and Results of Operations.....22

Item 3.           Controls and Procedures...................................................................30

PART II.   OTHER INFORMATION................................................................................30

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

Item 2.           Changes in Securities and Small Business Issuer Purchases of Securities...................30

Item 6.           Exhibits .................................................................................30



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                                       2
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                          PART I. FINANCIAL INFORMATION

Item 1.           Financial Statements


                                  I-TRAX, INC.
              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)






                                                                       Page No.


Report of Independent Registered Public Accounting Firm                   4

Condensed Consolidated Balance Sheets at September 30, 2004
     (unaudited) and December 31, 2003                                    5

Condensed Consolidated Statements of Operations
     for the three month periods ended September 30, 2004 and 2003
     (unaudited)                                                          6

Condensed Consolidated Statements of Operations
     for the nine month periods ended September 30, 2004 and 2003
     (unaudited)                                                          7

Condensed Consolidated Statement of Stockholders' Equity
     for the nine month period ended September 30, 2004
     (unaudited)                                                          8

Condensed Consolidated Statements of Cash Flows
     for the nine month periods ended September 30, 2004 and 2003
     (unaudited)                                                          9

Notes to Condensed Consolidated Financial Statements                     11





                                       3
<PAGE>





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 September 30, 2004,
and the related  condensed  consolidated  statements of operations for the three
month and nine month  periods ended  September 30, 2004 and 2003,  the condensed
consolidated  statements of stockholders' equity for the nine month period ended
September 30, 2004 and the condensed  consolidated  statements of cash flows for
the nine  month  periods  ended  September  30,  2004 and  2003.  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 the
standards of the Public Company  Accounting  Oversight  Board,  the objective of
which is the  expression  of an opinion  regarding  the  condensed  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 the  standards of the Public
Company  Accounting  Oversight  Board (United  States),  the balance sheet as of
December  31,  2003,  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 16, 2004, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of December 31, 2003
is fairly  stated,  in all material  respects,  in relation to the  consolidated
balance sheet from which it has been derived.


GOLDSTEIN GOLUB KESSLER LLP
New York, New York

October 27, 2004




                                       4
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<S>                                                                                 <C>            <C>

                          I-TRAX, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        (in thousands, except share data)

                                                            ASSETS
                                                                                    September 30,
                                                                                       2004        December 31,
                                                                                    (unaudited)       2003
                                                                                    ----------      ----------
Current assets
     Cash and cash equivalents                                                      $   5,453      $     574
     Accounts receivable, net                                                          12,363            549
     Income tax receivable                                                                132             --
     Other current assets                                                               2,105            188
                                                                                    ----------      ----------
         Total current assets                                                          20,053          1,311

Property and equipment, net                                                             5,784          1,675
Goodwill                                                                               46,064          8,424
Customer list, net                                                                     28,374            769
Other intangible assets, net                                                            1,805          1,400
Other long term assets                                                                    113             24
                                                                                    ----------      ----------

       Total assets                                                                 $ 102,193      $  13,603
                                                                                    ==========      ==========

                                             LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
     Accounts payable                                                               $   6,024      $     606
     Accrued expenses                                                                   4,765            361
     Due to officers and related parties                                                   --            280
     Notes payable                                                                      2,000             --
     Net liabilities of discontinued operations                                         1,299             --
     Other current liabilities                                                          8,730            355
                                                                                    ----------      ----------
       Total current liabilities                                                       22,818          1,602

Common stock warrants                                                                      --          2,760
Note payable                                                                            5,500             --
Other long term liabilities                                                             2,437            856
                                                                                    ----------      ----------

       Total liabilities                                                               30,755          5,218
                                                                                    ----------      ----------

Commitments and contingencies                                                              --             --

Stockholders' equity
     Preferred stock - $.001 par value, 2,000,000 shares authorized,
       1,200,000 and -0- issued and outstanding, respectively                               1             --
     Common stock - $.001 par value, 100,000,000 shares authorized,
       24,796,671 and 13,966,817 shares issued and outstanding, respectively               24             14
     Additional paid in capital                                                       130,593         47,276
     Accumulated deficit                                                              (59,180)       (38,905)
                                                                                    ----------      ----------
       Total stockholders' equity                                                      71,438          8,385
                                                                                    ----------      ----------

Total liabilities and stockholders' equity                                          $ 102,193      $  13,603
                                                                                    ==========      ==========

                                 See accompanying notes to consolidated financial statements (unaudited).

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                                       5
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<S>                                                                  <C>               <C>
                          I-TRAX, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
             FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)
                        (in thousands, except share data)



                                                                    Three months       Three months
                                                                        ended              ended
                                                                    September 30,      September 30,
                                                                        2004               2003
                                                                    -------------      -------------

Net revenue                                                          $     24,136      $      1,001
                                                                    -------------      -------------

Costs and expenses:
     Operating expenses                                                    18,816               642
     General and administrative expenses                                    4,670             1,024
     Depreciation and amortization                                          1,097               440
                                                                    -------------      -------------
Total costs and expenses                                                   24,583             2,106
                                                                    -------------      -------------

Operating loss                                                               (447)           (1,105)
                                                                    -------------      -------------

Other expenses (income):
     Interest expense                                                         124               948
     Amortization of financing costs                                           13                57
     Other income                                                              --              (500)
                                                                    -------------      -------------
Total other expenses                                                          137               505
                                                                    -------------      -------------

Loss before provision for income taxes                                       (584)           (1,610)
                                                                    -------------      -------------

Provision for income taxes                                                    251                --

Net loss                                                                     (835)           (1,610)
                                                                    -------------      -------------

Less preferred stock dividend                                                (605)               --
                                                                    -------------      -------------

Net loss applicable to common stockholders                           $     (1,440)     $     (1,610)
                                                                    =============      =============

Loss per common share, basic and diluted                             $      (0.06)     $      (0.14)
                                                                    =============      =============

Weighted average number of shares outstanding, basic and diluted       24,730,933        11,121,724
                                                                    =============      =============



    See accompanying notes to consolidated financial statements (unaudited).

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                                       6
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<S>                                                                   <C>                 <C>

                          I-TRAX, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)
                        (in thousands, except share data)



                                                                    Nine months ended   Nine months ended
                                                                      September 30,       September 30,
                                                                          2004                2003
                                                                      ------------        ------------
Net revenue                                                           $     49,968        $      3,668
                                                                      ------------        ------------

Costs and expenses:
     Operating expenses                                                     38,631               1,506
     General and administrative expenses                                    11,342               4,243
     Depreciation and amortization                                           2,889               1,318
                                                                      -------------       -------------
Total costs and expenses                                                    52,862               7,067
                                                                      -------------       -------------

Operating loss                                                              (2,894)             (3,399)
                                                                      -------------       -------------

Other expenses (income):
     Interest expense                                                          900               1,922
     Amortization of financing costs                                            60                 295
     Other expenses (income)                                                   350                (300)
                                                                      -------------       -------------
Total other expenses                                                         1,310               1,917
                                                                      -------------       -------------

Loss before provision for income taxes                                      (4,204)             (5,316)
                                                                      -------------       -------------

Provision for income taxes                                                     251                  --
                                                                      -------------       -------------

Net loss                                                                    (4,455)             (5,316)

Less preferred stock dividend                                               (1,282)                 --

Less deemed dividends applicable to preferred stockholders                 (15,820)                 --
                                                                      -------------       -------------

Net loss applicable to common stockholders                            $    (21,557)       $     (5,316)
                                                                      =============       =============

Loss per common share, basic and diluted:                             $      (1.00)       $      (0.53)
                                                                      =============       =============

Weighted average number of shares outstanding, basic and diluted:       21,613,701          10,111,766
                                                                      =============       =============



    See accompanying notes to consolidated financial statements (unaudited).

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                                       7
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<S>                 <C>                                        <C>        <C>         <C>       <C>         <C>          <C>


                                                           I-TRAX, INC. AND SUBSIDIARIES
                                             CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                                   FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
                                                                    (UNAUDITED)
                                                         (in thousands, except share data)


                                                         Preferred Stock         Common Stock    Additional               Total
                                                     ---------------------  -------------------- Paid-in  Accumulated  Stockholders'
                                                     Shares      Amount      Shares      Amount  Capital    Deficit     Equity
                                                     ---------- ----------  ----------  --------  --------  ----------   ----------
Balances at January 1, 2004                                 -- $  --      13,966,817  $     14  $   47,276  $  (38,905)  $    8,385

Reclassification of common stock warrants to paid in
   capital                                                  --    --              --        --       3,110          --        3,110

Issuance of common stock in connection with
   conversion of promissory note and other
   settlement, net of costs                                 --    --          69,165        --          71          --           71

Issuance of common stock for conversion of debenture
   and accrued interest                                     --    --         427,106        --         747          --          747

Issuance of common stock for exercise of warrants           --    --         333,583        --          52          --           52

Sale of preferred stock, net of costs                1,000,000     1              --        --      23,509          --       23,510

Issuance of preferred stock for acquisition of CHD
   Meridian                                            400,000    --              --        --      10,000          --       10,000

Redemption of preferred stock                         (200,000)   --              --        --      (5,000)         --       (5,000)

Issuance of common stock for acquisition of CHD
   Meridian                                                 --    --      10,000,000        10      36,290          --       36,300

Beneficial conversion feature in connection with
   issuance of preferred stock                              --    --              --        --      15,820     (15,820)          --

Preferred stock dividend                                    --    --              --        --      (1,282)         --       (1,282)

Net loss for the nine months ended September 30, 2004       --    --              --        --          --      (4,455)      (4,455)
                                                     ---------- -------    ----------  --------  ----------  ----------   ----------

Balances at September 30, 2004                       1,200,000 $   1      24,796,671  $     24  $  130,593  $  (59,180)  $   71,438
                                                     ========== =======    ==========  ========  ==========  ==========   ==========


                               See accompanying notes to consolidated financial statements (unaudited).

