UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC 20549-1004

                                   FORM 10-QSB

                                   (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, 2004

                                       OR

     [ ] 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


                                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             (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

                        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)

      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 [X] NO [ ]

      The number of issuer's shares outstanding as of August 6, 2004, was
57,240,578.

Transitional Small Business Disclosure Form (Check One): YES [ ] NO [X]

<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                       ISECURETRAC CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
                                                                          (Unaudited)
                                                                          June 30, 2004    December 31, 2003
------------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
<S>                                                                         <C>               <C>
       Cash                                                                 $    352,409      $    125,399
       Accounts receivable, net of allowance for doubtful accounts of
          $15,600 in 2004 and $12,000 in 2003                                    805,190           602,367
       Inventories                                                               161,291           144,151
       Prepaid expenses and other                                                111,885            95,032
------------------------------------------------------------------------------------------------------------

              Total current assets                                             1,430,775           966,949
------------------------------------------------------------------------------------------------------------
Leasehold Improvements and Equipment, net                                        268,575           359,453
Monitoring Equipment, net of accumulated depreciation of $1,679,474
       in 2004 and $470,331 in 2003                                            2,581,220         4,078,419
Product Development Costs, net of accumulated amortization of $742,239
       in 2004 and $577,246 in 2003                                              247,721           367,338
Intangibles, subject to amortization                                             438,330           822,856
Goodwill                                                                       2,302,179         2,302,179
Other Assets                                                                     277,025            32,488
------------------------------------------------------------------------------------------------------------

              Total assets                                                  $  7,545,825      $  8,929,682
------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
       Notes payable                                                        $  2,502,541      $  2,994,476
       Current maturities of long-term debt                                    1,850,395         1,645,494
       Accounts payable and accrued expenses                                   1,148,608         1,319,884
       Deferred gain on sale-leaseback transaction                               736,830           677,125
       Accrued interest payable                                                  189,031           195,587
       Preferred dividends payable                                               666,381           218,513
------------------------------------------------------------------------------------------------------------

              Total current liabilities                                        7,093,786         7,051,079
------------------------------------------------------------------------------------------------------------

Long-term debt, less current maturities                                        5,607,974         4,839,547

Stockholders'  Deficit
       Series A convertible preferred stock                                    9,125,470         9,125,470
       Series B convertible preferred stock; 2004, $18,000 dividends in
          arrears; 2003, $15,250 dividends in arrears                            295,000           295,000
       Common stock                                                               57,240            48,904
       Additional paid-in capital                                             32,578,917        28,524,733
       Unearned consulting expense                                                    --          (357,000)
       Accumulated deficit                                                   (47,212,562)      (40,598,051)
------------------------------------------------------------------------------------------------------------
              Total stockholders'  deficit                                    (5,155,935)       (2,960,944)
------------------------------------------------------------------------------------------------------------
              Total liabilities and stockholders' deficit                   $  7,545,825      $  8,929,682
============================================================================================================
</TABLE>

            See Notes to Condensed Consolidated Financial Statements.

