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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549-1004

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Form 10-QSB

|(Mark One)                                        |                                                                                         
|------------------------------------------------- | ----------------------------------------------------------------------------------------
|ý                                                 | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002
|or                                               
|o                                                 | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|For the transition period from
 to               

Commission File Number 0-26455

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ISECURETRAC CORP.(Exact name of small business issuer as specified in its charter)
(formerly Advanced Business Sciences, Inc.)

|DELAWARE                                                                                                                                                                                   |  | 87-0347787                          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------
|(State or other jurisdiction of
incorporation or organization)                                                                                                                             |  | (I.R.S. Employer Identification No.)
|5022 S. 114th Street, Suite #103
OMAHA, NEBRASKA 68137
(402) 537-0022
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive office)

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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the
past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. YES ý    NO o

The
number of issuer's shares outstanding as of November 01, 2002, was 30,871,842.

Transitional
Small Business Disclosure Form (Check
One): YES o    NO ý

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PART I. FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS

ISECURETRAC CORP
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS

|                                          |                                                  | September 30,
2002                            |         | December 31,
2001 |           
|----------------------------------------- | ------------------------------------------------ | --------------------------------------------- | ------- | ----------------- | ----------
|
|ASSETS                                    |                                                  |                                               |         |                   |           
|Current Assets                            |                                                  |                                               |         |                   |           
|                                          | Cash                                             |                                               | $       | 439               |           
|                                          | Receivables:                                     |                                               |         |                   |           
|                                          |                                                  | Trade accounts                                |         |                   | 69,374    
|                                          |                                                  | Note                                          |         |                   | 123,262   
|                                          |                                                  | Employees and stockholders                    |         |                   |          
|                                          | Prepaid expenses and other                       |                                               |         | 75,603            |           
|                                          |                                                  |                                               |         |                   |           
|                                          |                                                  | Total current assets                          |         |                   | 268,679   
|Leasehold Improvements and Equipment, net |                                                  |                                               | 225,987 |                   |           
|Product Development Costs, net            |                                                  |                                               | 782,875 |                   |           
|Other Assets                              |                                                  |                                               | 8,460   |                   |           
|                                          |                                                  |                                               |         |                   |           
|                                          |                                                  | Total assets                                  |         | $                 | 1,286,000 
|                                          |                                                  |                                               |         |                   |           
|LIABILITIES AND STOCKHOLDERS' (DEFICIT)   |                                                  |                                               |         |                   |           
|Current Liabilities                       |                                                  |                                               |         |                   |           
|                                          | Notes payable                                    |                                               |         | 1,893,368         |           
|                                          | Checks outstanding in excess of bank balance     |                                               |         | 148,559           |           
|                                          | Current maturities of long-term debt             |                                               |         | 471,429           |           
|                                          | Accounts payable and accrued expenses            |                                               |         | 779,719           |           
|                                          | Deferred revenue                                 |                                               |         |                  |           
|                                          | Accrued interest payable                         |                                               |         | 49,760            |           
|                                          | Preferred dividends payable                      |                                               |         | 203,861           |           
|                                          |                                                  |                                               |         |                   |           
|                                          |                                                  | Total Current Liabilities                     |         |                   | 3,546,696 
|                                          |                                                  |                                               |         |                   |           
|Long-term Debt, less current maturities   |                                                  |                                               |        |                   |           
|                                          |                                                  |                                               |         |                   |           
|Commitments and Contingency               |                                                  |                                               |         |                   |           
|Stockholders' (Deficit)                   |                                                  |                                               |         |                   |           
|                                          | Preferred stock                                  |                                               |         | 8,278,801         |           
|                                          | Common stock                                     |                                               |         | 30,640            |           
|                                          | Additional paid-in capital                       |                                               |         | 20,445,227        |           
|                                          | Deficit accumulated during the development stage |                                               |         | (31,015,364       | )         
|                                          |                                                  |                                               |         |                   |           
|                                          |                                                  | Total stockholders' (deficit)                 |         |                   | (2,260,696
|                                          |                                                  |                                               |         |                   |           
|                                          |                                                  | Total liabilities and stockholders' (deficit) |         | $                 | 1,286,000 
|                                          |                                                  |                                               |         |                   |           

See
Notes to Condensed Consolidated Financial Statements.