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                                       8
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<S>                                                                             <C>              <C>

                          I-TRAX, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
                                   (UNAUDITED)
                        (in thousands, except share data)

                                                                              Nine months        Nine months
                                                                                 ended              ended
                                                                             September 30,      September 30,
                                                                                  2004              2003
                                                                                --------           --------

Operating activities:
     Net loss                                                                   $ (4,455)        $ (5,316)

     Adjustments to reconcile net loss to net cash provided by (used in)
       operating activities:
         Depreciation and amortization                                             2,889            1,318
         Accretion of discount on notes payable charged to interest expense
            and beneficial conversion value of debenture                             573            1,609
         Increase in fair value of common stock warrants                             350               --
         Amortization of debt issuance costs                                          47              295
         Write-off of deposit on cancelled acquisition                                --              200
         Issuance of securities for services                                          --            1,414
         Other non-cash items                                                         --               10

Changes in operating assets and liabilities, net of acquisition:
     Decrease in accounts receivable                                                 996               33
     Decrease in income tax receivable                                               147               --
     Increase in other current assets                                               (920)            (670)
     Increase in other long term assets                                              (52)              --
     Decrease in accounts payable                                                   (948)            (207)
     Increase in accrued expenses                                                  1,463              134
     (Decrease) increase in other current liabilities                                260           (1,379)
                                                                                ---------         --------
Net cash provided by (used in) operating activities                                  350           (2,559)
                                                                                ---------         --------

Investing activities:
     Purchases of property, plant and equipment                                   (1,628)            (649)
     Acquisition of intangible assets                                               (688)              --
     Acquisition of CHD Meridian, net of acquired cash                           (18,134)              --
                                                                                ---------         --------
Net cash used in investing activities                                            (20,450)            (649)
                                                                                ---------         --------

Financing activities:
     Principal payments on capital leases                                            (35)             (62)
     Proceeds from/ repayment to related parties                                    (280)             575
     Proceeds (repayment) of note payable                                           (618)             175
     Proceeds from exercise of warrants                                               52               --
     Proceeds from bank credit facility, net of issuance costs                     7,350               --
     Proceeds from sale of preferred stock, net of issuance costs                 23,510               --
     Proceeds from sale of common stock                                               --            2,405
     Redemption of preferred stock                                                (5,000)              --
                                                                                ---------         --------

Net cash provided by financing activities                                         24,979            3,093
                                                                                ---------         --------

Net increase (decrease) in cash and cash equivalents                               4,879             (115)

Cash and cash equivalents at beginning of period                                     574              360
                                                                                ---------         --------

Cash and cash equivalents at end of period                                      $  5,453         $    245
                                                                                =========         ========
Supplemental disclosure of non-cash flow information:
     Cash paid during the year for:
       Interest                                                                 $    377         $     28
                                                                                =========         ========
                         (Continues on following page.)

  See accompanying notes to consolidated financial statements (unaudited).

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                                       9
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<CAPTION>

<S>                                                                                  <C>              <C>


                          I-TRAX, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

                         (Continues from previous page.)

                                                                                  Nine months        Nine months
                                                                                     ended             ended
                                                                                 September 30,      September 30,
                                                                                      2004              2003
                                                                                 -------------      -------------

       Income taxes                                                                  $    257         $     --
                                                                                     ========         ========

Schedule of non-cash financing activities:

     Reclassification of common stock warrants to paid in capital                    $  3,110         $     --
                                                                                     ========         ========
     Issuance of common stock in connection with conversion of promissory
       note and other settlement                                                     $     71         $  1,169
                                                                                     ========         ========
     Issuance of common stock in connection with conversion of debenture
       payable                                                                       $    747         $    565
                                                                                     ========         ========
     Beneficial conversion feature in connection with issuance of preferred
       stock                                                                         $ 15,820         $     --
                                                                                     ========         ========
     Issuance of common and preferred stock in connection with the
       acquisition of CHD Meridian                                                   $ 46,300         $     --
                                                                                     ========         ========
     Preferred stock dividend                                                        $  1,282         $     --
                                                                                     ========         ========
     Issuance of common stock in connection with the conversion of deferred
       salaries                                                                      $     --         $    122
                                                                                     ========         ========
     Purchase of all capital stock of CHD Meridian and assumption of liabilities
       in the acquisition as follows:
         Fair value of non-cash tangible assets acquired                             $ 17,257         $     --
         Goodwill                                                                      37,429               --
         Customer list                                                                 29,184               --
         Other intangibles                                                              1,167               --
         Cash paid, net of cash acquired (includes $85 of transaction costs
           incurred in a prior period)                                                (18,834)              --
         Common stock issued                                                          (36,300)              --
         Preferred stock issued                                                       (10,000)              --
                                                                                     ========         ========
         Liabilities assumed                                                         $(19,903)        $     --
                                                                                     ========         ========


                       See accompanying notes to consolidated financial statements (unaudited).


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



NOTE 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 does
business as CHD Meridian  Healthcare  ("CHD  Meridian").  (See Note  3--Business
Combination.)

Following the merger, the Company offers two categories of services: (1) on-site
health related  services such as occupational  health,  primary care,  corporate
health, and pharmacy; and (2) personalized health 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 personalized health management 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 non-medical services.


NOTE 2--INTERIM RESULTS AND BASIS OF PRESENTATION

The accompanying unaudited financial statements have been prepared in accordance
with accounting  principles  generally  accepted in the United States of America
for interim  financial  information and the instructions to Form 10-QSB and Item
310(b) of Regulation S-B promulgated under the Securities  Exchange Act of 1934.
In the opinion of  management,  the  unaudited  financial  statements  have been
prepared on the same basis as the annual  financial  statements  and reflect all
adjustments  necessary to present fairly the financial  position as of September
30, 2004 and the results of the operations and cash flows for the three and nine
months ended September 30, 2004.  Because the combination of the Company and CHD
Meridian for accounting  purposes was effective as of April 1, 2004, the results
for the nine months ended  September 30, 2004 only include the operations of CHD
Meridian  for the six months ended  September  30,  2004.  The balance  sheet at
December 31, 2003 has been derived from the audited financial  statements of the
Company at that date.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with accounting  principles generally accepted
in the United States of America have been  condensed or omitted  pursuant to the
Securities and Exchange Commission's rules and regulations.

Loss per common  share is  computed  pursuant  to SFAS No.  128,  "Earnings  Per
Share."  Basic loss per share is  computed  as net income  (loss)  available  to
common  stockholders  divided by the weighted  average  number of common  shares
outstanding  for the  period.  Diluted  loss per share  reflects  the  potential
dilution that could occur from common  shares  issuable  through stock  options,
warrants and  convertible  preferred  stock.  As of September 30, 2004 and 2003,
18,910,561 and 5,809,093 shares issuable upon exercise of options,  warrants and
convertible preferred stock,  respectively,  were excluded from the diluted loss
per share computation because their effect would be anti-dilutive.



                                       11
<PAGE>


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



NOTE 2--INTERIM RESULTS AND BASIS OF PRESENTATION (continued)

These  unaudited  financial  statements  should be read in conjunction  with the
Company's  audited  financial  statements  for the year ended  December 31, 2003
included in the Company's  annual  report on Form  10-KSB/A  filed on August 11,
2004, and the financial statements of CHD Meridian and notes thereto included in
the Company's current report on Form 8-K/A filed on November 10, 2004.

The consolidated  financial statements include the balance sheet of CHD Meridian
LLC,  its wholly  owned  subsidiaries,  the  Physician  Groups  and Green  Hills
Insurance,  a risk  retention  group  (see Note 9- Risk  Retention  Group).  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.
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
September 30, 2004.

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  and nine  months  ended  September  30,  2004 were
$25,357,000 and $50,228,000, respectively.

For comparability, certain 2003 amounts have been reclassified to conform to the
financial statement presentation used in 2004.

As shown in the  accompanying  financial  statements,  the Company has  suffered
recurring  losses from operations,  has an accumulated a deficit,  and a working
capital  deficiency.  The Company borrowed funds under its senior secured credit
facility (see Note 6 - Long Term Debt) and has entered into  agreements with new
customers which management  expects to provide  increased  revenue.  The Company
believes these measures will sustain operations through December 31, 2004.