                                     Page 2
<PAGE>

                       ISECURETRAC CORP. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        Three Months Ended           Six Months Ended
                                                                             June 30                     June 30
                                                                        2004          2003          2004          2003
-------------------------------------------------------------------------------- ------------- ------------- -------------
REVENUES:
<S>                                                                   <C>            <C>          <C>            <C>
      Equipment                                                      $  135,285      $ 51,682     $ 151,791      $ 80,950
      Leasing                                                           313,746        23,184       591,202        38,223
      Hosting                                                           541,769        34,376     1,046,772        55,731
      Gain on sale-leaseback transactions
         Related party                                                  127,759             -       228,434             -
         Other                                                            5,981             -        11,634             -
      Service                                                            31,795         1,668        50,526         3,725
-------------------------------------------------------------------------------- ------------- ------------- -------------
         Total revenues                                               1,156,335       110,910     2,080,359       178,629
-------------------------------------------------------------------------------- ------------- ------------- -------------
OPERATING EXPENSES:
      Cost of revenues                                                  814,128       161,086     2,768,658       287,642
      Research and development                                          181,508       192,962       356,472       373,449
      Sales, general and administrative                               1,103,197       980,534     3,487,878     2,014,673
-------------------------------------------------------------------------------- ------------- ------------- -------------
         Total operating expenses                                     2,098,833     1,334,582     6,613,008     2,675,764
-------------------------------------------------------------------------------- ------------- ------------- -------------
      Operating loss                                                   (942,498)   (1,223,672)   (4,532,649)   (2,497,135)
-------------------------------------------------------------------------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE):
      Interest income                                                         1           102             9           211
      Interest expense                                               (1,412,908)      (65,214)   (1,612,405)     (130,479)
      Financing fees                                                          -             -       (21,598)            -
-------------------------------------------------------------------------------- ------------- ------------- -------------
      Total other income (expense)                                   (1,412,907)       (65,112)   (1,633,994)     (130,268)
-------------------------------------------------------------------------------- ------------- ------------- -------------
      Loss before provision for income taxes                         (2,355,405)    (1,288,784)   (6,166,643)   (2,627,403)
      Provision for income taxes                                              -             -             -             -
-------------------------------------------------------------------------------- ------------- ------------- -------------
NET LOSS                                                            $(2,355,405)   $(1,288,784) $ (6,166,643) $ (2,627,403)
-------------------------------------------------------------------------------- ------------- ------------- -------------
Preferred dividends                                                    (226,555)      (209,453)     (447,868)     (412,916)
-------------------------------------------------------------------------------- ------------- ------------- -------------
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                           $(2,581,960)   $(1,498,237) $ (6,614,511) $ (3,040,319)
-------------------------------------------------------------------------------- ------------- ------------- -------------
Basic and diluted loss per common share                                 $ (0.05)      $ (0.04)      $ (0.12)      $ (0.08)
-------------------------------------------------------------------------------- ------------- ------------- -------------
Weighted average shares of common stock outstanding                  55,896,724    38,740,656    54,291,311    37,356,910
-------------------------------------------------------------------------------- ------------- ------------- -------------
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                     Page 3
<PAGE>

                       ISECURETRAC CORP. AND SUBSIDIARIES
                       STATEMENT OF STOCKHOLDERS' DEFICIT
                     FOR THE SIX MONTHS ENDED JUNE 30, 2004
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           SERIES A                  SERIES B
                                                         CONVERTIBLE                CONVERTIBLE
                                                       PREFERRED STOCK            PREFERRED STOCK          COMMON STOCK
                                                      SHARES      AMOUNT       SHARES       AMOUNT      SHARES         AMOUNT
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>        <C>            <C>        <C>         <C>           <C>
Balance, December 31, 2003                             9,126   $  9,125,470       300     $ 295,000   48,904,299   $     48,904
    Shares issued for cash, net of offering costs         --             --        --            --    8,166,485          8,166
    Shares issued for director's fees and services        --             --        --            --      169,794            170
    Amortization of unearned consulting expense           --             --        --            --           --             --
    Paid-in capital for cost of options issued            --             --        --            --           --             --
    Warrants issued for loans and consulting
      services                                            --             --        --            --           --             --
    Series A preferred stock dividends                    --             --        --            --           --             --
    Net loss                                              --             --        --            --           --             --
-------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2004                                 9,126   $  9,125,470       300     $ 295,000   57,240,578   $     57,240
===============================================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                                                       ADDITIONAL      UNEARNED
                                                        PAID-IN       CONSULTING        ACCUMULATED
                                                        CAPITAL         EXPENSE           DEFICIT            TOTAL
------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>             <C>               <C>               <C>
Balance, December 31, 2003                            $ 28,524,733    $   (357,000)     $(40,598,051)     $ (2,960,944)
    Shares issued for cash, net of offering costs        3,762,094              --                --         3,770,260
    Shares issued for director's fees and services          58,414              --                --            58,584
    Amortization of unearned consulting expense                 --         357,000                --           357,000
    Paid-in capital for cost of options issued              87,843              --                --            87,843
    Warrants issued for loans and consulting
      services                                             145,833              --                --           145,833
    Series A preferred stock dividends                          --              --          (447,868)         (447,868)
    Net loss                                                    --              --        (6,166,643)       (6,166,643)
------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 2004                                $ 32,578,917    $         --      $(47,212,562)     $ (5,155,935)
========================================================================================================================
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                     Page 4
<PAGE>