2

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ISECURETRAC CORP
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

|                                                       |                                          | Three Months Ended
September 30, |            | Nine Months Ended
September 30, |          
|------------------------------------------------------ | ---------------------------------------- | -------------------------------- | ---------- | ------------------------------- | ---------
|
|Revenues:                                              |                                          |                                  |            |                                 |          
|                                                       | Product                                  |                                  | $          | 220,955                         |          
|                                                       | Service                                  |                                  |            | 31,452                          |          
|                                                       |                                          |                                  |            |                                 |          
|                                                       |                                          | Total revenues                   |            |                                 | 252,407  
|                                                       |                                          |                                  |            |                                 |          
|Costs and expenses:                                    |                                          |                                  |            |                                 |          
|                                                       | Cost of product revenue                  |                                  |            | 244,043                         |          
|                                                       | Cost of service revenue                  |                                  |            | 22,674                          |          
|                                                       | Research and development                 |                                  |            | 209,148                         |          
|                                                       | Sales, general and administrative        |                                  |            | 874,289                         |          
|                                                       |                                          |                                  |            |                                 |          
|                                                       |                                          | Total costs and expenses         |            |                                 | 1,350,154
|                                                       |                                          |                                  |            |                                 |          
|                                                       | Operating (loss)                         |                                  |            | (1,097,747                      | )        
|                                                       |                                          |                                  |            |                                 |          
|Other income (expense):                                |                                          |                                  |            |                                 |          
|                                                       | Interest income                          |                                  |            |                                |          
|                                                       | Interest expense                         |                                  |            | (54,627                         | )        
|                                                       | Loan acquisition expense, stockholders   |                                  |            |                                |          
|                                                       | Other, net                               |                                  |            |                                |          
|                                                       |                                          |                                  |            |                                 |          
|                                                       | Total other income (expense)             |                                  |            | (54,627                         | )        
|                                                       |                                          |                                  |            |                                 |          
|                                                       | (Loss) before provision for income taxes |                                  |            | (1,152,374                      | )        
|                                                       | Provision for income taxes               |                                  |            |                                |          
|                                                       |                                          |                                  |            |                                 |          
|Net (loss)                                             |                                          | $                                | (1,152,374 | )                               | $        
|Preferred dividends                                    |                                          |                                  | (203,861   | )                               |          
|                                                       |                                          |                                  |            |                                 |          
|Net (loss) available to common stockholders            |                                          | $                                | (1,356,235 | )                               | $        
|                                                       |                                          |                                  |            |                                 |          
|Net (loss) per share of common stockbasic and diluted |                                          | $                                | (0.04      | )                               | $        
|                                                       |                                          |                                  |            |                                 |          
|Weighted average shares common stock outstanding       |                                          |                                  | 30,208,104 |                                 |          
|                                                       |                                          |                                  |            |                                 |          

See
Notes to Condensed Consolidated Financial Statements.

3

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ISECURETRAC CORP
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                        |                                                                     | Nine Months Ended
September 30 |                                          
|----------------------------------------------------------------------- | ------------------------------------------------------------------- | ------------------------------ | -----------------------------------------
|
|Cash flow from operating activities:                                    |                                                                     |                                |                                          
|                                                                        | Depreciation and amortization                                       |                                | $                                        
|                                                                        | Other                                                               |                                |                                          
|                                                                        |                                                                     |                                |                                          
|                                                                        |                                                                     |                                | Net cash (used in) operating activities  
|                                                                        |                                                                     |                                |                                          
|Net cash (used in) investing activities                                 |                                                                     |                                | (305,860                                 
|                                                                        |                                                                     |                                |                                          
|Cash flows from financing activities:                                   |                                                                     |                                |                                          
|                                                                        | Increase in notes payable                                           |                                |                                          
|                                                                        | Net proceeds from issuance of common stock                          |                                |                                          
|                                                                        | Other                                                               |                                |                                          
|                                                                        |                                                                     |                                |                                          
|                                                                        |                                                                     |                                | Net cash provided by financing activities
|                                                                        |                                                                     |                                |                                          
|                                                                        |                                                                     |                                | Increase in cash                         
|Cash, beginning of period                                               |                                                                     |                                | 439                                      
|                                                                        |                                                                     |                                |                                          
|Cash, end of period                                                     |                                                                     | $                              | 439                                      
|                                                                        |                                                                     |                                |                                          
|Supplemental Disclosures of Cash Flow Information:                      |                                                                     |                                |                                          
|                                                                        | Cash payments for:                                                  |                                |                                          
|                                                                        |                                                                     | Interest                       |                                          
|                                                                        |                                                                     | Taxes                          |                                          
|Supplemental Disclosures of Noncash Investing and Financing Activities: |                                                                     |                                |                                          
|                                                                        | Issuance of common and preferred stock in payment of long-term debt |                                | $                                        
|                                                                        | Issuance of preferred stock in payment of preferred stock dividends |                                |                                          
|                                                                        | Preferred stock dividends declared but not paid                     |                                |                                          