NOTE 3--BUSINESS COMBINATION

On March 19,  2004,  the Company  merged  with CHD  Meridian,  a privately  held
company  and a  major  provider  of  outsourced,  employer-sponsored  healthcare
services.  CHD Meridian provides such services to large self-insured  employers,
including Fortune 1,000 companies.

Pursuant to the merger agreement,  the Company,  (1) issued 10,000,000 shares of
common stock,  (2) issued 400,000 shares of  convertible  preferred  stock (with
each share  convertible  into 10 shares of common  stock) at $25.00 per share or
$10,000,000 in the aggregate, and (3) paid approximately  $25,508,000 in cash to
the CHD Meridian stockholders.  Immediately following the closing of the merger,
the  Company  also   redeemed  from  former  CHD  Meridian   stockholders   that
participated  in the  merger,  pro  rata,  an  aggregate  of  200,000  shares of
convertible  preferred  stock at its original issue price of $25.00 per share or
$5,000,000. The total value of the merger consideration is $73,592,000,  made up
of common stock valued at  $36,300,000,  preferred  stock valued at $10,000,000,
cash of $25,908,000  and  transaction  expenses of  $1,384,000.  The Company has
filed a registration  statement  with the Securities and Exchange  Commission to
register for resale the (a) common  stock  issued in the merger,  and (b) common
stock  issuable upon  conversion of  convertible  preferred  stock issued in the
merger.



                                       12
<PAGE>



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


NOTE 3--BUSINESS COMBINATION (continued)

The former CHD Meridian  stockholders will also receive additional shares of the
Company's common stock if CHD Meridian,  continuing its operations following the
closing of the merger as CHD Meridian LLC, achieves calendar 2004 milestones for
earnings before  interest,  taxes,  depreciation and amortization (or EBITDA) as
follows: If EBITDA equals or exceeds  $8,100,000,  the number of such additional
common shares payable will be 3,473,280; the number of such shares will increase
proportionately  with  EBITDA  above  $8,100,000,  up to a maximum of  3,859,200
additional  shares of the  Company's  common  stock if EBITDA  equals or exceeds
$9,000,000.  In connection  with this  earn-out,  the Company  placed  3,859,200
shares in escrow.  The shares are not  recorded as  outstanding  for  accounting
purposes until the earn-out target is satisfied.

The Company funded the cash portion of the merger  consideration  by (1) selling
1,000,000  shares of convertible  preferred stock at $25.00 per share (with each
share  convertible  into 10 shares  of common  stock),  for  gross  proceeds  of
$25,000,000,  and (2)  drawing  $12,000,000  under a new senior  secured  credit
facility with a national lender. (See Note 6 - Long Term Debt.)

In connection with the sale and issuance of the convertible preferred stock, the
Company  reported  $15,820,000  as a deemed  dividend to preferred  stockholders
representing the beneficial  conversion value for the underlying common stock as
of the date of the merger agreement.  The beneficial conversion value is treated
as a dividend  on the  convertible  preferred  stock  solely for the  purpose of
computing  earnings per share.  The dividend is computed by multiplying  (1) the
difference between the value of the underlying common stock calculated using the
average  closing  price  for the three  days  prior  and  three  days  after the
announcement of the merger ($3.63 per share) and the conversion price ($2.50 per
share) by (2) the number of shares of common  stock  into which the  convertible
preferred  stock  outstanding  at the merger's  effective  time was  convertible
(14,000,000 shares).

The acquisition  was accounted for using the purchase method of accounting.  The
Company  incurred  acquisition  costs of  $1,384,000  that are  included  in the
purchase  price.  In  addition,  $832,000  of  transaction  related  bonuses and
termination pay are included in the general and  administrative  expense item on
the condensed consolidated statement of operations.

The aggregate  purchase price of $73,592,000 for this  transaction is summarized
as follows:

Fair value of tangible assets acquired (includes
    cash of $8,444,000)                                  $   25,715,000
Liabilities assumed                                         (19,903,000)
Goodwill                                                     37,429,000
Customer list                                                29,184,000
Other intangibles                                             1,167,000
                                                     -------------------
                                                         $   73,592,000
                                                     ===================

The following are the Company's unaudited pro forma results of operations giving
effect to the acquisition of CHD Meridian as though the transaction had occurred
on January 1, 2003.  The results  exclude  transaction  costs of $1,938,000  and
transaction  related bonuses and termination pay of $832,000 included in the CHD
Meridian and the Company's statements of operations, respectively. The pro forma
results also include  adjustments to  amortization  expense  associated with the
intangibles  acquired and  interest  expense  related to the new senior  secured
credit facility.



                                       13
<PAGE>


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




NOTE 3--BUSINESS COMBINATION (continued)

                                       Nine months           Nine months
                                          ended                 ended
                                      September 30,         September 30,
                                          2004                  2003
                                   ------------------    ------------------

            Net revenue                   73,322,000            73,018,000
                                   ------------------    ------------------

            Operating loss                (1,453,000)           (1,070,000)
                                   ------------------    ------------------

            Net loss                      (3,166,000)           (4,253,000)
                                   ==================    ==================

            Loss per share                     (0.13)                (0.21)
                                   ==================    ==================


NOTE 4--GOODWILL AND INTANGIBLE ASSETS

During the quarter  ended  September 30, 2004,  goodwill  increased by $211,000.
This  increase  is related to the cost of  continuing  directors  and  officers'
insurance  coverage  for former  directors  and  officers of CHD  Meridian.  The
changes in the carrying  amount of goodwill for the nine months ended  September
30, 2004 are as follows:

                                              Total
                                          ------------------

Balance as of January 1, 2004                 $  8,424,000
Goodwill acquired in the nine months
ended September 30, 2004                        37,640,000
                                          ------------------
Balance as of September 30, 2004                46,064,000
                                          ==================

The components of identifiable intangible assets, which are included in the
consolidated balance sheet as of September 30, 2004, are as follows:

<TABLE>
<CAPTION>

<S>                                                      <C>                 <C>                 <C>


                                                     Gross Carrying       Accumulated         Net Carrying
                                                        Amount           Amortization           Amount
                                                  -----------------    ---------------    -----------------
       Amortized intangible assets:
           Customer lists                                36,492,000          8,118,000           28,374,000
           Other intangibles                              5,124,000          3,319,000            1,805,000
                                                  -----------------    ---------------    -----------------
       Total                                             41,616,000         11,437,000           30,179,000
                                                  =================    ===============    =================

</TABLE>


Customer lists are amortized on a straight-line  basis over the expected periods
to be benefited,  generally 12 to 15 years.  Other  intangible  assets represent
technology and deferred  marketing costs, which are amortized on a straight-line
basis over the  expected  periods to be  benefited,  generally 3 to 5 years.  In
accordance  with SFAS No. 142, the Company  completes a test for  impairment  of
goodwill and certain other intangible assets annually.


                                       14
<PAGE>



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



NOTE 5--CONVERTIBLE DEBENTURE

During the first quarter of 2004,  Palladin  Opportunity  Fund LLC converted the
remaining  balance of the  debenture  payable and accrued  interest  into common
stock.  Accordingly,  the Company  issued 427,106 shares of common stock for the
conversion of principal and accrued interest amounting to $747,000.

Interest expense associated with the convertible  debenture amounted to $368,000
for the nine months ended September 30, 2004. This amount includes $362,000 that
represents  accelerated  accretion  to interest  expense for the discount of the
value assigned to the warrants issued to the debenture holder and the beneficial
conversion value at date of issuance.


NOTE 6--LONG TERM DEBT

On March 19, 2004, in connection with the CHD Meridian acquisition,  the Company
obtained a $20,000,000  senior secured credit  facility from a national  lender.
The credit facility expires on April 1, 2007. The credit facility originally had
a  $6,000,000  term  loan  commitment  with  a  $14,000,000   revolving   credit
commitment.   Outstanding  letters  of  credit  liabilities  reduce  the  amount
available  to be borrowed  under the  revolving  credit  commitment.  The credit
facility has subsequently been amended, as discussed below.

In addition to funding the merger and related costs,  the Company used a portion
of the  proceeds  from the credit  facility to repay  $280,000 in related  party
loans  and  $944,000  in  principal  and  interest  for  all  other  outstanding
promissory notes.

The credit  facility is secured by  substantially  all of the Company's  assets.
Borrowings,  at the  Company's  election,  may be either Base rate or Eurodollar
rate loans.  Base rate loans bear  interest at the prime rate as published  from
time to time, plus up to 0.75% per annum depending on the Company's debt service
coverage ratios. Eurodollar rate loans bear interest at the Eurodollar rate plus
up to 3.0% per annum likewise  depending on the Company's debt service  coverage
ratios.

As of September  30, 2004,  the Company had  outstanding  $10,500,000  under the
credit facility,  $2,000,000 of which is classified as short term, $5,500,000 of
which is classified as long term,  and an aggregate of $3,000,000  under letters
of credit.