                        ISECURETRAC CORP AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                               2004                   2003
-------------------------------------------------------------------------------------------------------------------------------
Cash flow from operating activities:
<S>                                                                                        <C>                    <C>
     Net loss                                                                              $ (6,166,643)          $ (2,627,403)
     Depreciation and amortization                                                              953,416                228,294
     Impairment charge of monitoring equipment                                                1,341,251                      -
     Impairment charge of intangibles subject to amortization                                   302,298                      -
     Interest expense related to convertible debt                                             1,200,000                      -
     Other                                                                                        9,639               413,134
-------------------------------------------------------------------------------------------------------------------------------
        Net cash used in operating activities                                                (2,360,039)            (1,985,975)
-------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                          (202,472)                (9,802)
-------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
     Increase (decrease) in notes payable                                                      (491,935)             1,284,297
     Proceeds from long term debt                                                             1,825,000              1,112,529
     Principal payments on long term debt                                                      (851,672)              (232,579)
     Net proceeds from issuance of common stock                                               2,429,128              1,005,873
     Other                                                                                     (121,000)            (1,162,694)
-------------------------------------------------------------------------------------------------------------------------------
        Net cash provided by financing activities                                             2,789,521              2,007,426
-------------------------------------------------------------------------------------------------------------------------------
        Increase in cash                                                                        227,010                 11,649
Cash, beginning of period                                                                       125,399                 47,374
-------------------------------------------------------------------------------------------------------------------------------
Cash, end of period                                                                           $ 352,409               $ 59,023
-------------------------------------------------------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information:
     Cash payments for:
        Interest                                                                              $ 397,115               $ 91,265
        Income Taxes                                                                                  -                      -
</TABLE>

See Notes to Condensed Consolidated Financial Statements.

                                     Page 5

<PAGE>

                        ISECURETRAC CORP AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1. GENERAL

The condensed  consolidated  balance sheet of  iSECUREtrac  Corp ("iSt" or "we",
"us", or "our") at December 31, 2003,  has been taken from audited  consolidated
financial  statements at that date and  condensed.  The  condensed  consolidated
financial  statements  for the three and six months ended June 30, 2004, and for
the three and six months  ended June 30,  2003,  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, 2003.  The results of operations and cash flows for the
three and six months ended June 30, 2004 are not  necessarily  indicative of the
results for the entire fiscal year ending December 31, 2004. 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 July  31,  2004,  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.

NOTE 2. COMMON STOCK OPTIONS AND WARRANTS

During the quarter ended June 30, 2004, we granted options to purchase 2,580,000
shares of common stock to  thirty-nine  employees and five outside board members
pursuant to their stock option  agreements and employee bonus  incentive  plans.
The  exercise  prices for 655,000 of the  employee's  options are at 85% of fair
value of iSt's common stock and vest ratably over two years. The exercise prices
for 1,825,000 of the employee's options are at 85% of fair value of iSt's common
stock and will become vested and  exercisable in full if iSt achieves a positive
EBITDA (Earnings Before Interest,  Taxes,  Depreciation and Amortization) in any
one month  prior to March 31,  2005.  The board  members  who iSt  retained  for
another year term  received  100,000  options at 100% fair value and will become
exercisable  in full on June 4, 2005.  iSt had  205,520  options  forfeited  and
80,850 options exercised during the quarter ended June 30, 2004.

iSECUREtrac  Corp., at June 30, 2004, had 13,544,022  outstanding stock options,
19,196,466  outstanding warrants,  9,125,470 shares issuable upon the conversion
of Series A  Convertible  Preferred  Stock,  500,100  shares  issuable  upon the
conversion of Series B Convertible  Preferred  Stock,  2,631,579 shares issuable
upon  conversion of a Subordinated  Convertible  Note and 4,950 shares  issuable
upon conversion of a convertible subordinated debenture,  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.


