**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-Q**

| **Mark One**                                      |
|---------------------------------------------------|
|                                              |   |   |
| **x**                                             |   | **QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)  OF THE SECURITIES EXCHANGE ACT OF 1934** |
|                                              |   |   |
| **For The  Quarterly Period Ended June 30, 2007** |
|                                              |   |   |
| **o**                                             |   | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For theTransition Periodfrom               to               **

**Commission File Number 333-125575**

**INFOLOGIX, INC.**

(Exact name ofregistrant as specified in its charter)

| **Delaware**                                                    |   | **20-1983837**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (IRS Employer  Identification Number) |
| ** **                                                      |   | ** **                            |
| **101 E.  County Line Road**                                    |   | ** **                            |
| **Hatboro,  PA**                                                |   | **19040**                             |
| (Address of  principal executive offices)                       |   | (Zip code)                            |

 

**(215)604-0691**

(Registrant’stelephone number, including area code)

Indicate by check mark ifthe registrant is not required to file reports pursuant to Section 13 orSection 15(d) of the Exchange Act. Yes    o    No    x

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements for thepast 90 days. Yes    x    No    o

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer. See definition of “accelerated filer and largeaccelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o                Accelerated filer  o             Non-accelerated filer  x

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act). Yes  o    No  x

The number of sharesoutstanding of each of the issuer’s classes of common stock as of the latestpracticable date,

| Class                                      | ** ** | **Outstanding at August 1, 2007** |
|--------------------------------------------|------------|-----------------------------------|
| Common Stock,  $.00001 par value per share |       | 24,133,823  Shares                |

 

 

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**TABLE OF CONTENTS**
|            |       | **PART I — FINANCIAL  INFORMATION**                                                                          |       |       |
|------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|------------|
|       |       |                                                                                                              |       |       |
| Item 1.    |       | Financial  Statements (Unaudited)                                                                                 |       | 3          |
|       |       |                                                                                                              |       |       |
|       |       | Consolidated Balance  Sheets as of June 30, 2007 (unaudited) and December 31, 2006                           |       | 3          |
|       |       |                                                                                                              |       |       |
|       |       | Consolidated Statements of Operations (unaudited) for  the three and six months ended June 30, 2007 and 2006 |       | 4          |
|       |       |                                                                                                              |       |       |
|       |       | Consolidated Statements of Cash Flows (unaudited) for  the six months ended June 30, 2007 and 2006                |       | 5          |
|       |       |                                                                                                              |       |       |
|       |       | Consolidated Statements of Changes in Stockholders’  Equity for the six months ended June 30, 2007           |       | 6          |
|       |       |                                                                                                              |       |       |
|       |       | Notes to  Consolidated Financial Statements                                                                       |       | 7          |
|       |       |                                                                                                              |       |       |
| Item 2.    |       | Management’s  Discussion and Analysis of Financial Condition and Results of Operations                       |       | 15         |
|       |       |                                                                                                              |       |       |
| Item 3.    |       | Quantitative  and Qualitative Disclosures About Market Risk                                                       |       | 21         |
|       |       |                                                                                                              |       |       |
| Item 4.    |       | Controls and Procedures                                                                                           |       | 21         |
|       |       |                                                                                                              |       |       |
| ** ** | ** ** | **PART II — OTHER  INFORMATION**                                                                             | ** ** | ** ** |
| ** ** | ** ** | ** **                                                                                                        | ** ** | ** ** |
| Item 1.    |       | Legal Proceedings                                                                                                 |       | 22         |
| ** ** | ** ** | ** **                                                                                                        | ** ** | ** ** |
| Item  1a.  |       | Risk  Factors                                                                                                     |       | 22         |
|       |       |                                                                                                              |       |       |
| Item 2.    |       | Unregistered  Sales of Equity Securities and Use of Proceeds                                                      |       | 22         |
| ** ** | ** ** | ** **                                                                                                        | ** ** | ** ** |
| Item 4.    |       | Submission of  Matters to a Vote of Security Holders                                                              |       | 22         |
|       |       |                                                                                                              |       |       |
| Item  6.   |       | Exhibits                                                                                                          |       | 23         |
|       |       |                                                                                                              |       |       |
|       |       | Signatures                                                                                                        |       | 24         |

 

2

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**PART I - FINANCIAL INFORMATION**

**Item1.**

**INFOLOGIX, INC.**

**Consolidated Balance Sheets**
| ** **                                                                                                                                                                             | ** ** | **(Unaudited)**   | ** ** | ** **            | ** ** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                                                                                                             | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
| ** **                                                                                                                                                                             | ** ** | **2007**          | ** ** | **2006**              | ** ** |
| **ASSETS**                                                                                                                                                                             | ** ** | ** **        | ** ** | ** **            | ** ** |
| Currents assets:                                                                                                                                                                       |       |              |       |                  |       |
| Cash and cash  equivalents                                                                                                                                                             |       | $                 | 10,539,626 |                  | $          | 12,882,044 |   |
| Accounts and  other receivables (net of allowance for doubtful accounts in the amount of  $164,561 and $120,000 at June 30, 2007 and December 31, 2006, respectively)                  |       | 14,226,943        |       | 11,797,265            |       |
| Finished goods  inventory, net                                                                                                                                                         |       | 2,308,477         |       | 2,227,201             |       |
| Prepaid expenses  and other current assets                                                                                                                                             |       | 863,685           |       | 906,793               |       |
| Deferred tax  assets                                                                                                                                                                   |       | 116,847           |       | 311,478               |       |
| Total current  assets                                                                                                                                                                  |       | 28,055,578        |       | 28,124,781            |       |
|                                                                                                                                                                                   |       |              |       |                  |       |
| Property and equipment,  net                                                                                                                                                           |       | 1,386,931         |       | 1,200,680             |       |
| Intangible assets, net                                                                                                                                                                 |       | 4,198,252         |       | 1,111,634             |       |
| Deferred tax assets                                                                                                                                                                    |       | 2,500,134         |       | 1,375,486             |       |
| Total assets                                                                                                                                                                           |       | $                 | 36,140,895 |                  | $          | 31,812,581 |   |
|                                                                                                                                                                                   |       |              |       |                  |       |
| **LIABILITIES  AND STOCKHOLDERS’ EQUITY**                                                                                                                                         | ** ** | ** **        | ** ** | ** **            | ** ** |
| Accounts payable                                                                                                                                                                       |       | $                 | 8,866,163  |                  | $          | 6,584,489 |   |
| Line of credit                                                                                                                                                                         |       | 5,966,240         |       | 5,954,672             |       |
| Current portion  of notes payable                                                                                                                                                      |       | 902,029           |       | 833,333               |       |
| Current portion of  capital lease obligations                                                                                                                                          |       | 98,072            |       | 116,973               |       |
| Sales tax  payable                                                                                                                                                                     |       | 314,298           |       | 342,064               |       |
| Accrued expenses                                                                                                                                                                       |       | 1,712,865         |       | 767,967               |       |
| Total current  liabilities                                                                                                                                                             |       | 17,859,667        |       | 14,599,498            |       |
|                                                                                                                                                                                   |       |              |       |                  |       |
| Notes payable                                                                                                                                                                          |       | 1,275,295         |       | 1,194,445             |       |
| Capital lease  obligations, net of current maturities                                                                                                                                  |       | 65,364            |       | 130,378               |       |
| Total  liabilities                                                                                                                                                                     |       | 19,200,326        |       | 15,924,321            |       |
|                                                                                                                                                                                   |       |              |       |                  |       |
| Commitments and  Contingencies (Note L)                                                                                                                                                |       |              |       |                  |       |
|                                                                                                                                                                                   |       |              |       |                  |       |
| Stockholders’ equity:                                                                                                                                                             |       |              |       |                  |       |
| Preferred stock,  par value $.00001; authorized 10,000,000 shares; none issued or outstanding                                                                                          |       | —            |       | —                |       |
| Common stock,  par value $.00001; authorized 100,000,000 shares; issued and outstanding  24,133,823 shares and 23,595,663 shares at June 30, 2007 and December 31,  2006, respectively |       | 241               |       | 236                   |       |
| Additional paid  in capital                                                                                                                                                            |       | 20,322,371        |       | 17,802,373            |       |
| Accumulated  deficit                                                                                                                                                                   |       | (3,382,043        | )          | (1,914,349            | )          |
| Total  stockholders’ equity                                                                                                                                                       |       | 16,940,569        |       | 15,888,260            |       |
|                                                                                                                                                                                   |       |              |       |                  |       |
| Total liabilities and  stockholders’ equity                                                                                                                                       |       | $                 | 36,140,895 |                  | $          | 31,812,581 |   |

 

The accompanying notes are an integral part ofthese unaudited consolidated financial statements.