The credit facility includes certain financial  covenants,  including a covenant
measuring: (1) the ratio of the Company's funded indebtedness to earnings before
income,  taxes,  depreciation and amortization,  or EBITDA, (2) the ratio of the
Company's  funded  indebtedness to  capitalization,  and (3) the Company's fixed
charges  coverage ratio. As of September 30, 2004, the Company was in compliance
with these financial covenants.

On August 12,  2004,  the  Company  and the  senior  lender  amended  the credit
facility.  Among other things, the amendment added two additional covenants that
required the Company to achieve: (1) minimum stockholders' equity of $82,878,000
as of October 31, 2004, an increase of $10,000,000 from the stockholder's equity
reflected  on the  balance  sheet as of June 30,  2004,  and (2) pro forma  2004
EBITDA  (giving effect to the  acquisition of CHD Meridian  Healthcare as though
the  transaction  had  occurred  on January 1, 2004) of  $3,560,000.  The credit
facility  amendment  also limited the amount the Company  could borrow under the
facility  through  October 31, 2004 to  $8,500,000,  although  the amount of the
revolving credit commitments under the facility remained at $14,000,000.



                                       15
<PAGE>




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


NOTE 6--LONG TERM DEBT (continued)

On October 27, 2004,  the Company  amended its credit  facility  with its senior
secured lender. The amendment:  (1) increased the funded  indebtedness to EBITDA
ratio and the fixed charge coverage ratio; (2) moved the first  measurement date
for the  consolidated  net worth covenant to December 31, 2005, and restated the
covenant as a maintenance of minimum stockholders' equity at 90% of the level as
of December 31, 2005;  (3) excluded the  outstanding  letters of credit from the
credit  facility  borrowing  base  through  January 1, 2006;  and (4)  converted
amounts  outstanding  under the term loan commitment of the credit facility into
the revolving credit  commitment,  and eliminated the term loan commitment.  The
Company  continues to have access to $14,000,000  under the credit facility,  of
which $3,000,000 is currently  allocated to outstanding letters of credit and up
to $11,000,000 is available under the revolving portion.

NOTE 7--COMMITMENTS AND CONTINGENCIES

Litigation

CHD  Meridian  is a  defendant  in a lawsuit  seeking a return of  approximately
$556,000 in payments  received in the ordinary  course of business from a client
that filed for protection under bankruptcy laws during 2003. Management believes
that such amounts were not preference  payments,  and as such are not subject to
repayment.  The outcome of this lawsuit,  however, cannot be determined.  During
the three months ended  September 30, 2004, a second lawsuit seeking a return of
approximately $475,000 as preference payments was settled for substantially less
than the demand amount.

CHD Meridian is also  involved in certain  legal actions and claims on a variety
of matters  related to the normal course of business.  Management  believes that
such legal actions will not have a material  effect on the results of operations
or the  financial  position of the  Company.  (See also Note 9 - Risk  Retention
Group.)

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.  Recently,  government  activity has increased  with respect to
investigations and allegations concerning possible violations of fraud and abuse
statutes and regulations by healthcare  providers.  Violations of these laws and
regulations  could  result in, among other  things,  expulsion  from  government
healthcare  programs  together  with the  imposition  of  significant  fines and
penalties,  as well as significant  repayments for patient  services  previously
billed.

Management  believes  that the  Company  is in  compliance  with fraud and abuse
statutes as well as other applicable government laws and regulations. Compliance
with such laws and  regulations can be subject to future  government  review and
interpretation as well as regulatory actions unknown or unasserted at this time.

Significant Customers

As of September 30, 2004, one customer represented 15% of the Company's accounts
receivable as reflected on the Company's consolidated balance sheet.

For the three and nine months  ended  September  30,  2004,  one customer of the
Company accounted for 12% of the Company's revenue as reflected on the Company's
condensed consolidated statement of operations.


                                       16
<PAGE>



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



NOTE 7--COMMITMENTS AND CONTINGENCIES (continued)

Risk-Sharing Contracts

From time to time the Company enters into risk-sharing contracts. A risk-sharing
contract  generally  requires the Company to manage the health and wellness of a
predetermined  set  of  individuals  for a  term  of  three  to  five  years.  A
risk-sharing  contract  provides  that the  Company is required to refund to its
client a  percentage  of the  Company's  fees if its  program  does not save the
client an agreed upon percentage of the client's  healthcare  costs. The Company
did not generate material risk revenue, which may be subject to a refund, during
the quarter or nine months ended September 30, 2004.


NOTE 8--STOCKHOLDERS' EQUITY

Preferred Stock

The Company has 2,000,000  authorized shares of preferred stock. As of September
30, 2004, the Company had issued and  outstanding  1,200,000  shares of Series A
Convertible  Preferred Stock. Each share of Series A Convertible Preferred Stock
is convertible,  at any time, into 10 shares of common stock,  has a liquidation
preference  of $25.00  per share,  the  original  purchase  price,  and  accrues
dividends on that amount at a rate of 8% per year. Dividends are payable, at the
Company's  option,  in cash  or  common  stock,  and  only  upon  the  Company's
liquidation  or  conversion  of the Series A  Convertible  Preferred  Stock into
common stock. For the nine months ended September 30, 2004, the Company recorded
approximately $1,282,000 in accrued dividends.

The placement  agents that assisted the Company in the sale of 1,000,000  shares
of the  Series A  Convertible  Preferred  Stock to fund the  acquisition  of CHD
Meridian  received a commission of $1,490,000,  and warrants to acquire  492,000
shares of common stock exercisable at $2.50 per share. Such warrants were valued
at $1,506,000  utilizing the  Black-Scholes  valuation  model. The amount of the
cash paid and the value of the warrants have been classified as a cost of equity
in the condensed consolidated statement of stockholders' equity.

Common Stock

The Company has 100,000,000  authorized  shares of common stock. As of September
30,  2004,  the  Company had issued and  outstanding  24,796,671  shares,  which
excludes 3,859,200 shares held in escrow for purposes of the CHD Meridian merger
earn out.

Warrants

Under  the terms of a private  placement  completed  during  October  2003,  the
Company filed a  registration  statement  under the  Securities  Act of 1933, as
amended, covering the resale of the common stock and the common stock underlying
warrants issued in the private placement. The Securities and Exchange Commission
declared the registration statement effective on February 17, 2004.

In accordance with EITF Issue No. 00-19,  "Accounting  for Derivative  Financial
Instruments  Indexed To, and Potentially Settled In a Company's Own Stock," upon
issuance of such  warrants,  the Company  recorded a liability  in the amount of
$2,459,000,  representing  the fair value of the  warrants  to  acquire  890,000
shares of common stock.  The fair value of the warrants was estimated  using the
Black-Scholes  valuation  model with the  following  assumptions:  no dividends;
risk-free  interest rate of 4%; the contractual  life of 5 years; and volatility
of 112%.  The fair value of the warrants  was  estimated  to be  $2,760,000  and
$3,110,000 at December 31, 2003 and February 17, 2004, respectively. The Company
recorded an additional liability,  with a corresponding charge to operations, of
$301,000 and $350,000 on December 31, 2003 and February 17, 2004,  respectively,
associated with the increase in fair value of the warrants.


                                       17
<PAGE>




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



NOTE 8--STOCKHOLDERS' EQUITY (continued)

Warrants (continued)

The adjustments  required by EITF Issue No. 00-19 were triggered by the terms of
the private  placement  subscription  agreement,  which imposed penalties if the
Company did not timely register the common stock  underlying the warrants issued
in the private placement.  The Securities and Exchange  Commission  declared the
related registration statement effective within the contractual deadline and the
Company  incurred no penalties.  The adjustments for EITF Issue No. 00-19 had no
impact on the Company's working capital, liquidity or business operations.

The warrants were accounted for as a liability,  with an offsetting reduction to
additional  paid-in  capital  received  in the  private  placement.  The warrant
liability has been reclassified to equity as of February 17, 2004, the effective
date  of  the  registration  statement,   evidencing  the  non-impact  of  these
adjustments on the Company's financial position and business operations.

The  following  table  summarizes  the  Company's  activity as it relates to its
warrants for the nine months ended September 30, 2004:

                                                            Shares Underlying
                                                                 Warrants
                                                            ------------------

      Balance outstanding at January 1, 2004                        3,351,372
      Quarter ended March 31, 2004:
               Granted                                                492,000
               Exercised                                             (179,278)
                                                            ------------------
      Balance outstanding at March 31, 2004                         3,664,094
                                                            ------------------
      Quarter ended June 30, 2004:
               Granted                                                     --
               Exercised                                               (7,500)
                                                            ------------------
      Balance outstanding at June 30, 2004                          3,656,594
                                                            ------------------
               Granted                                                     --
               Exercised                                             (361,700)
                                                            ------------------
      Balance outstanding at September 30, 2004                     3,294,894
                                                            ==================

Warrants  issued during the nine months ended September 30, 2004 are exercisable
at $2.50 per share.  Such warrants  were valued at $1,506,000  and recorded as a
cost of equity because they were granted to placement  agents in connection with
sales of convertible preferred stock.