                                     Page 6
<PAGE>

NOTE 3. STOCK-BASED COMPENSATION

Stock-based  compensation:  As of June 30,  2004,  iSt had  various  stock-based
compensation  plans.  iSt  accounts  for those plans under the  recognition  and
measurement  principles  of APB Opinion No. 25,  Accounting  for Stock Issued to
Employees,  and related  interpretations,  which  measures  compensation  as the
difference  between  the fair  value of the  stock at the date of award  and the
amount  required to be paid for the stock.  Stock-based  compensation of $18,043
and $7,703 and $70,877 and $43,780 has been  reflected in net loss for the three
and  six-month  periods  ending  June 30,  2004,  and  2003,  respectively.  The
following  table  illustrates the effect on net loss for the three and six-month
periods  ending June 30,  2004,  and 2003,  as if iSt had applied the fair value
recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation,
to stock-based compensation.

<TABLE>
<CAPTION>
                                                       THREE MONTHS ENDED JUNE 30,         SIX MONTHS ENDED JUNE 30,
                                                          2004             2003             2004              2003
-----------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>              <C>              <C>              <C>
Net loss, as reported                                 $(2,355,405)     $(1,288,784)     $(6,166,643)     $(2,627,403)
Add:  Stock-based employee compensation expense
      included in reported net loss                        18,043            7,703           70,877           43,780
Deduct: Total stock-based employee compensation
        expense determined under fair value based
        method for all awards                            (759,951)         (96,231)      (1,472,028)        (181,034)
-----------------------------------------------------------------------------------------------------------------------
Pro forma net loss                                    $(3,097,313)     $(1,377,312)     $(7,567,794)     $(2,764,657)
=======================================================================================================================
Basic and diluted loss per share:
     As reported                                      $     (0.05)     $     (0.04)     $     (0.12)     $     (0.08)
=======================================================================================================================
     Pro forma                                        $     (0.06)     $     (0.04)     $     (0.15)     $     (0.09)
=======================================================================================================================
</TABLE>

In  determining  the pro forma amounts above during 2004 and 2003,  the value of
each grant is estimated at the grant date using the fair value method prescribed
in SFAS No. 123 with the following assumptions: no dividends, risk free interest
rate of 5%; expected life of 3.5 years and;  expected price volatility of 83.20%
and 82.13%.

The fair value of stock options and warrants  issued to  non-employees  is being
accounted  for using SFAS No. 123.  Related  compensation  expense is charged to
income when incurred.

Warrants and common stock issued in consideration for notes payable, convertible
debt and debt guarantee fees is expensed in the period incurred due to the short
term nature of the related notes.

NOTE 4. MANAGEMENT PLANS

Because  of a  limited  operating  history,  it is  difficult  to  evaluate  the
business.  Factors that may cause a failure to meet  business  goals include the
following:  the ability to raise adequate  capital to finance the business plan;
the future financial condition,  liquidity and business prospects generally;  an
inability to respond to competitive  market conditions;  marketplace  acceptance
and market  demand of the Company's  products;  perceived  opportunities  in the
marketplace  for  the  Company's  current  products  and  other  products  under
development;  future  sales  levels  and other  business  plans for the  future.
Profitability will require the successful  commercialization  of the Series 2100
Personal Tracking Unit (PTU) and tracNET24 software.  No assurances can be given
when this will occur or that the Company will ever be profitable.

To date,  the Company has  generated  limited  revenue from  operations  and has
accumulated significant losses. Consequently, it has had difficulty in obtaining
funding from  commercial  lenders,  resulting in the need to obtain funding from
private  sources.  Management  plans to continue  financing  development  of the
technology and operations through external and related party financing. On March
3, 2004,  iSt received a private  placement  commitment  of $5,000,000 in equity
financing  from a private  investor group to continue to fund the operations and
production of tracking devices and related  services.  As of July 31, 2004, this
funding had not been received by the Company and there is substantial doubt that
it will be received.