See
Notes to Condensed Consolidated Financial Statements.

4

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ISECURETRAC CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.    GENERAL

The condensed consolidated balance sheet of iSECUREtrac Corp ("iST" or "we", "us", or "our") at December 31, 2001 has been taken from audited consolidated
financial statements at that date and condensed. The condensed consolidated financial statements for the three and nine months ended September 30, 2002 and for the three and nine months ended
September 30, 2001 are unaudited and reflect all normal and recurring accruals and adjustments which are, in the opinion of management, necessary for a fair presentation of the financial
position, operating results and cash flows for the interim periods presented in this quarterly report. The condensed consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in our Annual Report on
Form 10-KSB for the year ended December 31, 2001. The results of operations and cash flows for the three and nine months ended September 30, 2002 are not necessarily
indicative of the results for the entire fiscal year ending December 31, 2002. Where appropriate, items within the condensed consolidated financial statements have been reclassified from the
previous periods' presentation.

The
accompanying financial statements of iSECUREtrac Corp have been prepared on a going-concern basis, which contemplates profitable operations and the satisfaction of liabilities in the
normal course of business. There are uncertainties that raise substantial doubt about the ability of iST to continue as a going concern. As shown in the statements of operations, iST has not yet
achieved profitable operations. As of September 30, 2002, iST has insufficient working capital to execute its business plan. These items raise substantial doubt about the ability of iST to
continue as a going concern. Management plans to continue financing operations and development of our technology through the plan described herein.

We
presently believe that iST is transitioning from a developmental stage company to an operating stage company with respect to its electronic tracking and monitoring devices and the
delivery of
services relating to these devices. Although there has been substantial progress in the development of this technology, we do not have any significant revenues and there can be no assurance that we
will have any significant revenues.

2.    CURRENT STOCKHOLDERS' EQUITY TRANSACTIONS

Our board members were compensated in total with 12,810 shares of stock valued at $14,000 for attending the (2) two first quarter board meetings. Ken
Macke, retired Chairman and CEO of Dayton Hudson Corp., was also compensated for being an Advisor to the Board of Directors. He received 16,724 shares of stock valued at $17,985 for attending
(2) first quarter board meetings.

In
March of 2002, we issued 250,000 shares of common stock valued at $284,091 to an individual for services per his consulting agreement.

During
the quarter ended March 31, 2002, we issued 250,000 shares of common stock in exchange for $50,000 upon the exercise of outstanding warrants.

In
March of 2002, we issued 2,231,363 shares of common stock valued at $1,639,096, net of offering costs of $145,994 to various individuals for cash.

5

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During
the quarter ended March 31, 2002, we issued 1,106,744 warrants to purchase 1,106,744 shares of common stock to stockholders for loans to iST and charged $536,734 to loan
acquisition expense.

During
the quarter ended March 31, 2002, we granted options to purchase 435,000 shares of common stock to six employees, three board members, and two outside consultants pursuant
to their stock option agreements. The exercise prices are at 85% of fair value of iST's common stock and vest ratably over one to three years.

Our
board members were compensated in total with 4,375 shares of stock valued at $7,000 for attending the (1) one second quarter board meeting. Ken Macke, retired Chairman and CEO
of Dayton Hudson Corp., was also compensated for being an Advisor to the Board of Directors. He received 6,935 shares of stock valued at $10,912 for attending (1) second quarter board meeting.