3

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**INFOLOGIX, INC.**

**UNAUDITED CONSOLIDATED STATEMENTS OFOPERATIONS**
| ** **                                    | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|-----------------------------------------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                    | ** ** | **2007**                                            | ** ** | **2006**                                          | ** ** | **2007** | ** ** | **2006** | ** ** |
| Revenues                                      |       | $                                                   | 21,410,162 |                                              | $          | 15,331,674 |   | $ | 34,287,835 |   | $ | 28,385,648 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Cost of Revenues                              |       | 15,755,748                                          |       | 11,661,643                                        |       | 25,292,733 |   | 21,423,082 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Gross profit                                  |       | 5,654,414                                           |       | 3,670,031                                         |       | 8,995,102 |   | 6,962,566 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Selling, general  and administrative expenses |       | 6,197,537                                           |       | 3,118,744                                         |       | 11,374,570 |   | 6,180,716 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Operating (loss) income                       |       | (543,123                                            | )          | 551,287                                           |       | (2,379,468 | ) | 781,850 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Interest income                               |       | 133,585                                             |       | —                                            |       | 291,996 |   | — |   |
| Interest expense                              |       | (178,745                                            | )          | (153,031                                          | )          | (310,240 | ) | (291,299 | ) |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Income (loss) before income tax benefit       |       | (588,283                                            | )          | 398,256                                           |       | (2,397,712 | ) | 490,551 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Income tax  benefit                           |       | 220,918                                             |       | —                                            |       | 930,018 |   | — |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Net (loss) income                             |       | $                                                   | (367,365   | )                                                 | $          | 398,256 |   | $ | (1,467,694 | ) | 490,551 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| (Loss) earnings  per share:                   |       |                                                |       |                                              |       |   |   |   |   |
| Basic                                         |       | $                                                   | (0.02      | )                                                 | $          | 0.03 |   | $ | (0.06 | ) | $ | 0.03 |   |
| Diluted                                       |       | $                                                   | (0.02      | )                                                 | $          | 0.03 |   | $ | (0.06 | ) | $ | 0.03 |   |
|                                          |       |                                                |       |                                              |       |   |   |   |   |
| Weighted average  shares outstanding:         |       |                                                |       |                                              |       |   |   |   |   |
| Basic                                         |       | 24,039,991                                          |       | 12,500,000                                        |       | 23,817,827 |   | 12,500,000 |   |
| Diluted                                       |       | 24,039,991                                          |       | 12,500,000                                        |       | 23,817,827 |   | 12,500,000 |   |

 

Theaccompanying notes are an integral part of these

unauditedconsolidated financial statements.

4

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**INFOLOGIX, INC.**

**UNAUDITED CONSOLIDATED STATEMENTS OFCASH FLOWS**
| ** **                                                                          | ** ** | **Six Months Ended June 30,** | ** ** |
|-------------------------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                                          | ** ** | **2007**                                          | ** ** | **2006** | ** ** |
| **Operating  activities:**                                                          | ** ** | ** **                                        | ** ** | ** ** | ** ** |
| Net income (loss)                                                                   |       | $                                                 | (1,467,694 | ) | $ | 490,551 |   |
| Adjustments to reconcile net income (loss) to  operating cash flow:                 |       |                                              |       |   |   |
| Depreciation and amortization                                                       |       | 710,675                                           |       | 545,293 |   |
| Allowance for doubtful accounts receivable                                          |       | 44,561                                            |       | — |   |
| Share based compensation                                                            |       | 500,002                                           |       | — |   |
| Deferred income tax benefit                                                         |       | (930,018                                          | )          | — |   |
| Loss on sale of property and equipment, net                                         |       | 10,082                                            |       | — |   |
| Inventory obsolescence                                                              |       | 215,000                                           |       | — |   |
| Changes in:                                                                         |       |                                              |       |   |   |
| Accounts receivable                                                                 |       | (2,474,237                                        | )          | (1,269,790 | ) |
| Finished goods inventory                                                            |       | (296,276                                          | )          | 68,380 |   |
| Prepaid expenses & other current assets                                         |       | 43,108                                            |       | (410,020 | ) |
| Accounts payable                                                                    |       | 2,281,670                                         |       | (940,998 | ) |
| Sales tax payable                                                                   |       | (27,766                                           | )          | 66,386 |   |
| Accrued expenses                                                                    |       | 944,899                                           |       | 341,564 |   |
| Deferred revenue                                                                    |       | —                                            |       | (144,175 | ) |
| Net cash used in  operating activities                                              |       | (445,994                                          | )          | (1,252,809 | ) |
|                                                                                |       |                                              |       |   |   |
| Investing activities:                                                               |       |                                              |       |   |   |
| Acquisition of AMT business assets                                                  |       | (500,000                                          | )          | — |   |
| Acquisition of property, equipment and intangibles                                  |       | (973,623                                          | )          | (605,954 | ) |
| Net cash used in investing activities                                               |       | (1,473,623                                        | )          | (605,954 | ) |
|                                                                                |       |                                              |       |   |   |
| Financing  activities:                                                              |       |                                              |       |   |   |
| Proceeds from long-term debt                                                        |       | —                                            |       | 1,500,000 |   |
| Repayment of long-term debt & capital leases                                    |       | (434,369                                          | )          | (796,582 | ) |
| Dividends paid to stockholders                                                      |       | —                                            |       | (649,346 | ) |
| Net borrowings (repayments) from line of credit                                     |       | 11,568                                            |       | 1,823,831 |   |
| Net cash provided (used) by financing activities                                    |       | (422,801                                          | )          | 1,877,903 |   |
|                                                                                |       |                                              |       |   |   |
| Net change in cash and cash equivalents                                             |       | (2,342,418                                        | )          | 19,140 |   |
|                                                                                |       |                                              |       |   |   |
| Cash and cash equivalents at beginning of year                                      |       | 12,882,044                                        |       | 447,901 |   |
|                                                                                |       |                                              |       |   |   |
| Cash and cash equivalents at end of quarter                                         |       | $                                                 | 10,539,626 |   | $ | 467,041 |   |
|                                                                                |       |                                              |       |   |   |
| Noncash  investing and financing activities:                                        |       |                                              |       |   |   |
| Issued 400,000 shares of common stock as part of  DDMS patent purchase              |       | $                                                 | 1,520,000  |   | — |   |
| Issued 138,160 shares of common stock as part of AMT  Systems asset acquisition     |       | 500,000                                           |       | — |   |
| $500,000 plus interest due over 72 months as part of  AMT Systems asset acquisition |       | 500,000                                           |       | — |   |

 

The accompanying notes are an integral part of theseunaudited consolidated financial statements.

5

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**INFOLOGIX, INC.**

**CONSOLIDATED STATEMENT OF CHANGES INSTOCKHOLDERS’ EQUITY**

**(unaudited)**
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | **Additional**  | ** ** | ** **             | ** ** | **Total**      | ** **     |
|----------------------------------------|------------|-----------------------|------------|-------------|------------|-----------------|------------|------------------------|------------|----------------|----------------|
| ** **                             | ** ** | **Common Stock** | ** ** | **Paid-in** | ** ** | **Accumulated** | ** ** | **Stockholder’s** | ** ** |
| ** **                             | ** ** | **Shares**            | ** ** | **Amount**  | ** ** | **Capital**     | ** ** | **Deficit**            | ** ** | **Equity**     | ** **     |
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **             | ** ** | ** **     | ** **     |
| **Balances,  December 31, 2006**       | ** ** | **23,595,663**        | ** ** | **$**       | **236**    | ** **      | **$**      | **17,802,373**         | ** ** | **$**          | **(1,914,349** | **)** | **$** | **15,888,260** | ** ** |
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **             | ** ** | ** **     | ** **     |
| **Net  Loss**                          | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | **(1,467,694**         | **)**      | **(1,467,694** | **)**          |
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **             | ** ** | ** **     | ** **     |
| **Common  Stock issued DDMS purchase** | ** ** | **400,000**           | ** ** | **4**       | ** ** | **1,519,996**   | ** ** | ** **             | ** ** | **1,520,000**  | ** **     |
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **             | ** ** | ** **     | ** **     |
| **Common  Stock issued AMT purchase**  | ** ** | **138,160**           | ** ** | **1**       | ** ** | **500,000**     | ** ** | ** **             | ** ** | **500,001**    | ** **     |
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **             | ** ** | ** **     | ** **     |
| **Stock-based  compensation**          | ** ** | ** **            | ** ** | ** **  | ** ** | **500,002**     | ** ** | ** **             | ** ** | **500,002**    | ** **     |
| ** **                             | ** ** | ** **            | ** ** | ** **  | ** ** | ** **      | ** ** | ** **             | ** ** | ** **     | ** **     |
| **Balances,  June 30, 2007**           | ** ** | **24,133,823**        | ** ** | **$**       | **241**    | ** **      | **$**      | **20,322,371**         | ** ** | **$**          | **(3,382,043** | **)** | **$** | **16,940,569** | ** ** |

 

6

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**INFOLOGIX, INC.**

**NOTES TO CONSOLIDATED FINANCIALSTATEMENTS**

The accompanyingunaudited consolidated financial statements of InfoLogix, Inc. andsubsidiaries (collectively, the “Company”) have been prepared in accordancewith United States generally accepted accounting principles (“GAAP”) forinterim financial information and with the instructions for Form 10-Q andArticle 10 of Regulation S-X. Accordingly, they do not include all ofthe information and footnotes required by GAAP for complete consolidated financialstatements. In the opinion of management, all adjustments (consisting of normalrecurring accruals) considered necessary for a fair presentation have beenincluded. The notes to the consolidated financial statements contained in theAnnual Report on Form 10-K for the year ended December 31, 2006should be read in conjunction with these consolidated financialstatements.  Operating results for the six and three months endedJune 30, 2007 are not necessarily indicative of the results that may beexpected for the year ending December 31, 2007.

**NOTEA—MERGER**

OnNovember 22, 2006, New Age Translation, Inc., a Nevada corporation (“NewAge-NV”) was merged with and into New Age Translation, Inc., a Delawarecorporation (“New Age-DE”), for the sole purpose of changing the state ofincorporation from Nevada to Delaware pursuant to a Certificate of Ownershipand Merger dated November 22, 2006 and approval by the stockholders onNovember 22, 2006. Under the terms of the Certificate of Ownership, each shareof New Age-NV was exchanged for 3.18877518427542 shares of New Age-DE, or anaggregate of 18,539,539 shares. On November 22, 2006, 15,943,876 shares ofcommon stock of New Age-DE were cancelled and 2,595,663 shares of common stockof New Age-DE remained outstanding.