                                     Page 7
<PAGE>

iSt entered into a common stock purchase  agreement on March 7, 2003, as amended
and restated on April 14, 2003,  with Fusion  Capital Fund II, LLC  (Fusion),  a
Chicago-based  institutional investor. Under the agreement, Fusion was to buy up
to $12  million of common  stock  over a period of up to 40  months,  subject to
iSt's right to extend the agreement for six months. iSt had the right to control
the timing and amount of stock sold to Fusion with the purchase price based upon
the market price of the  Company's  common stock at the time of sale without any
discount.  On March 3, 2004,  iSt elected to terminate its common stock purchase
agreement with Fusion. Prior to terminating the agreement,  the Company had sold
8,175,207 shares of Common Stock for total proceeds of $3,324,084.

10,956,523  shares of our authorized but unissued common stock has been reserved
for issuance to certain  private  investors  to whom iSt issued 4%  subordinated
convertible  promissory  notes, in the aggregate amount of $1,200,000 on May 28,
2004. 5,217,392 of such shares are issuable pursuant to the promissory notes and
5,739,131 of such shares are issuable  pursuant to certain  warrants.  The notes
may be converted at any time up to the maturity date of May 28, 2006.

iSt's  continuation  as a  going  concern  is  dependent  upon  its  ability  to
satisfactorily  meet its debt obligations,  meet its product  development goals,
secure new financing and generate  sufficient  cash flows from  operations.  The
financial  statements do not include any adjustments  that may result from these
uncertainties.

NOTE 5. MONITORING EQUIPMENT

Monitoring  equipment,  including  leased  equipment,  is carried at cost and is
being  depreciated  by the  straight  line method  over useful  lives of up to 5
years.  Depreciation expense on assets acquired under capital leases is included
with depreciation  expense on owned assets. As of June 30, 2004 and December 31,
2003,  leased  equipment  totaled   $2,135,002  and  $1,551,809,   respectively.
Accumulated  depreciation  on iSt's  leased  equipment  as of June 30,  2004 and
December 31, 2003 totaled $723,952 and $260,171, respectively.

NOTE 6. GOODWILL AND INTANGIBLES, SUBJECT TO AMORTIZATION

Goodwill  is the  excess  of the cash  paid  over the net fair  value of  assets
acquired  and  liabilities  assumed  in  an  acquisition,  less  the  amount  of
identifiable  intangible  assets.  Goodwill is not amortized,  but is tested for
impairment  on an annual  basis.  The  Company has  determined  that there is no
impairment of goodwill as of December 31, 2003.

Intangible  assets are those that can be  separately  identified  and assigned a
value.  Intangible  assets  consist of customer  monitoring  contracts  and loan
acquisition costs. In regards to the customer monitoring contracts,  the Company
is amortizing the intangible  assets based on the revenue stream of the existing
contracts.  As for the loan  acquisition  costs, the Company is amortizing those
costs over the life of the loan.  For the six months  ending  June 30,  2004 and
2003, amortization expense was $384,526 and none, respectively.  The composition
of goodwill  and  intangible  assets at June 30, 2004,  is as follows:


                                   GOODWILL    OTHER INTANGIBLES     TOTAL
--------------------------------------------------------------------------------
Balance at December 31, 2003     $ 2,302,179     $   822,856      $ 3,125,035
   Amortization                           --        (384,526)        (384,526)
--------------------------------------------------------------------------------
Balance at June 30, 2004         $ 2,302,179     $   438,330      $ 2,740,509
================================================================================


                                     Page 8
<PAGE>


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


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  Form  10-QSB,
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 30, 2004.

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.

iSt is an emerging  technology  company that has developed a Global  Positioning
Satellite (GPS) based tracking and monitoring  system for criminal  offenders on
parole,  probation or  pre-trial  release,  consisting  of a PTU and a web-based
automated monitoring system.  Direct sales of the Company's Series 2100 PTUs and
tracNET24  services  began in December  2002 and  revenues  from such sales have
increased  throughout  2003 and 2004.  2003  marked the first full year of iSt's
reporting as an operating company.  Previously, it had reported as a development
stage company.

iSt's  product,  which  utilizes GPS  technology,  wireless  communications  and
proprietary  computer  software,  provides  real-time  monitoring,  tracking and
reporting of adult and juvenile  offenders as a criminal justice  rehabilitative
alternative.  Based on  patented  technology,  it is the  latest  generation  of
software and hardware  available for the  monitoring  of  offenders.  The system
tracks the geographic  location of offenders,  reports  specific  activities and
identifies violations against customer-established  parameters. This information
is  then  delivered  to  the  appropriate  authorities  using  various  methods,
including  telephone calls,  paging,  e-mail and web-based  reports.  Use of the
system can offer  substantial  cost savings over the cost of  incarceration  and
improve the  efficiency  of probation  and parole  officers.  It also offers the
backlogged  criminal  justice  systems a more secure solution to the problems of
rapidly growing criminal populations,  overcrowded  correctional  facilities and
more lenient sentencing alternatives.