In
June of 2002, we issued 160,000 shares of common stock valued at $244,800 to a corporation for services per a consulting agreement.

During
the quarter ended June 30, 2002, we issued 121,522 shares of common stock valued at $43,918 to an individual for extinguishing his promissory note by exercising his
warrants.

In
the second quarter of 2002, we issued 757,142 shares of common stock valued at $1,048,865, net of offering costs of $13,635 to various individuals for cash.

During
the quarter ended June 30, 2002, we issued 13,333 shares of common stock valued at $11,673 to one individual for exercising his options.

In
the second quarter of 2002, we converted 500 shares of preferred stock into 500,000 shares of common stock.

During
the quarter ended June 30, 2002, we issued 62,500 warrants to purchase 62,500 shares of common stock to an investment group, as part of its equity financing package and
charged $53,675 to expense.

In
the second quarter of 2002, we granted options to purchase 115,000 shares of common stock to six employees pursuant to their stock option agreements. The exercise prices are at 85% of
fair value of iST's common stock and vest ratably over two years.

Our
board members were compensated in total with 15,457 shares of stock valued at $13,000 for attending (2) two third quarter board meetings. Ken Macke, retired Chairman and CEO
of Dayton Hudson Corp., was also compensated for being an Advisor to the Board of Directors. He received 21,258 shares of stock valued at $18,621 for attending (2) third quarter board meetings.

In
the third quarter of 2002, we issued 260,000 shares of common stock valued at $281,200 to various individuals for cash.

During
the quarter ended September 30, 2002, we issued 11,000 shares of common stock valued at $3,097 to one individual for exercising his options.

In
the third quarter of 2002, we converted 300 shares of preferred stock into 300,000 shares of common stock.

In
September of 2002, we issued 110,000 shares of common stock valued at $98,800 to (2) two companies for services per consulting agreements.

In
the third quarter of 2002, we granted options to purchase 205,000 shares of common stock to one employee and four consultants pursuant to their stock option agreements. The exercise
prices are at 85% of fair value of iST's common stock and vest ratably over 6 months to two years.

6

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iSECUREtrac
Corp., at September 30, 2002, had 10,600,657 outstanding stock options and warrants, and 8,278,871 and 6,600 shares issuable upon conversion of Series A
convertible preferred stock and convertible subordinated debentures, respectively, that could potentially dilute basic EPS in the future that were not included in the computation of diluted EPS
because to do so would have been anti-dilutive for the period presented.

3.    MANAGEMENT'S PLANS

We plan to continue financing our technology and operations through external and related party financing. We have raised $2,981,200 and are working to secure an
additional $3,500,000 of equity financing to fund the operations and production of our tracking devices and related services. We are also in the process of obtaining additional bridge financing from a
financial institution to help cover some of our general operating expenses. In addition, the $1,000,000 note that we have with Wells Fargo Bank, which matured August 27, 2002, has been renewed
until July 31, 2003. This renewal carries an interest rate per annum equal to the prime rate and requires interest only payments on a monthly basis.

Management
plans to hire additional sales and sales support staff to expand iST's sales opportunities within the United States. We believe that the addition of sales personnel will
enable us to increase sales on an accelerated basis.

Our
continuation as a going concern is dependent upon our ability to satisfactorily meet our debt obligations, meet our product development goals, secure new financing and generate
sufficient cash flows from operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

7

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4.    FINANCIAL STATEMENTS SINCE INCEPTION

Below is iST's condensed statements of operations and cash flows from inception (January 5, 1992) through September 30, 2002.