On October 27, 2004,  in connection  with the amendment of the Company's  senior
credit facility (see Note 6 - Long-Term  Debt),  the Company issued a warrant to
purchase  100,000  shares of the Company's  common stock at an exercise price of
$.01 per share to its senior secured  creditor.  The warrant expires on December
31, 2014.



                                       18
<PAGE>



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


NOTE 8--STOCKHOLDERS' EQUITY (continued)

Stock Options

The table below summarizes the activity in the Company's stock option plans for
the nine months ended September 30, 2004:

<TABLE>
<CAPTION>

<S>                                     <C>                 <C>                 <C>               <C>


                                                                           Non-Plan
                                                    Non-Qualified         Non-Qualified
                             Incentive Options         Options              Options                Total
   ------------------------ -------------------- ------------------- ------------------- -------------------
   Outstanding as of
   January 1, 2004                      652,941             795,973             669,000           2,117,914
   Granted                               70,921                  --                  --              70,921
   Exercised                                 --                  --                  --                  --
   Forfeited/Expired                         --             (30,000)                 --             (30,000)
                            -------------------- ------------------- ------------------- -------------------
   Outstanding as of
   March 31, 2004                       723,862             765,973             669,000           2,158,835
                            -------------------- ------------------- ------------------- -------------------
   Granted                                   --                  --                  --                  --
   Exercised                                 --                  --                  --                  --
   Forfeited/Expired                    (95,875)                 --                  --             (95,875)
                            -------------------- ------------------- ------------------- -------------------
   Outstanding as of June
   30, 2004                             627,987             765,973             669,000           2,062,960
                            -------------------- ------------------- ------------------- -------------------
   Granted                            1,147,000             595,000                  --           1,742,000
   Exercised                                 --                  --                  --                  --
   Forfeited/Expired                    (14,291)                 --           (175,002)            (189,293)
                            -------------------- ------------------- ------------------- -------------------
   Outstanding as of
   September 30, 2004                 1,760,696           1,360,973             493,998           3,615,667
                            ==================== =================== =================== ===================
   Vesting Dates:
         December 31, 2004               10,530              31,083               6,666              48,279
         December 31, 2005              580,357             330,578              26,668             937,603
         December 31, 2006              436,493             248,329                  --             684,822
         December 31, 2007              291,964             148,762                  --             440,726
         December 31, 2008                   --                  --              20,000              20,000
                Thereafter                   --                  --                  --                  --

</TABLE>


As of September 30, 2004,  exercisable  plan and non-plan options to purchase an
aggregate  of  1,410,307  shares,  with  exercise  prices  ranging from $.005 to
$10.00, were outstanding.

The Company  accounts  for its employee  incentive  stock option plans using the
intrinsic  value  method in  accordance  with the  recognition  and  measurement
principles of Accounting  Principles Board Opinion No. 25, "Accounting for Stock
Issued  to  Employees,"  as  permitted  by SFAS No.  123.  The  adoption  of the
disclosure  requirements  of SFAS No. 148 did not have a material  effect on the
Company's financial position or results of operations.



                                       19
<PAGE>




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


NOTE 8--STOCKHOLDERS' EQUITY (continued)

Had the Company determined  compensation  expense based on the fair value at the
grant  dates for  those  awards  consistent  with the  method  of SFAS 123,  the
Company's  net loss per share would have been  increased  to the  following  pro
forma amounts:

<TABLE>
<CAPTION>


<S>                                      <C>                 <C>                  <C>                  <C>

                                      For the three        For the three         For the nine         For the nine
                                      months ended          months ended         months ended         months ended
                                      September 30,        September 30,        September 30,        September 30,
                                          2004                  2003                 2004                 2003
                                    ------------------    -----------------    -----------------    -----------------

Net loss as reported                     $   (835,000)       $  (1,610,000)       $  (4,455,000)       $  (5,316,000)

Add back intrinsic value of the                    -                    -                    -
options issued to employee and
charged to operations                              -                    -                    -                24,000

Deduct stock based employee
compensation expense determined
under fair value based methods
for all awards                               (370,000)            (817,000)            (788,000)          (2,953,000)
                                    ------------------    -----------------    -----------------    -----------------

Pro forma net loss                       $ (1,205,000)       $  (2,427,000)       $  (5,243,000)       $  (8,245,000)
                                    ==================    =================    =================    =================

Basic and diluted net loss per
share as reported                        $      (0.06)       $       (0.14)       $       (1.00)       $       (0.53)
                                    ==================    =================    =================    =================

Pro forma basic and diluted net
loss per share                           $      (0.07)       $       (0.22)       $       (1.03)       $       (0.82)
                                    ==================    =================    =================    =================

</TABLE>


The above pro forma  disclosure  may not be  representative  of the  effects  on
reported net  operations for future years as options vest over several years and
the Company may continue to grant options to employees.

The fair market  value of each option  grant is  estimated  at the date of grant
using the  Black-Scholes  valuation  model with the  following  weighted-average
assumptions:

               Dividend yield                           0.00%
               Expected volatility                      112%
               Risk-free interest rate                  4%
               Expected life                            5 years

Securities and Exchange Commission Registration

Pursuant  to the terms of the  merger  agreement  between  the  Company  and CHD
Meridian, on April 19, 2004 the Company filed a registration statement under the
Securities Act of 1933, as amended,  covering the resale of (1) the common stock
issued in the merger, (2) the common stock underlying the convertible  preferred
stock issued in the merger and the related  financing,  and (3) the common stock
issuable upon exercise of warrants issued to the placement  agents in connection
with the merger.



                                       20
<PAGE>



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


NOTE 9--Risk Retention Group

During the first quarter of 2004, CHD Meridian formed Green Hills  Insurance,  a
Risk  Retention  Group (the  "RRG"),  licensed  in the State of Vermont  for the
purposes of  self-insuring a portion of the merged  companies'  professional and
general liability insurance.

The RRG was  capitalized  with  $2,000,000  in cash and a  $1,000,000  letter of
credit under the Company's credit facility.  The RRG began issuing policies on a
claims-made  basis to CHD Meridian  LLC, its direct  subsidiaries  and Physician
Groups  in May 2004.  As of  September  30,  2004,  cash held by the RRG,  which
includes   $2,000,000   contributed  to  RRG's  capital,  is  invested  in  cash
equivalents  in  accordance  with the  regulations  promulgated  by the State of
Vermont and is reflected on the balance sheet as cash and cash equivalents.

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  from  May 1,  2004  through  September  30,  2004.
Management's estimates are based on an independent actuarial report. The Company
does not discount loss and loss adjustment  expense  reserves.  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  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.  No claims have been filed
against  these  policies as of September 30, 2004. To the extent claims are made
against  the  policies  in the future,  the  Company  expects  such claims to be
resolved within five years of original date of claim.

The RRG does not plan to pay dividends to the  policyholders  in the foreseeable
future.















                                       21
<PAGE>



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

         Readers of this report should review the following Management's
Discussion and Analysis of Financial Condition and Results of Operations of
I-trax, Inc. and its subsidiaries in conjunction with our 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-KSB for the year ended December 31, 2003, as amended, and the audited
financial statements of CHD Meridian Healthcare and related notes for the year
ended December 31, 2003 included in our current report on Form 8-K/A filed on
November 10, 2004.

         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 will actually 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 Annual Report on
Form 10-KSB for the fiscal year ended December 31, 2003, as amended, 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.

         The accompanying unaudited 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-QSB and
Item 310(b) of Regulation S-B. In our opinion, the unaudited financial
statements have been prepared on the same basis as the annual financial
statements and reflect all adjustments necessary to present fairly the financial
position as of September 30, 2004 and the results of the operations and cash
flows for the nine months ended September 30, 2004. 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.

Our Business

         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 does business as CHD Meridian Healthcare. For
accounting purposes, the consolidation of results of operations of the two
constituent companies was effective April 1, 2004. As a result, our consolidated
results of operations for the nine months ended September 30, 2004 include the
operations of CHD Meridian Healthcare only from April 1, 2004 until September
30, 2004.

         We offer two categories of services that can be integrated or blended
as necessary or appropriate based on each client's needs. The first category
includes on-site health related services - occupational health, primary care,
corporate health, and pharmacy - which were historically offered by CHD Meridian
Healthcare. We believe we are the nation's largest provider of on-site corporate
health management services. The second category includes personalized health
management programs, which were historically offered by I-trax.

         Our services are designed to allow employers to contract directly for a
wide range of employee healthcare needs. We can deliver these services at or
near the client's work site by opening, staffing and managing a clinic or
pharmacy dedicated to the client and its employees, or remotely by using the
Internet and our state-of-the-art Care Communication Center staffed with trained
nurses and other healthcare professionals who are available 24 hours per


                                       22
<PAGE>


day, 7 days per week. Our array of services provides each client with
flexibility to meet its specific pharmacy, primary care, occupational health,
corporate health, wellness, lifestyle management, or disease management needs.