OnNovember 29, 2006, New Age-DE entered into an Agreement and Plan of Merger(the “Merger Agreement”) with InfoLogix, Inc., a privately held Delawarecorporation (“InfoLogix”), and INFLX Acquisition Corp., a newly formedwholly-owned Delaware subsidiary of New Age-DE (“Merger Sub”), pursuant towhich Merger Sub merged with and into InfoLogix (the “Merger”) onNovember 29, 2006. As a result, InfoLogix is now a wholly owned subsidiaryof New Age-DE. In connection with the Merger, New Age-DE changed its name to “InfoLogix, Inc.”and InfoLogix changed it name to “InfoLogix Systems Corporation.”

Pursuant to theterms and conditions of the Merger Agreement, each share of InfoLogix commonstock issued and outstanding immediately prior to the closing of the Merger wasconverted into the right to receive 25,000 shares of New Age-DE common stock.As a result, 12,500,000 shares of New Age common stock were issued to thestockholders of InfoLogix. Immediately after closing of the Merger onNovember 29, 2006, there were 15,095,663 shares of New Age-DE common stockissued and outstanding, approximately 82.8% of which shares are currently heldby the former stockholders of InfoLogix.

OnNovember 29, 2006, concurrent with the Merger, the Company closed on aprivate placement of 8,500,000 shares of its common stock to accreditedinvestors. The shares were sold for an aggregate purchase price of $17,000,000before costs associated with the private placement of $2,020,825.  Theprivate placement was exempt from registration under the Securities Act of 1933as amended.

The Merger wasaccounted for under the purchase method of accounting as a reverse acquisitionin accordance with GAAP. Under this method of accounting, New Age-DE wastreated as the “acquired” company for financial reporting purposes. Inaccordance with guidance applicable to these circumstances, the Merger wasconsidered to be a capital transaction in substance. Accordingly, foraccounting purposes, the Merger was treated as the equivalent of InfoLogixissuing stock for the net monetary assets of New Age-DE, accompanied by arecapitalization. All historical share and per share amounts have beenretroactively adjusted to give effect to the reverse acquisition of InfoLogixand related recapitalization.

7

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**NOTEB—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

***Nature of business***

The Companyprovides mobile intelligence technology solutions by enabling real time datacommunications anywhere in an enterprise through wireless network design,hardware, software, consulting, system integration and network managementsolutions.

***Principles of consolidation***

The consolidatedfinancial statements include the accounts of the Company and its wholly-ownedsubsidiaries, OPT Acquisition LLC, InfoLogix-DDMS, Inc. and EmbeddedTechnologies, LLC. All significant inter-company balances and transactionshave been eliminated in consolidation.

***Cash and cash equivalents***

For purposes ofthe cash flow statements, the Company considers all highly liquid investmentswith original maturities of three months or less to be cash equivalents.

***Fair value of financial instruments***

The Company usedthe following methods and assumptions in estimating the fair value disclosuresfor financial instruments:

Cash and cashequivalents: The carrying value approximates fair value due to the currentmaturity of these instruments.

Long- andshort-term debt: The carrying value of the debt is considered to approximatefair value because the underlying interest rates approximate market rates atthe balance sheet date.

***Concentrations of credit risk***

Financialinstruments that subject the Company to credit risk consist of cash equivalentsand accounts receivable.

The Company’spolicy is to limit the amount of its credit exposure to any one financialinstitution, and place investments with financial institutions evaluated asbeing creditworthy, or in short-term money market funds which are exposed tominimal interest rate and credit risk. The Company maintains its cash primarilyin investment accounts within large financial institutions. The Federal DepositInsurance Corporation insures these balances up to $100,000 per bank. TheCompany has not experienced any losses on its bank deposits and managementbelieves these deposits do not expose the Company to any significant credit risk.

The Company grantscredit, generally without collateral, to its customers, which are primarily inthe healthcare and commercial markets. Consequently, the Company is subject topotential credit risk related to changes in economic conditions within those markets.However, management believes that its billing and collection policies areadequate to minimize the potential credit risk.

The Company has apolicy of reserving for uncollectible accounts based on its best estimate ofthe amount of probable credit losses in its existing accounts receivable. TheCompany periodically reviews its accounts receivable to determine whether anallowance is necessary based on an analysis of past due accounts and otherfactors that may indicate that the realization of an account may be in doubtincluding historical experience and current economic and market conditions.Account balances deemed to be uncollectible are charged to the allowance afterall means of collection have been exhausted and the potential for recovery is consideredremote.

***Inventory***

Inventory isstated at the lower of cost or market. Cost is determined using the first in,first out method.

***Reclassification***

Certain amounts in the December 31, 2006Consolidated Balance Sheet have been reclassified in order to conform to thepresentation of the June 30, 2007 information.

8

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***Property, equipment and intangible assets***

Property, plantand equipment, intangible and certain other long-lived assets are depreciatedand amortized over their useful lives. Useful lives are based on management’sestimates of the period that the assets will generate revenue. Intangibleassets are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable. Inaccordance with Statement of Financial Standards (SFAS) 142, “Goodwill andOther Intangible Assets”, which supersedes Accounting Principles Board (APB)No. 17, “Intangible Assets”, effective February 1, 2002, the Company’sunamortized goodwill balance is not being amortized over its estimated usefullife; rather, it is being assessed at least annually for impairment.

***Software capitalization***

The Companycapitalizes certain costs related to the acquisition and development ofsoftware and amortizes these costs using the straight-line method over theestimated useful life of the software which is three to five years. Inaccordance with SFAS 86,*Accounting forthe Costs of Computer Software to be Sold, Leased or Otherwise Marketed*,the Company expenses as incurred those costs incurred prior to achievingtechnological feasibility.

***Revenue recognition***

Revenue consistsprimarily of sales of wireless products. Sales revenue is recognized when boththe title and risk of loss transfer to the customer, generally upon shipment.The Company also realizes revenue from the sale of component warranties ontheir wireless mobile products as well as from the sale of proprietary learningtechnologies. Warranty revenue is recognized upon execution of the warrantyagreement. There is no associated warranty risk as the Company has contractedwith another party to fully assume all risks and obligations. Revenue from thesale of proprietary learning technologies is recognized upon delivery andacceptance by the customer. We also generate revenue from professionalservices, primarily on a project basis, under which revenue is recognized on afixed fee, time and expense basis or upon acceptance of our deliverables byclients.

 

We present salestax liability on a net basis in accordance with Emerging Issues Task Force(EITF) Issue No. 06-03. Sales are not grossed up with the attendant taxesand deducted as a separate line item.

***Advertising costs***

Advertising costsare expensed when incurred and approximated $59,000 and $71,000 for the threemonths ended June 30, 2007 and 2006, respectively.  Advertising costs for the six months endedJune 30, 2007 and June 30, 2006 were approximately $142,000 and $159,000,respectively.

In accordance withEITF 02-16,*Accounting by a Customer(Including a Reseller) for Certain Consideration Received from a Vendor*,certain cooperative advertising reimbursements are netted against specific,identifiable costs incurred in connection with the selling of a vendor’sproduct. Cooperative advertising reimbursement was approximately $10,000 and$26,000 for the three months ended June 30, 2007 and 2006, respectively,advertising reimbursement was approximately $35,000 and $66,000 for the threemonths ended June 30, 2007 and 2006, respectively, and all amounts wererecorded as a reduction of advertising expense with the net amount included inselling, general and administrative expenses in the consolidated statements ofoperations.

***Income taxes***

The Companyaccounts for income taxes in accordance with SFAS 109,*Accounting for Income Taxes*.SFAS 109 requires that deferred tax assets be reduced by a valuationallowance if it is more likely than not that some portion or all of thedeferred tax asset will not be realized.   For the three months andsix months ended June 30, 2007, the Company recorded income tax benefitsamounting to $220,918 and $930,018, respectively, related primarily to the netoperating loss incurred during this period.

The Companyadopted the provisions of Financial Accounting Standards Board (FASB)Interpretation No. 48,*Accounting forUncertainty in Income Taxes*, on January 1, 2007. FIN 48 prescribes a recognition threshold and measurement attribute forthe financial statement recognition and measurement of a tax position taken orexpected to be taken in a tax return. As a result of the implementation ofFIN 48, the Company determined that there were no material liabilities fortax benefits for past years and the current period.

The Company hasdetermined that any future interest accrued, related to unrecognized tax benefits,will be included in interest expense. In the event the Company must accrue forpenalties as a result of FIN 48, they will be included as an operatingexpense.

Prior to theMerger discussed in Note A, the Company filed its Federal and State IncomeTax Returns as a Sub-Chapter S Corporation.  Therefore, any incometax liability from its operations was payable directly by its shareholders. TheCompany’s Sub-Chapter S Corporation status was terminated on November 29,2006, the date of the Merger.  As a result, the results of operations forthe three and six months ended June 30, 2006 do not include an income taxprovision. The unaudited pro-forma income tax rate for the 

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three months and sixmonths ended June 30, 2006 was 33.3%.

***Stock based compensation***

EffectiveJanuary 1, 2006, the Company adopted the provisions of SFAS 123(R),*Share-Based Payment*, under the modifiedprospective method which requires that such transactions be accounted for usinga fair-value-based method. Under the modified prospective method, the Companyis required to recognize compensation cost for share-based payments toemployees based on their grant-date fair value from the beginning of the fiscalperiod in which the recognition provisions are first applied.

For the three andsix months ended June 30, 2007, the recognized compensation cost for stockoptions and warrants granted to employees during 2006 was $250,001 and$500,002, respectively.  In addition, the Company recorded an income taxbenefit of $98,750 and $197,501 for the three and six month periods ending June30, 2007, relating to the granting of the nonqualified options and warrants.