Statement of Operations

|                                            |                                                                 | (Inception) to
September 30,
2002 |            
|------------------------------------------- | --------------------------------------------------------------- | --------------------------------- | -----------
|Revenues:                                   |                                                                 |                                   |            
|                                            | Product                                                         |                                   | $          
|                                            | Service                                                         |                                   |            
|                                            |                                                                 |                                   |            
|                                            |                                                                 | Total revenues                    |            
|                                            |                                                                 |                                   |            
|Costs and expenses:                         |                                                                 |                                   |            
|                                            | Cost of product revenue                                         |                                   |            
|                                            | Cost of service revenue                                         |                                   |            
|                                            | Research and development                                        |                                   |            
|                                            | Sales, general and administrative                               |                                   |            
|                                            |                                                                 |                                   |            
|                                            |                                                                 | Total costs and expenses          |            
|                                            |                                                                 |                                   |            
|                                            | Operating (loss)                                                |                                   |            
|                                            |                                                                 |                                   |            
|Other income (expense):                     |                                                                 |                                   |            
|                                            | Interest income                                                 |                                   |            
|                                            | Interest expense                                                |                                   |            
|                                            | Loan acquisition expense, stockholders                          |                                   |            
|                                            | Other, net                                                      |                                   |            
|                                            |                                                                 |                                   |            
|                                            | Total other income (expense)                                    |                                   |            
|                                            |                                                                 |                                   |            
|                                            | (Loss) before extraordinary item and provision for income taxes |                                   |            
|                                            | Extraordinary item, gain from extinguishment of debt            |                                   |            
|                                            | (Loss) before provision for income taxes                        |                                   |            
|                                            | Provision for income taxes                                      |                                   |            
|                                            |                                                                 |                                   |            
|Net (loss)                                  |                                                                 | $                                 | (30,342,492
|Preferred dividends                         |                                                                 |                                   | (672,872   
|                                            |                                                                 |                                   |            
|Net (loss) available to common stockholders |                                                                 | $                                 | (31,015,364
|                                            |                                                                 |                                   |            

8

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Statement of Cash Flows

|                                                                        |                                                                     | (Inception) to
September 30,
2002 |                                          
|----------------------------------------------------------------------- | ------------------------------------------------------------------- | --------------------------------- | -----------------------------------------
|Cash flow from operating activities:                                    |                                                                     |                                   |                                          
|                                                                        | Depreciation and amortization                                       |                                   | $                                        
|                                                                        | Other                                                               |                                   |                                          
|                                                                        |                                                                     |                                   |                                          
|                                                                        |                                                                     |                                   | Net cash (used in) operating activities  
|Net cash (used in) investing activities                                 |                                                                     |                                   | (2,683,869                               
|                                                                        |                                                                     |                                   |                                          
|Cash flows from financing activities:                                   |                                                                     |                                   |                                          
|                                                                        | Increase (decrease) in notes payable                                |                                   |                                          
|                                                                        | Net proceeds from issuance of common stock                          |                                   |                                          
|                                                                        | Other                                                               |                                   |                                          
|                                                                        |                                                                     |                                   |                                          
|                                                                        |                                                                     |                                   | Net cash provided by financing activities
|                                                                        |                                                                     |                                   |                                          
|                                                                        |                                                                     |                                   | Increase (decrease) in cash              
|Cash, beginning of period                                               |                                                                     |                                   |                                         
|                                                                        |                                                                     |                                   |                                          
|Cash, end of period                                                     |                                                                     | $                                 | 439                                      
|                                                                        |                                                                     |                                   |                                          
|Supplemental Disclosures of Cash Flow Information:                      |                                                                     |                                   |                                          
|                                                                        | Cash payments for:                                                  |                                   |                                          
|                                                                        |                                                                     | Interest                          |                                          
|                                                                        |                                                                     | Taxes                             |                                          
|Supplemental Disclosures of Noncash Investing and Financing Activities: |                                                                     |                                   |                                          
|                                                                        | Exchange of preferred stock for notes payable                       |                                   | $                                        
|                                                                        | Conversion of note payable to long-term debt                        |                                   |                                          
|                                                                        | Issuance of common and preferred stock in payment of long-term debt |                                   |                                          
|                                                                        | Issuance of preferred stock in payment of preferred stock dividends |                                   |                                          
|                                                                        | Preferred stock dividends declared but not paid                     |                                   |                                          

9

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Discussions of certain matters contained in this Quarterly Report on Form 10-QSB may contain statements that plan for or anticipate the future.
Forward-looking statements include statements about the future of our products and the industry, statements about our future business plans and strategies, and most other statements that are not
historical in nature. In this Prospectus, forward-looking statements are generally identified by the words "anticipate," "plan," "believe," "expect," "estimate," and the like. Because forward-looking
statements involve future risks and uncertainties, there are factors that could cause actual results to differ materially from those expressed or implied. The actual outcomes of these matters may
differ significantly from the outcomes expressed or implied in these forward-looking statements and other risks detailed in "ITEM 1. Description of Business contained in iST's
Form 10-KSB filed with the SEC March 27, 2002.