Revenues are derived from selling and leasing monitoring units; selling services
such as training, monitoring services, and data archiving; and providing the use
of a web-based tracking and monitoring system, known as tracNET24(TM). tracNET24
is a hosted application,  accessible with a standard web browser to distributors
and their justice agency  customers  through secured logins.  It allows tracking
and monitoring of all electronically  activated PTUs. For each monitoring system
hosted on the company's servers,  a daily fee is charged.  Agreements exist with
distributors, service providers (I.E. private companies which operate monitoring
centers for state and county agencies), and state and county agencies. The usual
term of such  agreements  is from one to three years,  with  automatic  one year
renewals thereafter.


On August 12, 2003, iSt entered into a share exchange agreement with Tracking
Systems Corporation, Harrisburg, Pennsylvania (TSC), a privately held provider
of criminal offender monitoring equipment services. Under the terms of the
agreement, iSt exchanged 4,423,077 shares its common stock (valued at $2.3
million based upon the average of the bid and asked prices for 20 trading days
preceding the closing) for 100% of the common stock of TSC and assumed
$4,152,239 of TSC debt. The transaction was approved by the stockholders of TSC
on August 21, 2003, and was closed on August 28, 2003. TSC is now a wholly owned
subsidiary of iSt and the results of their operations from August 29, 2003,
through December 31, 2003, are included in the consolidated financial
statements.


EQUIPMENT REVENUE

Equipment Revenue is derived from the sale of product. For the three and six
months ended June 30, 2004, equipment revenues were $135,285 and $151,791
compared to $51,682 and 80,950 for the three and six month periods in 2003.
$79,028 and $101,777 of this three and six month increase, respectively, is
attributable to the acquisition of TSC.


LEASING REVENUE

Leasing Revenue is derived from the leasing of monitoring equipment. For the
three and six month periods ended June 30, 2004, leasing revenues were $313,746
and $591,202 compared to $23,184 and $38,223 for the same periods in 2003.
$166,936 and $358,736 of this three and six month increase, respectively, is
attributable to the acquisition of TSC with the balance due to an increase in
units under lease.


HOSTING REVENUE

Hosting Revenue is derived from the fees charged to customers for the use of ASP
and monitoring center services. For the three and six months ended June 30,
2004, hosting revenues were $541,769 and $1,046,772 compared to $34,376 and
$55,731 during the three and six month periods in 2003. $388,716 and $786,611 of
this three and six month increase, respectively, is attributable to the
acquisition of TSC with the balance due to the increased deployment of PTUs.


GAIN ON SALE-LEASEBACK TRANSACTIONS

The Gain on Sale-leaseback Transactions consists of amortization of the deferred
gain that is recorded upon delivery of units in conjunction with the
sale-leaseback transactions the Company entered into. For the three and six
months ended June 30, 2004, the gain on sale-leaseback transactions for related
parties was $127,759 and $228,434 compared to none during the same periods in
2003. The gain on all other sale-leaseback transactions for the three and six
months ended June 30, 2004, was $5,981 and $11,634, compared to none during the
same periods in 2003. There was no gain on sale-leaseback agreements until 3rd
Quarter of 2003.


SERVICE REVENUE

For 2004, Service Revenue consisted of sales of non-core product that included
various ancillary computer equipment and the maintenance associated with such
equipment. For the three and six months ended June 30, 2004, Service Revenue was
$31,795 and $50,526 compared to $1,668 and $3,725 for the comparable periods of
2003. $19,891 and $36,683 of this three and six month increase, respectively, is
attributable to the acquisition of TSC.