***Non-employee stock based compensation***

The cost of stockbased compensation awards issued to non-employees for services are recorded ateither the fair value of the services rendered or the instruments issued inexchange for such services, whichever is more readily determinable, using themeasurement date guidelines enumerated in EITF 96-18,*Accounting for Equity Instruments That Are Issued toOther Than Employees for Acquiring, or in Conjunction with Selling, Goods orServices*.

***Earnings per share***

The Company hasadopted the provisions of SFAS 128,*Earnings per Share*. Basic earnings per share is computed by dividingincome or loss available to common stockholders by the weighted average numberof common shares outstanding during the period. SFAS 128 also requires adual presentation of basic and diluted earnings per share on the face of thestatement of operations for all companies with complex capital structures.

As discussedabove, there is no provision for income taxes for the periods endedJune 30, 2006.  The unaudited pro-forma results of operations for thesix months and three months ended June 30, 2006 and related income pershare are as follows:
|                                                                     | ** ** | **Six Months Ended** | ** ** | **Three Months Ended** | ** ** |
|---------------------------------------------------------------------|------------|--------------------------------|------------|----------------------------------|------------|
| **(Unaudited pro-forma results of operations)** | ** ** | **June 30, 2006**    | ** ** | **June 30, 2006**      | ** ** |
| Income before  income taxes                                         |       | $                              | 490,551    |                             | $          | 398,256 |   |
| Pro-forma income tax expense                                        |       | 160,353                        |       | 129,619                          |       |
| Pro-forma net  income                                               |       | $                              | 330,198    |                             | $          | 268,637 |   |
| Pro-forma  earnings per share:                                      |       |                           |       |                             |       |
| Basic                                                               |       | $                              | .026       |                             | $          | .021 |   |
| Diluted                                                             |       | $                              | .026       |                             | $          | .021 |   |

 

***Use of estimates***

The preparation offinancial statements in conformity with GAAP requires management to makeestimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenue and expensesduring the reporting period.  Significant estimates are required inaccounting for inventory costing, asset valuations and amortization. Actualresults could differ from those estimates.

**NOTEC—PROPERTY AND EQUIPMENT**

Property andequipment consists of the following:
| ** **                              | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|-----------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Demonstration  and evaluation equipment |       | $                       | 2,763,995  |                        | $          | 2,477,581 |   |
| Equipment                               |       | 723,697                 |       | 593,721                     |       |
| Furniture and  fixtures                 |       | 374,074                 |       | 295,425                     |       |
| Leasehold  improvements                 |       | 58,113                  |       | 40,587                      |       |
|                                    |       | 3,919,879               |       | 3,407,314                   |       |
| Less:  accumulated depreciation         |       | (2,532,948              | )          | (2,206,634                  | )          |
|                                    |       | $                       | 1,386,931  |                        | $          | 1,200,680 |   |

 

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Depreciationexpense was $163,845 and $175,233 for the three months ended June 30, 2007 and2006, respectively.  Depreciation expensewas $361,721 and $316,644 for the six months ended June 30, 2007 and 2006,respectively.

**NOTED—INTANGIBLE ASSETS**

Intangible assetsconsist of the following:
| ** **                      | ** ** | **March 31,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| Patents                         |       | $                        | 2,359,881  |                        | $          | 639,881 |   |
| Less:  accumulated amortization |       | (635,276                 | )          | (576,921                    | )          |
|                            |       | 1,724,605                |       | 62,960                      |       |
| Computer  software              |       | 1,376,130                |       | 791,708                     |       |
| Less:  accumulated amortization |       | (389,896                 | )          | (219,843                    | )          |
|                            |       | 986,234                  |       | 571,865                     |       |
| Developed  technology           |       | 457,057                  |       | 457,525                     |       |
| Less:  accumulated amortization |       | (370,616                 | )          | (390,716                    | )          |
|                            |       | 86,441                   |       | 66,809                      |       |
| License fees                    |       | 515,468                  |       | 515,000                     |       |
| Less:  accumulated amortization |       | (226,575                 | )          | (105,000                    | )          |
|                            |       | 288,893                  |       | 410,000                     |       |
| Customer List                   |       | 956,810                  |       | —                      |       |
| Less:  accumulated amortization |       | (15,947                  | )          | —                      |       |
|                            |       | 940,863                  |       | —                      |       |
| Non compete  agreement          |       | 75,000                   |       | —                      |       |
| Less:  accumulated amortization |       | (3,125                   | )          | —                      |       |
|                            |       | 71,875                   |       | —                      |       |
| Goodwill                        |       | 99,341                   |       |                        |       |
| Total net intangible  assets    |       | $                        | 4,198,252  |                        | $          | 1,111,634 |   |

 

Amortizationexpense related to intangible assets was $259,343 and $139,038 for the threemonths ended June 30, 2007 and 2006, respectively.  Amortization expense related to intangibleassets was $348,954 and $228,649 for the six months ended June 30, 2007 and2006, respectively.

**NOTEE—DEBT**

InMarch 2006, the Company executed a Loan and Security Agreement with abank. Under the terms of the agreement and subsequent amendments, the bankprovided the Company with an $8,500,000 line of credit and two term loansamounting to $1,500,000 and $1,000,000, respectively. The proceeds from theloans were used to pay off existing loans and to provide working capital. Theloans are collateralized by all of the tangible and intangible assets of theCompany. The Loan and Security Agreement contains certain financial covenantswith which we must comply including:  minimum annual and quarterly netincome tests, a fixed-charge coverage ratio, and maximum annual capital expenditures.On March 23, 2007 we entered into an amendment to the Loan and SecurityAgreement which waived the non-compliance with these covenants, and providedthe bank with a security interest in a Company investment account pursuant towhich the Company is required to maintain a minimum balance of $2,000,000. Theamendment also lowered the quarterly net income covenant to a cumulativebalance of $0 through September 30, 2007, and adjusted the fixed chargecoverage ratio to 1.0 to 1.0 at December 31, 2007 and 1.2 to 1.0 as of the endof each fiscal quarter thereafter.

***Lines of credit***

At June 30, 2007,the outstanding balance of the line of credit was $6.0 million and bearsinterest at 9.5% which is 1.25% above the bank’s prime rate under the creditfacility (8.25%). At December 31, 2006, the outstanding balance on the line ofcredit was $6.0 million.

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***Notes and other long-term liabilities***

Notes and otherlong-term liabilities, except for capital lease obligations, consist of thefollowing:
| ** **                                                                                                                                                                                             | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Note payable,  bank, principal payable $41,667 monthly over thirty-five months commencing  March 2006. Interest was payable monthly at the prime rate plus 1.0%  (9.25% at June 30, 2007)         |       | $                       | 875,000    |                        | $          | 1,083,333 |   |
|                                                                                                                                                                                                   |       |                    |       |                        |       |
| Note payable,  bank, principal payable $27,778 monthly over thirty-five months commencing  December 2006. Interest was payable monthly at the prime rate plus 1.0%  (9.25% at June 30, 2007) |       | 805,556                 |       | 944,445                     |       |
|                                                                                                                                                                                                   |       |                    |       |                        |       |
| Amounts payable  pursuant to the asset purchase agreement with AMT Systems, Inc. (Note K), in  monthly installments of $8,766, interest included, at a rate of 7.84%,  maturing May 31, 2013           |       | 496,768                 |       | —                      |       |
| Total                                                                                                                                                                                                  |       | 2,177,324               |       | 2,027,778                   |       |
| Less: current  maturities                                                                                                                                                                              |       | 902,029                 |       | 833,333                     |       |
|                                                                                                                                                                                                   |       | $                       | 1,275,295  |                        | $          | 1,194,445 |   |

 

***Letter of Credit***

InNovember 2006, the Company issued a letter of credit to a vendor for$243,000 to support a customer order for products. In June 2007, the Companyissued a letter of credit to a vendor for $350,000.  At June 30, 2007 and December 2006the Company had contingent liabilities under the letters of credit of $350,000and $161,458 respectively.

**NOTEF—CAPITAL LEASE OBLIGATION**

The capital leaseobligations expire in 2009 and bear interest at 10.3% imputed based on thelessor’s implicit rate of return. Future minimum capital lease payments are asfollows:
|                                              | ** ** | **Amount** | ** ** |
|----------------------------------------------|------------|------------|------------|
| 2007, remainder  of                          |       | $          | 55,185     |   |
| 2008                                         |       | 110,352    |       |
| 2009                                         |       | 12,646     |       |
| Total                                        |       | $          | 178,183    |   |
| Less: amount  representing interest          |       | 14,747     |       |
| Net present  value of minimum lease payments |       | 163,436    |       |
| Less: current  portion                       |       | 98,072     |       |
|                                         |       | $          | 65,364     |   |

 

The Company leasesfurniture and fixtures and computer equipment under capital leases. Assets under capital leases included in property and equipment are as follows:
| ** **                      | ** ** | **June 30,  2007** | ** ** | **December 31,  2006** | ** ** |
|---------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| Equipment                       |       | $                       | 439,031    |                        | $          | 439,031 |   |
| Less:  accumulated depreciation |       | (239,105                | )          | (188,945                    | )          |
|                            |       | $                       | 199,926    |                        | $          | 250,086 |   |

 

**NOTEG—LEASE COMMITMENTS**

The Company leasesits facilities in Pennsylvania, and Connecticut, under agreements expiringbetween 2007 and 2011. Total rent expense for all leases was approximately$99,245 and $42,472 for the three months ended June 30, 2007 and 2006,respectively.  Rent for the six monthsending June 30, 2007 and 2006 was $155,025 and $84,944, respectively.