The
following discussion is intended to provide a better understanding of the significant changes in trends relating to iST's financial condition and results of operations. Management's
Discussion and Analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements and Notes thereto.

We
have been in the process of moving from a developmental stage company to an operating company throughout the third quarter of 2002. As such, the financial results of operations
reflect our primary activities transitioning from development and testing of our GPS products to production and sales of our Model 2100NC units, principally for offender monitoring in the criminal
justice marketplace. We completed the final design and began production of our series 2100 tracking unit in the first quarter of 2002. For the first nine months of 2002, we had 318 GPS 2100NC
units sold and shipped to our distributor for deployment.

We
have developed our computerized center for communication and data management (tracNET24 platform), staffed only to maintain the system. We anticipate revenues will
increase significantly in the fourth quarter of 2002 and first quarter of 2003 as we begin to deliver our new products to the criminal justice market. The tracNET24 platform will be
operated as an Application Service Provider (ASP) service, allowing agents of our distributing partners at existing monitoring centers to access and use the system to provide the monitoring services.
As we continue to roll out this new product offering, our customers will have control and responsibility to monitor the movement of their individuals or assets. Utilizing our GPS tracking products,
customers, through a secure internet connection, will access their information via our host website, www.tracnet24.com. Our product will allow our customers greater
flexibility, ease of use and reduced operating costs when compared to our and our competitor's current product offerings and pricing. At the same time, it will allow us to partner with
industry-specific service providers, wherein they will provide the staffing and end-user interaction, and we will supply the tracking technology and information reporting.

In
addition, management plans to hire additional sales and sales support staff to expand iST's sales opportunities within the United States. We believe that the addition of sales
personnel will enable us to increase sales on an accelerated basis.

Product Revenue

Product Revenue is derived from the sale of our products. For the three and nine months ended September 30, 2002, Product Revenues were $220,955 and
$326,530 compared to $0 for the three and nine month periods of September 2001. The reason for the increase in the comparable periods is the sales of our series 2100NC tracking units, as
opposed to units being leased in prior year periods.

10

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Service Revenue

For the three and nine months ended September 30, 2002, Service Revenues were $31,452 and $137,426 and consisted of sales of various computer equipment and
the maintenance associated with such equipment, compared to $1,920 and $49,352 for the comparable periods of 2001, which consisted of monitoring leased units. The main reason for the three and
nine-month increase was due to the change in the type of service revenue.

Cost of Product Revenue

Cost of Product Revenue represents the direct costs associated with the generation of product revenue, and includes cost of goods for products sold. A portion of
our cost of product revenue, which began in March 2002, consists of a quarterly amortization amount of $78,715 with respect to the capitalization of our Series 2100 unit. For the three
and nine months ending September 30, 2002, Cost of Product Revenue increased to $244,043 and $427,948, of which product amortization was $78,715 and $183,669 respectively, compared to $0 during
the same periods in 2001. The primary reason for the higher cost of product revenue in the third quarter was due to the sales of our Series 2100 tracking units.

Cost of Service Revenue

Cost of Service Revenue represents the direct costs associated with the generation of service revenue. This includes direct costs of distribution of software and
equipment, maintenance expenses on equipment repaired under service agreements, and the direct variable communications expenses associated with the web centric hosting services provided by iST. For
the three months ending September 30, 2002, Cost of Service Revenue increased to $22,674, compared to $1,954 during the same period in 2001. For the nine-month period ending
September 30, 2002, Cost of Service Revenue decreased to $76,415, compared to $109,174 for the same nine month period in 2001. The primary reason for the overall lower cost of sales in the nine
month period was due to the transition of leasing units to the selling of units.