         We provide services to approximately 150 clients, including automotive
and automotive parts manufacturers, consumer products manufacturers, large
financial institutions, health plans, integrated delivery networks, and third
party administrators. These services include operating for certain of such
clients approximately 168 on-site facilities in 32 states. Our client retention
rate is high because we establish 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.

Key Financial Trends and Analytical Points

         The following is a summary of key trends and analytical points
affecting our business and, unless otherwise noted, reflects pro forma results
of operations giving effect to the acquisition of CHD Meridian Healthcare as
though the transaction had occurred on January 1, 2003:

         Business Integration. On March 19, 2004, we finalized the acquisition
of CHD Meridian Healthcare and commenced reporting financial results that
include CHD Meridian Healthcare operations as of April 1, 2004. Since that time,
we have substantially completed the integration of the two companies' management
teams and operations, as well as the finance and information technology
functions. We are now focusing on integrating our population health and
productivity management solutions with our on-site services, and reorganizing
our sales and marketing efforts to deliver a wide range of value-added services
to our clients.

         Revenue Restatement. On November 10, 2004, we amended the audited
financial statements of CHD Meridian Healthcare and related notes for the year
ended December 31, 2003 in our current report on Form 8-K/A, and our quarterly
financial statements included on our quarterly reports on Form 10-QSB/A for the
quarters ended March 31, 2004 and June 30, 2004. With these amendments, we are
reporting our revenues net of all sales of pharmaceuticals offered at on-site
pharmacies we operate for the benefit of our clients. In the past, we included
in reported revenue a portion of such sales in arrangements where we maintained
legal ownership of the pharmaceuticals. We believe that the current approach is
more appropriate under applicable accounting literature. The discussion of
financial results below is based on this revised approach. Comparable numbers
for prior periods are reported in the above referenced current and quarterly
reports.

         Revenue Trend. As a result of the CHD Meridian Healthcare acquisition,
our revenue increased significantly from the nine-month period ended September
30, 2003 to the nine-month period ended September 30, 2004.

         On a pro forma basis, however, revenue growth was modest from the
nine-month period ended September 30, 2003 to the nine-month period ended
September 30, 2004. Although we added 17 new on-site facilities during the nine
months ended September 30, 2004, we also closed 13 existing facilities during
such period because of client bankruptcies or facility shutdowns. We expect,
however, to implement 20 new on-sites facilities prior to March 31, 2005 with
few, if any, closures. We believe that these new facilities will add
approximately $7,000,000 in annualized revenue when fully operational, and
therefore, we expect better revenue growth in coming periods than we experienced
from the nine-month period ended September 30, 2003 to the nine-month period
ended September 30, 2004. By contrast, our heath management products are
experiencing only measured growth. We are continuing to de-emphasize software
sales and traditional nurse call center business in favor of our health
management solutions services launched in October 2003. We added approximately
41,000 lives under management during the first six months period ended June 30,
2004, and expect to add up to an additional 45,000 to 55,000 lives in the three
months ended December 31, 2004. When fully implemented by June 30, 2005, we
expect to have approximately 86,000 to 96,000 lives under management, with
annualized revenue of approximately $5,000,000. These new products, however, are
still in an early stage of development, and there can be no assurance that we
will be successful in completing pending contracts or fully implementing the
related services.

         Profitability. The pro forma gross profit contribution, which is net
revenues less direct costs of operation, for our on-site services has shown
growth from the nine month period ended September 30, 2003 to the nine month
period ended September 30, 2004. Our gross profit margins for on-site services
are stable because these services are


                                       23
<PAGE>



well established and priced on a reimbursable cost model. The gross profit
contribution from our population health management services is less predictable
because we are continuing to develop and implement these services.

         Liquidity. Our on-site operations continue to generate positive cash
flow. During the six months ended September 30, 2004, we invested substantially
all of such free cash flow in developing and implementing our health management
programs for existing customers. In coming periods, we expect to continue to
invest free cash flow in developing and implementing our health management
programs, but only to support continued revenue growth from such programs.

         Working Capital. At September 30, 2004, we had a working capital
deficiency of $2,765,000. On October 27, 2004 we amended the terms of our senior
credit facility. This amendment has substantially reduced our working capital
deficiency. Please refer to "Liquidity and Capital Resources - Working Capital"
section below for a further discussion.

         CHD Meridian Acquisition Earn-out. An aggregate of 3,859,200 shares of
our common stock is in escrow. These shares will be released to former CHD
Meridian Healthcare stockholders if CHD Meridian Healthcare, continuing its
operations following the closing of the merger as our subsidiary, achieves
agreed upon calendar 2004 milestones for earnings before interest, taxes,
depreciation and amortization (or EBITDA). Based on CHD Meridian Healthcare's
results of operations as of September 30, 2004, we believe that CHD Meridian
Healthcare will achieve at least the minimum EBITDA target, which will result in
3,473,280 shares being released to former CHD Meridian Healthcare stockholders.

Results of Operations

         As noted above, we commenced reporting financial results that include
CHD Meridian Healthcare operations beginning as of April 1, 2004, and
consequently, our historic results from the periods prior to the second quarter
ended June 30, 2004 only reflect the separate operations of I-trax. Accordingly,
in addition to providing comparative analysis on a historical basis, we are also
providing supplemental unaudited pro forma information that we believe is useful
to understand how our results of operations have performed on a comparative
basis as if the acquisition of CHD Meridian Healthcare occurred on January 1,
2003.

         Three Months ended September 30, 2004 (Actual) Compared to Three Months
         ended September 30, 2003 (Actual)

         Revenue for the three months ended September 30, 2004 was $24,136,000,
an increase of $23,135,000 from $1,001,000 for the three months ended September
30, 2003. Of the total revenue for the three months ended September 30, 2004,
$747,000 was from our personalized health management programs and $23,389,000
from our on-site facilities.

         Operating expenses, which represent our direct costs associated with
the operation of our on-site and health management services, amounted to
$18,816,000 for the three months ended September 30, 2004, an increase of
$18,174,000 from $642,000 for the three months ended September 30, 2003.

         General and administrative expenses which represent our corporate
costs, increased to $4,670,000 for the three months ended September 30, 2004
from $1,024,000 for the three months ended September 30, 2003. The increase of
$3,646,000 is primarily attributable to an increase of $3,008,000 related to the
CHD Meridian Healthcare acquisition, offset by a non-cash charge incurred during
2003 associated with issuing common stock, granting warrants and having certain
shareholders contribute shares to an investor relations firm as consideration
for services rendered.

         Depreciation and amortization expenses were $1,097,000 for the three
months ended September 30, 2004, an increase of $657,000 as compared to $440,000
for the three months ended September 30, 2003. Approximately $435,000 of the
increase relates to amortization for the intangibles recorded as part of the CHD
Meridian transaction. The remaining increase relates to intangible assets
acquired from CHD Meridian Healthcare.



                                       24
<PAGE>


         Interest expense for the three months ended September 30, 2004 was
$124,000, representing a decrease of $824,000 or 87% from $948,000 for the three
months ended September 30, 2003. For the three months ended September 30, 2004,
interest expense includes interest payable under the credit facility. For the
three months ended September 30, 2003, interest expense includes a charge of
$517,000 attributable to the unamortized portion of the discount and beneficial
conversion value associated with a convertible debenture.

         Amortization of financing costs for the three months ended September
30, 2004 was $13,000 representing a decrease of $44,000 or 77% from $57,000 for
the three months ended September 30, 2003. As of September 30, 2004, these
financing costs are fully amortized.

         Other income was $500,000 for the three months ended September 30,
2003. This consists of $500,000 of proceeds from a key-person life insurance
policy.

         The provision for income taxes for the three months ended September 30,
2004 was $251,000, representing an increase of $251,000 from the three months
ended September 30, 2003. This increase is related to certain state taxes for
CHD Meridian operations.

         For the three months ended September 30, 2004, our net loss was
$835,000, as compared to a net loss of $1,610,000 for the three months ended
September 30, 2003.

         Nine Months ended September 30, 2004 (Actual) Compared to Nine Months
         ended September 30, 2003 (Actual)

         Revenue for the nine months ended September 30, 2004 was $49,968,000,
an increase of $46,300,000 from $3,668,000 for the nine months ended September
30, 2003. Of the total revenue for the nine months ended September 30, 2004,
$2,776,000 was from our personalized health management programs and $47,192,000
from our on-site facilities.

         Operating expenses, which represent our direct costs associated with
the operation of our on-site and health management services, amounted to
$38,631,000 for the nine months ended September 30, 2004, an increase of
$37,125,000 from $1,506,000 for the nine months ended September 30, 2003.

         General and administrative expenses, which represent our corporate
costs, increased to $11,342,000 for the nine months ended September 30, 2004
from $4,243,000 for the nine months ended September 30, 2003. The increase of
$7,099,000 is primarily attributable to the addition of $6,366,000 related to
the CHD Meridian Healthcare acquisition, and to an increase of $1,040,000 in
salaries and wages expenses, offset by a non-cash charge incurred during 2003
associated with issuing common stock, granting warrants and having certain
shareholders contribute shares to an investor relations firm as consideration
for services rendered.