Future minimumlease payments required under the operating leases in effect subsequent to June30, 2007 are as follows:  
|                     | ** ** | **Amount** | ** ** |
|---------------------|------------|------------|------------|
| 2007, remainder  of |       | $          | 215,639    |   |
| 2008                |       | 440,838    |       |
| 2009                |       | 452,762    |       |
| 2010                |       | 236,800    |       |
| 2011                |       | 241,500    |       |
|                |       |       |       |
|                     |            |            |            |  |

 

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**NOTEH—RELATED PARTY TRANSACTIONS**

***Notes payable—stockholders***

The Company wasindebted to certain stockholders for notes payable. Interest paid tostockholders was $64,580 at June 30, 2006.  The notes were paid in full inAugust 2006.

***Support services***

Beginning in 2004,the Company has an agreement with a stockholder’s company whereby the Companytransferred its warranty risks for extended warranties sold and technicalsupport services provided on behalf of certain of the Company’s customers.Under the agreement, the Company was charged $506,194 and $646,094 for thethree months ended June 30, 2007 and 2006, respectively, and made paymentsunder this agreement of $508,775 and $675,098 for the three months ended June30, 2007 and 2006, respectively.  TheCompany was charged $958,499 and $732,052 for the six months ended June 30,2007 and 2006, respectively, and made payments under this agreement of $950,981and $741,643 for the six months ended June 30, 2007 and 2006, respectively.

***Due from related party***

There wasapproximately $1,845,708 and $104,000 due from a related party at June 30, 2007and December 31, 2006 for the sale of certain hardware products. Theseamounts are classified as accounts receivable in the accompanying financialstatements.

**NOTEI—CUSTOMER AND VENDOR CONCENTRATIONS**

The Company had sales tosignificant customers as follows:
|            | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** ** | ** ** | **2007**                                            | ** ** | **2006**                                          | ** ** | **2007** | ** ** | **2006** | ** ** |
| Customer A |       | 19                                                  | %          | 12                                                | %          | 16 | % | 15 | % |
| Customer B |       | 11                                                  | %          | 7                                                 | %          | 13 | % | 4 | % |

 

The Company had asignificant vendor providing hardware purchases as follows:
|            | ** ** | **Three Months Ended June 30,** | ** ** | **Six Months Ended June 30,** | ** ** |
|------------|------------|-----------------------------------------------------|------------|---------------------------------------------------|------------|
| ** ** | ** ** | **2007**                                            | ** ** | **2006**                                          | ** ** | **2007** | ** ** | **2006** | ** ** |
| Vendor A   |       | 37                                                  | %          | 28                                                | %          | 36 | % | 34 | % |

 

**NOTEJ—ACQUISITION OF DDMS PATENTS**

On April 9, 2007,the Company acquired DDMS Holdings, LLC, a privately held Florida companythrough a merger of DDMS Holdings, LLC with the Company’s newly formedwholly-owned subsidiary InfoLogix-DDMS, Inc. After the merger, InfoLogix-DDMS,Inc. was the surviving wholly owned subsidiary of the Company.  The acquired assets consisted of five USpatents, along with one published US patent application and four foreignpatents issued and five foreign patents that are currently pending.Consideration given for all of the shares of DDMS Holdings, LLC included$200,000 in cash and the issuance of 400,000 shares of InfoLogix commonstock.  Under the terms of the mergeragreement, the Company agreed to commit funds as it deems necessary toward themaintenance and expansion of the patents and patent applications acquired inthe merger, including a minimum of $250,000 before April 9, 2008.  The 400,000 shares of common stock aresubject to a one-year lock-up period. This acquisition of the DDMS patents was accounted for in accordancewith FAS 142.
| Cash Paid                             |   | $         | 200,000   |   |
|---------------------------------------|--------|-----------|-----------|--------|
| Common stock  issued (400,000 shares) |   | 1,520,000 |      |
|                                  |   | $         | 1,720,000 |   |

 

The value of thecommon stock issued above was based on the average closing market price of theCompany’s common stock for 

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the period three daysbefore and three days after the date of issuance of the common stock.

The purchase price wasallocated to the assets and based on their fair values on the date ofacquisition as follows:
| Patents and application |   | $ | 1,720,000 |   |
|-------------------------|--------|---|-----------|--------|
|                    |   | $ | 1,720,000 |   |

 

The patentsacquired are being amortized over the average remaining life of sixteen years.

**NOTEK—ACQUISITION OF CERTAIN ASSETS OF AMTSYSTEMS, INC.**

On May 10, 2007,the Company, through its wholly-owned subsidiary InfoLogix Systems Corporation,acquired certain assets of AMT Systems, Inc. (“AMT”) pursuant to an assetpurchase agreement.  The acquired assets include the rights to existingrelationships with customers, vendors and partners, and the intellectualproperty rights behind AMT’s clinical and financial mobility solutions forhealthcare.  The purchase price paid by the Company consisted of $100,000in cash and 138,160 shares of the Company’s common stock at closing, and$500,000 in cash, plus interest, payable in 72 equal monthly installments of$8,766.22.  The shares of common stock are unregistered and are subject toa two-year lock-up.  The acquisition wasaccounted for under FAS 141 “Business Combinations” and results have beenincluded in the statement of operations from May 10, 2007 through June 30,2007.
| Cash Paid                             |   | $       | 100,000   |   |
|---------------------------------------|--------|---------|-----------|--------|
| Common stock  issued (138,160 shares) |   | 500,000 |      |
| Installment  Payments                 |   | 500,000 |      |
| Acquisition  costs                    |   | 135,000 |      |
|                                  |   | $       | 1,235,000 |   |

 

The value of thecommon stock issued above was based on the average closing market price of theCompany’s common stock for the ten trading days prior to the closing date perthe asset purchase agreement.

The acquiredassets consisted primarily of software and customer lists.  The purchase price was allocated to theassets and based on their fair values on the date of acquisition as follows:
| Furniture and Fixtures  |   | $       | 3,850     |   |
|-------------------------|--------|---------|-----------|--------|
| Technology              |   | 100,000 |      |
| Customer  Relationships |   | 956,810 |      |
| Non-Compete  Agreement  |   | 75,000  |      |
| Goodwill                |   | 99,340  |      |
|                    |   | $       | 1,235,000 |   |

 

The technology isbeing amortized over a three year period, the customer relationships are beingamortized over a ten year period and the non-compete agreement is beingamortized over four year period.

**NOTEL—COMMITMENTS AND CONTINGENCIES**

***Litigation***

The Company isinvolved in disputes or legal actions arising in the ordinary course ofbusiness. Management does not believe the outcome of any such pending legalactions will have a material adverse effect on the Company’s financial position,results of operations or cash flows.

**NOTEM—INCOME TAXES**

In determining ourcurrent income tax provision, the Company assesses temporary differencesresulting from different treatments of items for tax and accountingpurposes.  These differences result in deferred tax assets andliabilities, which are recorded in the Company’s consolidated balancesheet.  A valuation allowance is provided to the extent tax assets are notlikely to be recovered.  The Company has recorded a valuation allowanceagainst the Company’s gross deferred tax assets of approximately $25,000, whichallowance has remained unchanged since December 31, 2006.

As of June 30,2007, the Company has net operating losses (“NOLs”) of approximately $2,204,207which may be available to offset future taxable income.  Included in theNOLs are losses of $65,000 generated by New Age Translation, Inc. which aresubject to restrictions under Internal Revenue Code Section 382, due to changein ownership in that entity.  Therefore, the Company has recorded avaluation allowance against the NOLs generated by New Age Translation,Inc.  If not used, the NOLs will expire beginning after 2024.  TheCompany’s state NOLs will also be subject to expiration in varying yearsstarting in 2013 through 2027.

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**Item2.  *Management’s Discussion andAnalysis of Financial Condition and Results of Operations***

The followingdiscussion and analysis of our financial condition and results of operations isintended to assist you in understanding our financial condition and results ofoperations.  This discussion and analysis should be read in conjunctionwith our financial statements and the notes thereto included elsewhere in thisreport and our annual report filed with the U.S. Securities and ExchangeCommission on Form 10-K.  Many of the amounts and percentages presented inthis discussion and analysis have been rounded for convenience of presentation.

**Overviewand Outlook**

We provide mobileintelligence technology solutions principally to the healthcare, retail,distribution, and transportation markets in North America.  Our businessis organized to provide consulting, business software applications, managedservices, mobile workstations, devices and other hardware products, andwireless communications infrastructure. Our professional services and productsutilize proprietary software and radio frequency identification (RFID)technologies that enhance workflow and customer care using real-timeinformation, and proprietary learning technologies for business-to-business applications.We deliver our products and professional services to customers utilizing mobileapplications that run on handheld computers, cell phones, tablet computingdevices and mobile workstations, and that operate with existing enterprisesoftware solutions.

We are positionedat the convergence of the growing enterprise mobility, healthcare informationtechnology and RFID markets. The market for enterprise mobility solutions isprojected to be a $21 billion market by 2008 driven by rapid adoption within industriessuch as healthcare, manufacturing/distribution and retail for the purposes ofstreamlining data sharing and communication, according to Venture DevelopmentCorporation (VDC) research published in September 2005. The HospitalInformation Systems (HIS) market is estimated to grow from $52 billion today to$61 billion by 2009 according to Health Industry Insights research published inFebruary 2006.  Additionally, the RFID technology industry is alsoexperiencing rapid adoption, with analysts projecting market growth from $2billion today to $25 billion by 2015 according to Gartner research published inNovember 2005.