Research and Development

Research and Development expenses are the direct costs associated with the iST's development of its proprietary products. Expenses in this category include the
cost of outside contracted engineering and design, staffing expenses for the iST's own engineers and software developers, and the actual costs of components, prototypes, and testing equipment and
services used in the product development functions. The Research and Development expenses increased to $209,148 and $562,557 respectively for the three and nine months ended September 30, 2002,
up from $48,839 and $399,214 for the three and nine month period in 2001. The main reason for the three and nine-month increase were increases in salaries and wages due to additional
personnel added to iST for software development associated with our Series 2100 tracking unit.

Sales, General and Administrative

Sales, General and Administrative expenses are all the expenses associated with the operations and marketing of our company, outside of depreciation and
amortization expenses and the expenses described above. These expenses include executive, sales, administrative and accounting staff payroll, taxes and benefits, rent on property, all travel, fixed
telephone expenses, office leases and supplies, marketing advertising in magazines and periodicals, attendance at trade shows, production of marketing and related collateral material, as well as
recruiting and training expenses. For the three and nine months ended September 30, 2002, Sales, General and Administrative expense increased to $874,289 and $3,004,590, compared from $820,722
and $2,215,599 in the comparable periods of 2001. The main

11

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reasons for the three and nine month increase were increases in salaries and wages due to additional personnel added to iST, as well as increases in compensation and other costs incurred related to
various consulting agreements.

Operating (Loss)

For the three and nine months ended September 30, 2002, operating (loss) was $(1,097,747) and $(3,607,554), compared to $(869,595) and $(2,674,635) for the
same periods in 2001. The main reason for the three and nine month increases was higher expenses in the period, as explained above.

Interest Expense

For the three and nine months ended September 30, 2002, Interest expense totaled $54,627 and $158,705, compared to interest expense of $200,740 and
$591,908 in the comparable periods of 2001. This interest expense decrease was due to a reduction of debt in the third and fourth quarter of 2001 through the issuance of common and preferred stock,
coupled with lower interest rates throughout the year.

Loan Acquisition Expense, Stockholders

For the three and nine months ended September 30, 2002, loan acquisition expense was $0 and $536,734, compared to $310,421 and $1,844,565 for the
comparable periods of 2001. This expense is due to stock warrants issued to various stockholders or individuals for lending us money and for their personal guarantees on the notes payable with certain
banks. This expense fluctuates based on the cash needs of iST.

Net (Loss)

For the three and nine months ended September 30, 2002, we had a Net Loss of $(1,152,374) and $(4,301,304) or $(0.04)and $(0.17) per share, compared to a
Net Loss of $(1,180,880) and $(4,911,207) or $(0.05) and $(0.25) per share, in the comparable period of 2001, for the reasons described above.

Preferred Dividends

For the three and nine months ended September 30, 2002, preferred dividends totaled $203,861 and $604,711, as compared to $0 for the comparable periods of
2001. This increase was due to the issue of Series A Convertible Preferred Stock in November, 2001 through July, 2002.

Net (loss) Available to Common Stockholders

For the three and nine months ended September 30, 2002, we had a net (loss) available to common stockholders of $(1,356,235) and $(4,906,015) compared to a
net (loss) available to common stockholders of $(1,180,880) and $(4,911,207) in the comparable period of 2001. The reasons for the difference are described above.

Liquidity and Capital Resources

For the nine months ended September 30, 2002, we used $(2,776,158) in cash in operating activities, we used $(305,860) in investing activities, and we
generated $3,082,018 in cash from financing activities. The total of all cash flow activities resulted in no change in the balance of cash for the nine month period. For the same period of 2001, we
used $(1,828,329) of cash in operating activities and another $(528,379) in investing activities. It generated $2,504,294 in cash from financing activities. The total of all cash flow activities
resulted in an increase in the balance of cash of $147,586.

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As
of September 30, 2002, we had the following borrowing facilities in place, all of which are guaranteed by various directors of iST:

We
have a $431,429 note payable from U.S. Bank N.A. of Omaha, Nebraska. iST is repaying this loan in 35 monthly payments of $16,557 and one last payment estimated at $369,376 due
June 30, 2003. The interest rate is a variable rate based on the U.S. Bank N.A. Reference Rate (the "Index Rate") plus two (2) percent. As of September 30, 2002, the Index Rate
was currently four and three-fourths (4.75) percent. This loan is secured by a security interest in our tangible and intangible assets.