         Depreciation and amortization expenses were $2,889,000 for the nine
months ended September 30, 2004, an increase of $1,571,000 as compared to
$1,318,000 for the nine months ended September 30, 2003. Approximately $435,000
of the increase relates to amortization for the intangibles recorded as part of
the CHD Meridian Healthcare acquisition. The remaining increase relates to
intangible assets acquired from CHD Meridian Healthcare.

         Interest expense for the nine months ended September 30, 2004 was
$900,000, representing a decrease of $1,022,000 from $1,922,000 for the nine
months ended September 30, 2003. For the nine months ended September 30, 2004,
interest expense includes a charge of $573,000 attributable to the unamortized
portion of the discount and beneficial conversion value associated with the
convertible debenture and certain other promissory notes. The discount amount is
expensed because the convertible debenture was converted into common stock and
the promissory notes were repaid during March 2004. During the nine months ended
September 30, 2003, interest expense includes a charge of $1,302,000
attributable to the unamortized portion of the discount and beneficial
conversion value associated with a convertible debenture.




                                       25
<PAGE>

         Amortization of financing costs for the nine months ended September 30,
2004 was $60,000 representing a decrease of $235,000 or 80% from $295,000 for
the nine months ended September 30, 2003. As of September 30, 2004, these
financing costs are fully amortized.

         The provision for income taxes for the nine months ended September 30,
2004 was $251,000, representing an increase of $251,000 from the nine months
ended September 30, 2003. This increase is related to certain state taxes for
CHD Meridian operations.

         Other expense for the nine months ended September 30, 2004, represents
a one-time non-cash charge of $350,000 associated with the warrants to acquire
common stock issued in a private placement completed during October 2003. The
charge represents the increase in the value of the common stock underlying the
warrants until the effective time of a registration statement we filed with the
Securities and Exchange Commission to register the underlying shares. The
initial value of the warrants was recorded as a liability and any fluctuation in
the value was passed through the statement of operations. Once the registration
became effective, any balance in the liability account was reclassified to
equity. The registration became effective during February 2004, and accordingly,
we reclassified $3,110,000 of liability into equity. Other expense for the nine
months ended September 30, 2003, reflects a charge of $200,000 in connection
with the termination in January 2003 of our agreement to acquire DxCG, Inc., a
Boston-based predictive modeling company. This sum was paid to DxCG following
DxCG's termination of the merger agreement because certain conditions to
closing, including third party financing for the cash portion of the purchase
price, were not satisfied. It also includes $500,000 of proceeds from a
key-person life insurance policy.

         For the nine months ended September 30, 2004, our net loss was
$4,455,000, as compared to a net loss of $5,316,000 for the nine months ended
September 30, 2003. The net loss for the nine months ended September 30, 2004,
includes non-cash and merger related expenses of $1,755,000, comprised of: (1)
$573,000 in non-cash interest expense attributable to the unamortized discount
and beneficial conversion value of a previously outstanding convertible
debenture and certain other promissory notes which were converted into common
stock in March 2004; (2) $350,000 of non-cash charges related to an increase in
the fair market value of common stock underlying warrants issued in a private
placement completed during October 2003; and (3) $832,000 of merger related
costs, which were included in general and administrative expense.

Pro Forma Results of Operations

         The following are our unaudited pro forma results of operations giving
effect to the acquisition of CHD Meridian Healthcare as though the transaction
had occurred on January 1, 2003. The results exclude transaction costs of
$1,938,000 and transaction related bonuses and termination pay of $832,000
included in the CHD Meridian Healthcare's and our statements of operations,
respectively. The pro forma results also include adjustments to amortization
expense associated with the intangibles acquired and interest expense related to
the new credit facility.

                                    Nine months           Nine months
                                       ended                 ended
                                   September 30,         September 30,
                                       2004                  2003
                                 ------------------    ------------------

       Net revenue                      73,322,000            73,018,000
                                 ------------------    ------------------

       Operating loss                   (1,453,000)           (1,070,000)
                                 ------------------    ------------------

       Net loss                         (3,166,000)           (4,253,000)
                                 ==================    ==================

       Loss per share                        (0.13)                (0.21)
                                 ==================    ==================



                                       26
<PAGE>



         Nine Months  ended  September  30,  2004 (pro forma)  Compared to Nine
         Months ended September 30, 2003 (pro forma)

         Pro forma revenue for the nine months ended September 30, 2004
increased to $73,322,000, an increase of $304,000, from $73,018,000 for the nine
months ended September 30, 2003. In accordance with management's expectations,
our on-site revenue and personalized health management revenue increased from a
combination of expansion of existing business and new sales growth. Technology
revenue decreased as we continue to emphasize services over technology sales. We
expect this trend to continue.

         Total costs and expenses include direct costs of our operations
(operating expenses), corporate overhead (general and administrative expenses),
and depreciation and amortization. Total costs and expenses for the nine months
ended September 30, 2004 increased to $74,775,000, a $687,000 increase, from
$74,088,000 reported for the nine months ended September 30, 2003 on a pro forma
basis. The increase is primarily related to the incremental costs associated
with new and expanded business discussed above offset by a slight reduction in
general and administrative expenses. Depreciation and amortization decreased by
$36,000 on a pro forma basis. In coming periods, we expect total costs and
expenses to increase as our revenue increases.

         Interest expense and financing costs for the nine months ended
September 30, 2004 decreased from the corresponding expenses for the nine months
ended September 30, 2003 on a pro forma basis. During the nine months ended
September 30, 2004 and September 30, 2003, the company recorded non-recurring
charges to interest expense and other expenses in the amount of $923,000 and
$1,002,000, respectively. We expect interest expense related to outstanding
amounts due under the senior secured credit facility to increase in future
periods.

         We record pass-through pharmaceutical purchases on a net basis. These
purchases were $69,778,000 and $63,122,000 for the nine months ended September
30, 2004 and 2003, respectively.

         During the three months ended March 31, 2004, CHD Meridian Healthcare
formed Green Hills Insurance, a Risk Retention Group, to self-insure a portion
of the merged companies' professional and general liability insurance. Green
Hills was capitalized with $2,000,000 in cash and a $1,000,000 letter of credit
under our credit facility. Green Hills contributed an estimated $150,000 and
$300,000 to our pre-tax profits in the three and nine month periods ended
September 30, 2004, respectively. Green Hills' loss and loss adjustment reserves
are adjusted monthly and represent management's best estimate of the ultimate
net cost of all reported and unreported losses. Management's estimates are based
on an independent actuarial report.

         Green Hills has permitted us to reduce our insurance costs, while
maintaining our level of exposure as under our prior insurance strategy, which
involved a self-insured retention of $500,000 per claim. We obtain excess
insurance to mitigate risk in excess of Green Hills' policy limits. Nonetheless,
we are now subject to the risks associated with any insurance business, which
include investment risk relating to the performance of our invested assets set
aside as reserves for future claims, the uncertainty of making actuarial
estimates of projected future professional liability losses, and loss adjustment
expenses. Failure to make an adequate return on our investments, to maintain the
principal of invested funds, or to estimate future losses and loss adjustment
expenses accurately, could cause us to sustain losses. Also, maintaining the
insurance subsidiary has exposed us to substantial additional regulatory
requirements, with attendant risks if we fail to comply with applicable
regulations.



Liquidity and Capital Resources

         Working Capital

         As of September 30, 2004, we had a working capital deficiency of
$2,765,000, an increase of $264,000 from a working capital deficiency of
$2,501,000 as of June 30, 2004.

         On October 27, 2004, we amended our credit facility with our senior
secured lender. The amendment: (1) increased the funded indebtedness to EBITDA
ratio and the fixed charge coverage ratio; (2) moved the first measurement date
for the consolidated net worth covenant to December 31, 2005, and restated the
covenant as a maintenance of minimum stockholders' equity at 90% of the level as
of December 31, 2005; (3) excluded the outstanding letters of credit from the
credit facility borrowing base through January 1, 2006; and (4) converted
amounts outstanding under the term loan commitment of the credit facility into
the revolving credit commitment, and eliminated the term loan commitment. We
continue to have access to $14,000,000 under the credit facility, of which
$3,000,000 is currently allocated to outstanding letters of credit and up to
$11,000,000 is available under the revolving portion.



                                       27
<PAGE>


         The amendment strengthened our cash position by providing us access to
the full amount available under the credit facility and by excluding outstanding
letters of credit from the credit facility's borrowing base through January 1,
2006. Consequently, we believe that amounts available under the credit facility,
together with cash flow from operations, are sufficient to meet our operating
needs through December 31, 2004.

         Sources and Uses of Cash

         Cash provided by operations was $350,000 for the nine months ended
September 30, 2004. A portion of the cash used for operations is the result of
an increase in accounts receivable from the CHD Meridian Healthcare acquisition
and billings on the implementation costs of new clients. Other current assets
also increased due to additional carrying balances in prepaid insurance.
Finally, accrued expenses increased because the higher carrying amount of
accrued payroll and vacation.