An importantcomponent of our strategy is to continue to build and, when necessary, defendour intellectual property portfolio. We file patent applications to protecttechnology, innovations and improvements that we consider important to thedevelopment of our business and throughout our history we have proactivelyinvested in and acquired intellectual property assets.  We continue topartner and invest to develop, capture and deliver unique, high-quality,differentiated and cost-effective mobile intelligence technology solutions forour customers. We have 19 issued patents in the U.S. related to wearablecomputers and surrounding RFID technology that manages proper medicationdelivery and administration. We also have 15 patent applications pending withthe U.S. Patent and Trademark Office related to medication delivery andadministration and a proprietary power solution specifically designed formobile workstations, a system and method for live interactive distancelearning, and related mobile wireless computer systems.  The patents forwhich we have received a final issuance have remaining legal lives that varyfrom 5 to 17 years.

As the result ofthe private placement and merger we consummated in November 2006, we continueto transition from a private to publicly-traded company. We are making selectinvestments in operations, sales and marketing to support our anticipatedgrowth and various public company compliance requirements. As part of ourgrowth strategy, we intend to identify and evaluate potential professionalservices and technology related acquisitions to broaden our service offeringsand establish us as a leader in enterprise mobility solutions. Management mustmanage the growth of the business and provide infrastructure to support it,particularly related to executing against our sales and marketing plans, anddeveloping technologies that will differentiate us in the markets we serve. Wehave experienced improved gross margins, but have yet to reach optimalfinancial metrics related to cash flow and operating margins as we invest inthe anticipated future growth of our business.

**2007 Acquisitions**

In April 2007, weacquired a portfolio of patents from DDMS Holdings, LLC, a privately heldFlorida company.  The acquired assetsconsist of five US patents issued, and four patents issued in foreigncountries, along with one published US patent application and five pendingforeign patent applications. We view this acquisition strategic to our businessby providing us with protections related to our on-going sales and developmentof Radio Frequency Identification (RFID) technologies and mobility solutionsacross our business.

In May 2007, weacquired certain assets of AMT Systems, Inc. (“AMT”).  The acquired assetsinclude the rights to existing relationships with customers, vendors andpartners, and the intellectual property rights behind AMT’s clinical andfinancial mobility solutions for healthcare. We believe that the additionof professional staff from AMT will enable us to enhance our softwaredevelopment capabilities and  increaseour barcode and RFID technology sales. The focus of this acquisition is on theintegration of clinical and financial systems through software applicationsthat operate on mobile computing devices enabling materials management, patientcharge capture, and a full line of proof positive patient identificationsolutions. We realized revenue and gross profit in the second quarter of 2007as the immediate result of our re-selling third-party thermal wristbands andprinters to existing and 

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newly acquired healthcarecustomers, and while we believe these sales opportunities will continue toexpand as we further develop these offerings, the impact to our financialresults in the second quarter were not material.

We believe theseacquisitions will allow us to broaden our market penetration in healthcare andlife sciences, and increase the use of our mobility solutions by our existingcustomers,  differentiating us as aleading provider of a broad range of mobility solutions in the markets that weserve.

**Characteristicsof our revenue and expenses**

We generate ourrevenue through the resale of wireless and mobile hardware and systems,including computers, peripherals, and related products under which the revenueis recognized. Sales revenue on product is recognized when both the title andrisk of loss transfer to the customer, generally upon shipment. We alsogenerate revenue from the sale of extended warranties on certain components.Revenue from the sale of component warranties is recognized upon our customer’sexecution of the warranty agreement. There is no associated warranty risk as wehave contracted with third parties to fully assume all risks and obligations.We also generate revenue from professional services, primarily on a projectbasis, under which revenue is recognized on a fixed fee, time and expense basisor upon acceptance of our deliverables by clients.

Payments receivedin advance of services performed are recorded as deferred revenue. Certain contract payment terms may result in customer billing occurring at apace slower than revenue recognition. The resulting revenue recognized inexcess of amounts billed and project cost is included in accounts receivableand other receivables on our balance sheet.

Cost of revenueprimarily consists of all expenses that are directly attributable to ourbusiness and include the costs associated with professional services, thepurchase, for resale, of wireless and mobile hardware and systems, includingcomputers, peripherals, and related products. Fluctuations in our gross marginmay occur due to changes in our ability to obtain discounts on product sales orour ability to negotiate higher margins on sales contracts with largecustomers.

Sales andmarketing expenses primarily consist of the salaries, benefits, travel andother costs of our sales and marketing teams, as well as marketing initiativesand business development expenses.  General and administrative expensesprimarily consist of the costs attributable to the support of our operations,such as: costs related to information systems, salaries, expenses and officespace costs for executive management, customer service, warehousing, technicalsupport, financial accounting, purchasing, administrative and human resourcespersonnel, insurance, recruiting fees, legal, accounting and other professionalservices.

**CriticalAccounting Estimates and Policies**

Our consolidatedfinancial statements are prepared in conformity with accounting principlesgenerally accepted in the United States of America (GAAP), which requires us tomake estimates and assumptions that affect the reported amounts of assets andliabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting periods.  Critical accountingpolicies are those that require the application of management’s most difficult,subjective, or complex judgments, often because of the need to make estimatesabout the effect of matters that are inherently uncertain and that may changein subsequent periods. Actual results may differ from these estimates. Inaddition, other companies may utilize different estimates, which may impact thecomparability of our results of operations to those of companies in similarbusinesses.

In making thecomplex or subjective assumptions and judgments with respect to applying itscritical accounting policies, management considers, among other factors:

·             events and changes inmarket and economic conditions;

·             estimated future cashflows from operations; and

·             the risk of loss onspecific accounts or amounts.

The estimates andassumptions made by management in applying critical accounting policies havenot changed materially during 2007,  andnone of these estimates or assumptions have proven to be materially incorrector resulted in our recording any significant adjustments related to priorperiods. We will continue to monitor the key factors underlying our estimatesand judgments, but no change is currently expected. Please refer to our AnnualReport on Form 10-K for a summary of the accounting policies that managementbelieves are critical to the preparation of the consolidated financialstatements.

**Resultsof Operations**

***Three Months ended June 30, 2007 compared with the ThreeMonths ended June 30, 2006***

Revenues were$21.4 million for the three months ended June 30, 2007, compared to $15.3million for the three months ended 

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June 30, 2006, anincrease of $6.1 million or 39.6%. Revenue increased as the result of a greaternumber of mobile workstations that shipped in the three month period ended June30, 2007, an increase in the number of third-party wireless hardwareimplementations delivered, and an increase in our managed services and helpdesk solutions.

Our cost of saleswas $15.8 million for the three months ended June 30, 2007, compared to $11.7million for the three months ended June 30, 2006, an increase of $4.1 millionor 35.1%. Our gross profit was $5.7 million for the three months ended June 30,2007, compared to $3.7 million for the three months ended June 30, 2006, anincrease of $2.0 million or 54.1%, resulting in a gross margin of 26.4% at June30, 2007, up from 23.9% at June 30, 2006. The increase in our gross margin isthe result of increased margins earned from our mobile solutions sales, and theincreased sales volume of our higher margin third-party warranty sales.

Our selling,general and administrative expenses were $6.2 million for the three monthsended June 30, 2007, compared with $3.1 million for the three months ended June30, 2006, an increase of $3.1 million, or 98.7%.  Selling expensesincreased to $3.1 million in the three months ended June 30, 2007 from $1.7million in the three months ended June 30, 2006, an increase of $1.4 million,or 78.4%, as the result of an expansion of our sales force. Our general andadministrative expenses increased to $3.1 million in the three months endedJune 30, 2007 from $1.4 million in the three months ended June 30, 2006, anincrease of $1.7 million, or 124.5%. General and administrative expenses increased as the result of anincreased level of: administrative support and infrastructure; marketingcampaigns and public relations consulting; professional fees associated withour investor relations programs, internal controls and compliance requirements;and FAS 123R compensation expenses incurred as the result of incentive stockoptions granted to employees.

Our interestexpense, which is derived from our credit line, term loan and stockholders’loans was $179 thousand for the three months ended June 30, 2007, compared toapproximately $153 thousand for the three months ended June 30, 2006, anincrease of $26 thousand, or 16.8%, as the result of higher amounts outstandingunder our loan agreements with our senior lender. Our interest earned on cashand cash equivalents was approximately $134 thousand for the three months endedJune 30, 2007, compared to $0 for the three months ended June 30, 2006, an increaseof $134 thousand.  Interest income in the three months ended June 30, 2007was the result of an increase in cash due to the financing transactioncompleted in November 2006.

Our depreciationand amortization expense increased to $423 thousand for the three months endedJune 30, 2007 from $314 thousand for the three months ended June 30, 2006, anincrease of $109 thousand, or 34.7%, as the result of intangible assetsacquired in two transactions previously described, a greater number ofdemonstration units deployed to our expanded sales force and additionalinvestments in computer equipment and software.

Our net loss was$0.4 million for the three months ended June 30, 2007, compared with net incomeof $0.4 million for the three months ended June 30, 2006, a decrease of$0.8 million. Net income declined primarily due to increased selling expensesrelated to our expanded sales force, increased levels of managerial and supportstaff, costs related to professional services associated with public company disclosurerequirements and FAS 123R compensation expenses incurred as the result ofissuing incentive stock options to employees.

Prior to November29, 2006, InfoLogix Systems Corporation was a Sub-chapter S Corporation. Inaccordance with SFAS 109, when a company changes its tax status from anontaxable corporation to a taxable corporation, deferred tax assets andliabilities are recognized for timing differences at the date that a nontaxableenterprise becomes a taxable enterprise. We recorded a net deferred taxasset of approximately $0.2 million with the offset being recorded as an incometax benefit in the statement of operations for the quarter ended June 30, 2007.No net income tax benefit or offsetting net deferred tax asset was recorded inthe first quarter ended June 30, 2006 since InfoLogix Systems Corporationelected to be taxed under the provisions of Sub-Chapter S of the InternalRevenue Code whereby our individual stockholders reported their share of thecorporate income on their personal federal and state income tax returns.