We
have a $1,000,000 note payable from Wells Fargo Bank. Interest only payments are due monthly. The note matures on July 31, 2003 and carries an interest rate per annum equal to
the prime rate. As of September 30, 2002, the prime rate is four and three-fourths (4.75)%.

We
have a $98,318 note payable from Nebraska State Bank of Omaha. This short-term note matures on January 21, 2003 and carries an interest rate of seven and
one-fourth (7.25)% due at maturity.

The
majority of our remaining notes payable and long-term debt consists of amounts owed to individuals, primarily directors of iST, which mature within one year and carry
interest rates ranging from 6% to 10%.

We
lack sufficient operating capital, and we intend to fund our ongoing development and operations through a combination of additional equity capital and further borrowings. As of
September 30, 2002, we did not have commitments for either debt or share purchases to meet its planned 2002 operating capital requirements.

ITEM 3. DISCLOSURE CONTROLS AND PROCEDURES

An evaluation was performed of the effectiveness of the design and operation of our disclosure controls and procedures as of November 6, 2002. This
evaluation was conducted under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based on that evaluation, our Chief
Executive Officer and Chief Financial Officer each concluded that our disclosure controls and procedures were effective as of November 6, 2002. There have been no significant changes in our
internal controls or in other factors that could significantly affect our internal controls subsequent to November 6, 2002.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are subject to pending or threatened lawsuits that are ordinary to our business. We are also subject to a variety of federal and state laws and regulations,
especially those relating to electronic devices and wireless communications.

On
January 2, 2002, iSecureTrac Corp., a Delaware corporation, filed a complaint against LEDvision Inc, an Iowa corporation, d/b/a Electronic Manufacturing
Technologies, Inc. ("EMT"), in the U.S. District Court, District of Nebraska(Case No. 8:02CV5). iSecureTrac Corp. alleges that EMT breached its contract with iSecureTrac by
its failure to manufacture and deliver production units of iSecureTrac's Model 2100 Series products. Consequently, iSecureTrac has had to utilize other manufacturers to produce such products, causing
a delay in our customer deliveries. iSecureTrac seeks to recover monies previously paid to EMT plus lost profits and incidental and consequential damages, and the cost of pursuing the action. In an
additional claim, iSecureTrac alleges that EMT's conduct concurrent with and subsequent to EMT's breach of contract amounted to trade disparagement and interference with our business relationships. We
seek damages to compensate us for damage to its reputation caused by EMT's conduct.

On
March 4, 2002 LEDvision Holding, Inc. d/b/a Electronics Manufacturing Technology, answered and made a counterclaim in the United States District Court for the District
of Nebraska Case No. 8:02CV5. The defendant, EMT, alleges that iSecureTrac Corp. breached its agreement with EMT and that such alleged breach excused EMT's non-performance. EMT's
counterclaim seeks monies for services allegedly provided to iST and for the loss of manufacturing profits. iST intends to vigorously contest any claims that it breached its agreement with EMT and
that such breach excused EMT's non-performance and contest any claims for monies for alleged services provided to iST for which iST received no value.

As
of October 14, 2002, the case is in the discovery phase.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.

iST claims exemption under the Securities Act of 1933 Section 4(2) for the following equity transactions which took place in the third quarter of 2002.



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On
July 2, July 9, and August 20, 2002, we received cash subscriptions totaling $281,200 to purchase a total of 260,000 shares of our common stock, which shares were
covered by a registration statement filed with the Securities and Exchange Commission on Form SB-2.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable

ITEM 5. OTHER INFORMATION.

Not Applicable

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.





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SIGNATURE

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

|                        |  | ISECURETRAC CORP
|----------------------- |  | ----------------
|Date: November 13, 2002 |  | By:             

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CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,
Michael P. May, certify that:





|Date November 13, 2002 |  | /s/ Michael P. MayMichael P. May
Chief Executive Officer |  | 
|---------------------- |  | -------------------------------------------------------- |  | 

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CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I,
James E. Stark, certify that:





|Date November 13, 2002 |  | /s/ James E. StarkJames E. Stark
Chief Financial Officer |  | 
|---------------------- |  | -------------------------------------------------------- |  | 

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