         In connection with the CHD Meridian Healthcare merger, we received
funds from selling 1,000,000 shares of Series A Convertible Preferred Stock for
$25,000,000, before commission expenses and other transaction costs, which
amounted to approximately $1,490,000 in the aggregate. We also received funds
from borrowings of $12,000,000 from our new senior secured credit facility with
a national lender. These funds were primarily used to fund $30,508,000 required
for the cash portion of the CHD Meridian Healthcare acquisition, including the
$5,000,000 redemption of Series A Convertible Preferred Stock issued directly to
the CHD Meridian Healthcare stockholders and for working capital.

         In addition to funding the merger and related costs, we used a portion
of the proceeds from the credit facility to repay $280,000 in related party
loans and $944,000 in principal and interest for all other outstanding
promissory notes.

         During the first quarter of 2004, Palladin Opportunity Fund LLC
converted the remaining balance of the debenture payable and accrued interest
into common stock. Accordingly, the Company issued 427,106 shares of common
stock for the conversion of principal and accrued interest amounting to
$747,000.

Critical Accounting Policies

         Impairment of Goodwill and Intangible Assets

         We operate in an industry that is rapidly evolving and extremely
competitive. It is reasonably possible that our accounting estimates with
respect to the useful life and ultimate recoverability of our carrying basis of
goodwill and intangible assets could change in the near term and that the effect
of such changes on the financial statements could be material. In accordance
with SFAS No. 142, we complete a test for impairment of goodwill and certain
other intangible assets annually.

         Revenue Recognition

         Service Revenue - On-site Facilities. We generate revenue from
contractual client obligations for occupational health, primary care, pharmacy
and corporate health services rendered on either a fixed fee or a cost-plus
arrangement. For fixed fee contracts, revenues are recorded on a straight-line
basis as services are rendered. For cost-plus contracts, revenues are recorded
as costs are incurred with the management fee component recorded as earned based
on the method of calculation stipulated in the client contracts.

         Revenue is recorded at estimated net amounts to be received from
customers for services rendered. The allowance for doubtful accounts represents
management's estimate of potential credit issues associated with amounts due
from customers.

         We record pass-through pharmaceutical purchases on a net basis in
accordance with EITF Issue No. 99-19, "Reporting Gross Revenue as a Principal
vs. Net as an Agent." Under our pharmacy arrangements, we provide
pharmaceuticals to a client as a component of our pharmacy agreement, which
typically requires us to staff and operate a pharmacy for the sole benefit of
the client's employees and, in certain instances, dependents and retirees.




                                       28
<PAGE>


The substance of our pharmacy agreement in relation to pharmaceutical purchases
demonstrates an agent-like arrangement and points to net reporting. Our
agreements stipulate that we must be reimbursed upon purchasing pharmaceuticals,
and not upon dispensing, thus limiting inventory risk. We also price
pharmaceuticals on a pass-through basis and mitigate credit risk through
structured payment terms with our clients. Consequently, we do not have
unmitigated credit risk.

         Cash we receive prior to the performance of services is reflected as
deferred revenue on the balance sheet.

         Service Revenue - Personalized Health Management Programs. We recognize
service revenue as services are rendered. We contract with our customers to
provide services for a monthly fee based on the number of employees, members or
covered lives, a per-call charge to our Care Communication Center, or a
combination of both.

         Upon execution of a contract for services, we assess whether the fee
associated with our revenue transactions is fixed and determinable and whether
collection is reasonably assured. We assess whether the fee is fixed and
determinable based on the payment terms associated with such contract. If a
significant portion of a fee is due after our normal payment terms, which are
generally 30 to 90 days from invoice date, we account for such fee as services
are provided.

         From time to time we enter into risk-sharing contracts. A risk-sharing
contract generally requires us to manage the health and wellness of a
predetermined set of individuals for a term of three to five years. A
risk-sharing contract may also provide that we are required to refund to our
client a percentage of our fees if our program does not save the client a
stipulated percentage of the client's healthcare costs. We did not generate
material risk revenue that may be subject to a refund during the quarter or nine
months ended September 30, 2004.

         Technology Revenue. We derive our revenue pursuant to different
contract types, including perpetual software licenses, subscription licenses and
custom development services, all of which may include support services revenue
such as licensed software maintenance, training, consulting and web-hosting
arrangements. As described below, significant management judgments and estimates
must be made and used in connection with the revenue recognized in any
accounting period. Material differences may result in the amount and timing of
our revenue for any period if management made different judgments or utilized
different estimates.

         We license our software products for a specific term or on a perpetual
basis. Most of our license contracts also require maintenance and support. We
apply the provisions of Statement of Position 97-2, "Software Revenue
Recognition," as amended by Statement of Position 98-9 "Modification of SOP
97-2, Software Revenue Recognition, With Respect to Certain Transactions" to all
transactions involving the sale of software products and hardware transactions
where the software is not incidental. For hardware transactions where software
is not incidental, we do not unbundle our fee and, accordingly, do not apply
separate accounting guidance to the hardware and software elements. For hardware
transactions where software is not involved, we apply the provisions of Staff
Accounting Bulletin 101 "Revenue Recognition." In addition, we apply the
provisions of EITF 00-03 "Application of AICPA Statement of Position 97-2 to
Arrangements that Include the Right to Use Software Stored on Another Entity's
Hardware" to our hosted software service transactions.

         We recognize revenue from the sale of software licenses when persuasive
evidence of an arrangement exists, the product has been delivered, the fee is
fixed and determinable, and collection of the resulting receivable is reasonably
assured. Delivery generally occurs when the product is delivered to a common
carrier.

         We assess collection based on a number of factors, including past
transaction history with the customer and the creditworthiness of the customer.
We do not request collateral from our customers. If we determine that collection
of a fee is not reasonably assured, we defer the fee and recognize revenue at
the time collection becomes reasonably assured, which is generally upon receipt
of cash.

         For technology arrangements with multiple obligations (for example,
undelivered software maintenance and support), we allocate revenue to each
component of the arrangement using the residual value method based on the fair
value of the undelivered elements. Accordingly, we defer technology revenue in
the amount equivalent to the fair value of the undelivered elements.



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         We recognize revenue for maintenance services ratably over the contract
term. Our training and consulting services are billed based on hourly rates, and
we generally recognize revenue as these services are performed. However, upon
execution of a contract, we determine whether any services included within the
arrangement require us to perform significant work either to alter the
underlying software or to build additional complex interfaces so that the
software performs as the customer requests. If these services are included as
part of an arrangement, we recognize the fee using the percentage of completion
method. We determine the percentage of completion based on our estimate of costs
incurred to date compared with the total costs budgeted to complete the project.

Material Equity Transactions

         During the nine months ended September 30, 2004, we executed equity
transactions with unrelated parties in connection with the CHD Meridian
Healthcare merger and related financing. We believe that we have valued all such
transactions pursuant to the various accounting rules and that they ultimately
represent the economic substance of each transaction. Please refer to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Sources and Uses of Cash" and Part II, "Item 2 - Changes in
Securities and Small Business Issuer's Purchases of Securities."

Item 3.  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 September 30, 2004, which is the end of the period
covered by this quarterly report on Form 10-QSB. Based on that evaluation, the
principal executive officer and principal financial officer have concluded that
our controls and procedures are effective.

         There were no changes that occurred during the fiscal quarter ended
September 30, 2004 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

         Other than as described in Note 7 - Commitments and Contingencies to
the condensed consolidated financial statements, there have been no material
developments in any reported legal proceedings.

         Subsidiaries of I-trax are involved in various other 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 I-trax's overall consolidated financial position, results of
operations or liquidity.

Item 2.   Changes in Securities and Small Business Issuer's Purchases of
          Securities

Issuance of Unregistered Securities

         Effective July 30, 2004, an investor and former executive, exercised
warrants to purchase an aggregate of 361,500 shares of our common stock at
exercise prices of $.75 to $2.50. In lieu of paying the exercise price in cash,
such investor used the warrants' cashless exercise feature, such that the
investor received 201,597 shares of our common stock and surrendered to us for
cancellation 160,103 shares of our common stock. The investor is an accredited
investor. In undertaking this issuance, we relied on an exemption from
registration under Section 4(2) of the Securities Act.

Item 6.  Exhibits

      10.1     Lease Agreement made as on August 12, 2004 by and between
               Henderson Birmingham Associates and I-trax Health Management
               Solutions, Inc.



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      10.2     Guarantee and Suretyship Agreement made as on August 12, 2004
               by I-trax, Inc. for the benefit of Henderson Birmingham
               Associates.

      10.3     Amended and Restated 2001 Equity Compensation Plan.

      31.1     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      31.2     Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
               Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

      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.



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                                    SIGNATURE

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


                                  I-TRAX, INC.

Date: November 12, 2004                         By: /s/  Frank A. Martin
                                                    ----------------------------
                                                Name:   Frank A. Martin
                                                Title:  Chief Executive Officer






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