As of June 30,2007, we had net operating losses (“NOL”) of approximately $2.2 million whichwill be available to offset future taxable income.  Included in the NOLsare losses of $65,000 generated by New Age Translation, Inc., the predecessorto InfoLogix, Inc., which are subject to restrictions under Internal RevenueCode Section 382, due to the change in ownership in that entity. Therefore, werecorded a valuation allowance against the net operating losses generated by NewAge Translation, Inc.  If not used, the NOLs will expire beginning in theyear 2024.  Our state NOLs will also be subject to expiration in varyingyears starting in 2013 through 2027.

***Six Months ended June 30, 2007 compared with the Six Monthsended June 30, 2006***

Revenues were$34.3 million for the six months ended June 30, 2007, compared to $28.4 millionfor the six months ended June 30, 2006, an increase of $5.9 million or 20.8%.Revenue increased as the result of a greater number of mobile workstations thatshipped in the comparable periods, an increase in the number of third-partywireless hardware implementations delivered, and an increase in our managedservices and help desk solutions.

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Our cost of saleswas $25.3 million for the six months ended June 30, 2007, compared to $21.4million for the six months ended June 30, 2006, an increase of $3.9 million or18.1%. Our gross profit was $9.0 million for the six months ended June 30,2007, compared to $7.0 million for the six months ended June 30, 2006, anincrease of $2.0 million or 29.2%, resulting in a gross margin of 26.2% at June30, 2007, up from 24.5% at June 30, 2006. The increase in our gross margin isthe result of increased margins earned from our mobile solutions sales, and theincreased sales volume of our higher margin third-party warranty sales.

Our selling,general and administrative expenses were $11.4 million for the six months endedJune 30, 2007, compared with $6.2 million for the six months ended June 30,2006, an increase of $5.2 million, or 84.0%.  Selling expenses increasedto $5.7 million in the six months ended June 30, 2007 from $3.3 million in thesix months ended June 30, 2006, an increase of $2.4 million, or 71.3%, as theresult of our expanded sales force. Our sales force increased from 22 to 33 inthe comparable periods.  Our general andadministrative expenses increased to $5.6 million in the six months ended June30, 2007 from $2.8 million in the six months ended June 30, 2006, an increaseof $2.8 million, or 99.1%, as the result of an increased level ofadministrative support staff and higher professional fees associated with ourinternal controls, asset purchases and compliance requirements andapproximately $0.5 million of FAS 123R compensation expenses incurred as the resultof incentive stock options granted to employees.

Our interestexpense, which is derived from our credit line, term loans and stockholders’loans was $310 thousand for the six months ended June 30, 2007, compared toapproximately $291 thousand for the six months ended June 30, 2006, an increaseof $19 thousand or 6.5%. Our interest earned on cash and cash equivalents wasapproximately $292 thousand for the six months ended June 30, 2007, compared to$0 for the six months ended June 30, 2006, an increase of $292 thousand. Interest income in the six months ended June 30, 2007 was the result of anincrease in cash due to the financing transaction completed in November 2006.

Our depreciationand amortization expense increased to $711 thousand for the six months endedJune 30, 2007 from $545 thousand for the six months ended June 30, 2006, anincrease of $166 thousand or 30.5% as the result of intangible assets acquiredin two transactions previously described, a greater number of demonstrationunits deployed to our expanded sales force and additional investments incomputer equipment and software.

Our net loss was$1.5 million for the six months ended June 30, 2007, compared with net incomeof $0.5 million for the six months ended June 30, 2006, a decrease of $2.0million. Net income declined primarily due to increased selling expensesrelated to our expanded national sales force, increased levels of professionalservices associated with public company disclosure requirements and FAS 123Rcompensation expenses incurred as the result of issuing incentive stock optionsto employees.

Prior to November29, 2006, InfoLogix Systems Corporation was a Sub-chapter S Corporation. Inaccordance with SFAS 109, when a company changes its tax status from anontaxable corporation to a taxable corporation, deferred tax assets andliabilities are recognized for timing differences at the date that a nontaxableenterprise becomes a taxable enterprise. We recorded a net deferred tax assetof approximately $0.9 million with the offset being recorded as an income taxbenefit in the statement of operations for the six months ended June 30, 2007.No net income tax benefit or offsetting net deferred tax asset was recorded inthe first six months ended June 30, 2006 since InfoLogix Systems Corporationelected to be taxed under the provisions of Sub-Chapter S of the InternalRevenue Code whereby our individual stockholders reported their share of thecorporate income on their personal federal and state income tax returns.

As of June 30,2007, we had net operating losses (“NOL”) of approximately $2.2 million whichwill be available to offset future taxable income.  Included in the NOLsare losses of $65,000 generated by New Age Translation, Inc., the predecessorto InfoLogix, Inc., which are subject to restrictions under Internal RevenueCode Section 382, due to the change in ownership in that entity. Therefore, werecorded a valuation allowance against the net operating losses generated byNew Age Translation, Inc.  If not used, the NOLs will expire beginning inthe year 2025.  Our state NOLs will also be subject to expiration invarying years starting in 2013 through 2027.

***Liquidity and Capital Resources***

At June 30, 2007,we had cash and cash equivalents of $10.5 million, compared to $12.9 million atDecember 31, 2006.  We have used, and plan to use, such cash for generalcorporate purposes, including working capital as well as acquisitions. Net cashused in operating activities for the six months ended June 30, 2007 was $0.4million, primarily the result of net losses from operations. Net cash used ininvesting activities was $1.5 million for the six months ended June 30, 2007,primarily used to acquire the patent portfolio from DDMS Holdings, LLC andbusiness assets from AMTSystems, Inc. as previously described, to purchaseadditional  demonstration equipment, andto increase investment in software and technology.  Net cash used byfinancing activities was $0.4 million for the six months ended June 30, 2007,primarily due to principal payments under the terms of our senior-securednotes.

We believe thatour available funds and the availability under our asset-based line of creditwill be sufficient to meet our capital requirements over the next 12 months;however, we may seek to raise additional funds through the sale of equity ordebt securities or obtaining additional credit facilities. The sale ofadditional equity securities or issuance of equity securities in futureacquisitions would result in dilution to our stockholders and the incurrence ofdebt would result in an increase in our interest expense. However, there can beno assurance that we will be able to sell additional equity or debt securities,or be able to obtain financing on acceptable terms, if at all.

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***Line of Credit and Term Loan***

In March 2006, weexecuted a Loan and Security Agreement with a bank.  Under the terms ofthe agreement and subsequent amendments, the bank provided us with an $8.5million line of credit and two term loans amounting to $1.5 million and $1.0million, respectively.  The proceeds from the loans were used to pay offexisting loans and to provide working capital.  The loans arecollateralized by all of the tangible and intangible assets of InfoLogixSystems Corporation, as well as a pledge of all of the common stock ofInfoLogix Systems Corporation. At June 30, 2007, the outstanding balance of theline of credit is $6.0 million, and $1.7 million on the two term loans. TheLoan and Security Agreement contains certain financial covenants with which wemust comply including:  minimum annual and quarterly net income tests, afixed-charge coverage ratio, and maximum annual capital expenditures. On March23, 2007 we entered into an amendment to the Loan and Security Agreement whichwaived the non-compliance with these covenants, and provided the bank with asecurity interest in a Company investment account pursuant to which the Companyis required to maintain a minimum balance of $2,000,000. The amendment alsolowered the quarterly net income covenant to a cumulative balance of $0 throughSeptember 30, 2007, and adjusted the fixed charge coverage ratio to 1.0 to 1.0at December 31, 2007 and 1.2 to 1.0 as of the end of each fiscal quarterthereafter.

***Off Balance Sheet Arrangements***

We do notcurrently have any off-balance sheet arrangements.

***New Accounting Standards***

Several newaccounting standards have been issued and as yet not adopted

In September 2006,the FASB issued SFAS No. 157,*FairValue Measurements*. SFAS 157 defines fair value, establishes aframework for measuring fair value and expands disclosures about fair valuemeasurements. SFAS 157 is effective for financial statements issued for fiscalyears beginning after November 15, 2007 and interim periods within thosefiscal years. We are in the process of evaluating the impact SFAS 157 will haveon our consolidated financial statements.

In February 2007,the FASB issued SFAS No. 159,*The FairValue Option for Financial Assets and Financial Liabilitie*s. SFAS159 allows entities to voluntarily choose to measure certain financial assetsand liabilities at fair value (“fair value option”). The fair value option maybe elected on an instrument-by-instrument basis and is irrevocable, unless anew election date occurs. If the fair value option is elected for aninstrument, SFAS 159 specifies that unrealized gains and losses for thatinstrument shall be reported in earnings at each subsequent reporting date.SFAS 159 is effective January 1, 2008. We are in the process of evaluatingthe impact that SFAS 159 will have on our consolidated financial statements.

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*Forward-LookingStatements*

This reportcontains “forward-looking statements” within the meaning of the PrivateSecurities Litigation Reform Act of 1995 that involve risks and uncertainties,many of which are beyond our control.  Our actual results could differmaterially and adversely from those anticipated in such forward-lookingstatements as a result of certain factors, including those set forth in ourAnnual Report on Form 10-K for the year ended December 31, 2006.  Importantfactors that may cause actual results to differ from projections include, butare not limited to, for example:

·                                                  adverseeconomic conditions;

·                                                  inabilityto raise sufficient additional capital to operate our business;

·                                                  unexpectedcosts, lower than expected sales and revenues, and operating deficits;

·                                                  adverseresults of any legal proceedings;

·                                                  inabilityto attract or retain qualified personnel, including sales and marketing, andscientific personnel; and

·                                                  otherrisks that may be referred to in this report and in our Annual Report onForm 10-K for the year ended December 31, 2006, including those under“Risk Factors.”

All statements,other than statements of historical facts, included in this report regardingour strategy, future operations, financial position, estimated revenue orlosses, projected costs, prospects, current expectations, forecasts, and plansand objectives of management are forward-looking statements.  When used inthis report, the words “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,”“expect,” “should,” “project,” “plan” and similar expressions are intended toidentify forward-looking statements, although not all forward-lookingstatements contain such identifying words.  All forward-looking statementsspeak only as of the date of this report.  We do not undertake anyobligation to update any forward-looking statements or other informationcontained herein, except as required by federal securities laws.  Youshould not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in orsuggested by the forward-looking statements in this report are reasonable, wecannot assure you that these plans, intentions or expectations will beachieved.  We have disclosed important factors that could cause our actualresults to differ materially from our expectations under “Risk Factors” in ourAnnual Report on Form 10-K for the year ended December 31, 2006 and elsewherein this report.  These cautionary statements qualify all forward-lookingstatements attributable to us or persons acting on our behalf.

Informationregarding market and industry statistics contained in this report is includedbased on information available to us that we believe is accurate.  It is generallybased on academic and other publications.   We have not reviewed orincluded data from all sources, and we cannot assure you of the accuracy orcompleteness of the data included in this report.  Forecasts and otherforward-looking information obtained from these sources are subject to the samequalifications and the additional uncertainties accompanying any estimates offuture market size, revenue and market acceptance of products andservices.  We undertake no obligation to update forward-lookinginformation to reflect actual results or changes in assumptions or otherfactors that could affect those statements.  See “Risk Factors” includedin our Annual Report on Form 10-K for the year ended December 31, 2006 for amore detailed discussion of uncertainties and risks that may have an impact onfuture results.

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**Item3.  Quantitative and Qualitative Disclosures About Market Risk**

The primaryobjective of our investment activities is to preserve principal. Our funds arecurrently held in checking accounts and money market funds which do not subjectus to risk of a loss of principal due to changes in prevailing interest ratesand in a portfolio of cash and cash equivalents that include investments ininvestment-grade securities, such as commercial paper, money market funds,government debt securities and certificates of deposit with maturities of lessthan nine months. Some of these securities may be subject to market risk due tochanges in prevailing interest rates, which may cause fluctuations in market value.

Two of the mainrisks associated with these investments are interest rate risk and creditrisk.  Typically, when interest rates rise, there is a correspondingdecline in the market value of debt securities.  Fluctuations in interestrates would not have a material effect on our financial statements because ofthe short-term nature of the securities in which we invest and our intention tohold the securities to maturity.  Credit risk refers to the possibilitythat the issuer of the debt securities will not be able to make principal andinterest payments.  We have limited the investments to investment grade orcomparable securities and have not experienced any losses on our investments todate due to credit risk.

The fair value ofour cash and short-term investment portfolio at June 30, 2007, approximated itscarrying value due to the short-term maturities of these investments. Thepotential decrease in fair value resulting from a hypothetical 10% increase ininterest rates at year-end for our investment portfolio is not material.

The fair value ofour long-term debt at June 30, 2007, including current maturities, wasapproximately $2.2 million. Our long-term bank debt is set at the prime rate(8.25%) plus 1.0%, or 9.25% at June 30, 2007. The balance of our other longterm liabilities consists of an installment obligation under the AMT Systemsasset purchase agreement which bears interest at 7.84% per annum.

**Item4.  Controls and Procedures**

We maintaindisclosure controls and procedures that are designed to ensure that informationrequired to be disclosed in our reports filed under the Securities Exchange Actof 1934, as amended, is recorded, processed, summarized and reported within thetime periods specified in the SEC’s rules and forms and that such informationis accumulated and communicated to our management, including our ChiefExecutive Officer and Chief Financial Officer, as appropriate, to allow fortimely decisions regarding required disclosure. In designing and evaluating thedisclosure controls and procedures, management recognizes that any controls andprocedures, no matter how well designed and operated, can provide onlyreasonable assurance of achieving the desired control objectives, andmanagement is required to apply its judgment in evaluating the cost-benefitrelationship of possible controls and procedures.

As required by SECRule 13a-15(b), we carried out an evaluation, under the supervision and withthe participation of our management, including the Chief Executive Officer andChief Financial Officer, of the effectiveness of the design and operation ofour disclosure controls and procedures as of the end of the period covered bythis report. Based on the foregoing, our Chief Executive Officer and ChiefFinancial Officer concluded that our disclosure controls and procedures wereeffective to provide reasonable assurance that we would meet our disclosureobligations.

There was nochange in our internal controls over financial reporting that occurred duringthe period covered by this report that has materially affected, or isreasonably likely to materially affect, our internal controls over financialreporting.

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**PART II — OTHER INFORMATION**

**Item1. Legal Proceedings**

In the normalcourse of business, we have become and might in the future become involved inlegal actions relating to our business. In management’s opinion, the resolutionof any such pending legal actions are not expected to have a material adverseeffect on our consolidated financial position or results of operations.

**Item1A.  Risk Factors**

There have been nomaterial changes in our risk factors from the information set forth in ourAnnual Report on Form 10-K for the year ended December 31, 2006.

**Item2. Unregistered Sales of Equity Securities and Use of Proceeds**

None.

**Item 4.****             Submission of Matters to a Vote of SecurityHolders**

Our 2007 AnnualMeeting of Stockholders was held on June 12, 2007.  At that meeting, (1) Messrs. David T. Gulian,Wayne D. Hoch, Richard D. Hodge, Thomas C. Lynch, Thomas O. Miller, Warren V.Musser, Jake Steinfeld, Richard A. Vermeil and Craig A. Wilensky were reelectedto our Board of Directors to serve for a term ending at the 2008 Annual Meetingand until their respective successors are elected and qualified and (2)McGladrey & Pullen LLP was ratified as our independent auditor for2007.  At the 2007 Annual Meeting, thenominees to our Board of Directors received the following number of votes foror withheld from such nominee:
| Director            | ** ** | **Votes For** | ** ** | **Votes Withheld** | ** ** |
|---------------------|------------|--------------------|------------|-------------------------|------------|
|                |       |               |       |                    |       |
| David T. Gulian     |       | 17,169,757         |       | 3,164                   |       |
| Wayne D. Hoch       |       | 17,169,757         |       | 3,164                   |       |
| Richard D. Hodge    |       | 17,169,757         |       | 3,164                   |       |
| Thomas C. Lynch     |       | 17,169,757         |       | 3,164                   |       |
| Thomas O. Miller    |       | 17,169,757         |       | 3,164                   |       |
| Warren V. Musser    |       | 17,169,207         |       | 3,714                   |       |
| Jake Steinfeld      |       | 17,166,372         |       | 6,549                   |       |
| Richard A.  Vermeil |       | 17,165,972         |       | 6,949                   |       |
| Craig A. Wilensky   |       | 17,170,337         |       | 2,584                   |       |

 

The holders of17,172,922 shares voted for the ratification of the selection of McGladrey& Pullen LLP as the Company’s independent auditor for 2007, no shares votedagainst the ratification of the selection of McGladrey & Pullen LLP and noshares abstained from voting for or against the ratification of the selectionof McGladrey & Pullen LLP.

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**Item6. Exhibits**
| Exhibit No. | ** ** | **Description**                                                                                                                                                                                                                                                                    |
|-------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.1        |       | Agreement and Plan of Merger dated April 9, 2007 by  and among InfoLogix, Inc., InfoLogix-DDMS, Inc., DDMS-Holdings, LLC, Louis  Heidelberger and Mark Niemiec (incorporated herein by reference to Exhibit  10.1 of our Current Report on Form 8-K filed April 11, 2007).         |
|        |       |                                                                                                                                                                                                                                                                               |
| 10.2        |       | Consulting Agreement dated April 9, 2007 by and  between InfoLogix, Inc., LM consulting LLC, Louis Heidelberger and Mark  Niemiec (incorporated herein by reference to Exhibit 10.2 of our Current  Report on Form 8-K filed April 11, 2007).                                      |
|        |       |                                                                                                                                                                                                                                                                               |
| 10.3        |       | Asset Purchase Agreement dated as of May 10, 2007 by  and among InfoLogix, Inc, InfoLogix Systems Corporation, AMTSystems, Inc.,  David J. Stewart and Sandra A. Stewart (incorporated herein by reference to  Exhibit 10.1 of our Current Report on Form 8-K filed May 14, 2007). |
|        |       |                                                                                                                                                                                                                                                                               |
| 31.1        |       | Certification pursuant to Exchange Act Rules  13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002.*                                                                                                                                         |
|        |       |                                                                                                                                                                                                                                                                               |
| 31.2        |       | Certification pursuant to Exchange Act Rules  13a-14(a)/15d-14(a), 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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* Filed herewith.

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**SIGNATURES**

Pursuant to therequirements of section 13 or 15(d) of the Securities Exchange Act of 1934, theRegistrant has duly caused this report to be signed on its behalf by theundersigned; thereunto duly authorized, in Hatboro, Pennsylvania on August 14,2007.
|          |     | INFOLOGIX, INC. |
|----------|----------|-----------------|
|     |     |            |   |   |
|     |     | By:             |   | /s/ David T. Gulian |   |
|     |     |            |   | David T. Gulian |
| * * | * * | * *        | * * | *President and Chief Executive Officer* |
| * * | * * | * *        | * * | * * |
|     |     | By:             |   | /s/ John A. Roberts |   |
|     |     |            |   | John A. Roberts |
| * * | * * | * *        | * * | *Chief Financial Officer and Principal Accounting  Officer* |

 

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