                                     Page 9
<PAGE>

COST OF REVENUES

Cost of Revenues represents all direct costs associated with the generation of
equipment and hosting revenue, including cost of goods for equipment that is
sold and leased, the direct variable communications and hardware equipment
expenses associated with the webcentric hosting services, the costs of
distribution of software and equipment, and the maintenance expenses on
equipment repaired under service agreements. A portion of the cost of revenues
consists of the amortization of product development costs, which began in March
2002. This amortization amounted to $78,715 and $157,430 for the three and six
months ended June 30, 2004 and $78,715 and $157,430 for the same periods in
2003. For the three and six months ending June 30, 2004, Cost of Revenues was
$814,128 and $2,768,658, compared to $161,086 and $287,642 during the same
periods in 2003. $341,644 and $1,942,135 of this three and six month increase,
respectively, is attributable to the acquisition of TSC, including a $1,341,251
write down to market value during the 1st Quarter of 2004 of certain host
monitoring equipment pursuant to the company's strategy of moving to the
tracNET24 platform for all electronic monitoring. Other contributing factors
include the overall increase in deployment of PTUs.


RESEARCH AND DEVELOPMENT

Research and Development expenses are the direct costs associated with iSt's
development of its proprietary products. Expenses in this category include the
cost of outside contracted engineering and design, staffing expenses for 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 were $181,508 and $356,472 for
the three and six months ended June 30, 2004, compared to $192,962 and $373,449
for the three and six month periods in 2003.


SALES, GENERAL AND ADMINISTRATIVE

Sales, General and Administrative (SG&A) expenses are all the expenses
associated with the operations and marketing of the Company, outside of 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 six months ended June 30, 2004, SG&A
expenses increased to $1,103,197 and $3,487,878 from $980,534 and $2,014,673 in
the comparable periods of 2003. $244,379 and $1,242,338 of this three and six
month increase respectively, was due to the acquisition of TSC, including a
$302,298 1st quarter write down of certain monitoring contracts, with the
balance primarily attributable to the amortization of unearned consulting fees
and increases in salaries and wages due to addition of sales personnel.


OPERATING LOSS

For the three and six months ended June 30, 2004, operating loss was $942,498
and $4,532,649, compared to $1,223,672 and $2,497,135 for the same periods in
2003. The increase is primarily attributable to increases in Cost of Revenues
and SG&A expenses as described above.


INTEREST EXPENSE

For the three and six months ended June 30, 2004, interest expense totaled
$1,412,908 and $1,612,405, compared to interest expense of $65,214 and $130,479
in the three and six month periods of 2003. During the 2nd quarter of 2004, the
company recorded $1,200,000 of non-cash interest expense related to the issuance
of convertible debt and pursuant to APB Opinion No. 14, Accounting for
Convertible Debt and Debt Issued with Stock Purchase Warrants. The balance of
the increase was due to higher borrowings by the Company in 2004.

                                    Page 10
<PAGE>

FINANCING FEES

For the three and six months ended June 30, 2004, financing fees were none and
$21,598, respectively, compared to none for the comparable periods of 2003.

Net Loss

For the three and six months ended June 30, 2004, the Company had a net loss of
$2,355,405 and $6,166,643, compared to a net loss of $1,288,784 and $2,627,403
in the three and six month periods of 2003, for the reasons described above.


PREFERRED DIVIDENDS

For the three and six months ended June 30, 2004, preferred dividends totaled
$226,555 and $447,868, as compared to $209,453 and $412,916 for the comparable
periods of 2003. This change was due to more outstanding Series A Convertible
Preferred Stock during 2004.


NET LOSS AVAILABLE TO COMMON STOCKHOLDERS

For the three and six months ended June 30, 2004, there was a net loss available
to common stockholders of $2,581,960 and 6,614,511 compared to $1,498,237 and
$3,040,319 in the three and six month periods of 2003. The reasons for these
changes are described above.


                                    Page 11
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

For the six months ended June 30, 2004,  the Company used  $2,360,039 of cash in
operating activities,  another $202,472 in investing  activities,  and generated
$2,789,521  in cash  from  financing  activities.  The  total of all  cash  flow
activities  resulted  in an  increase  in the balance of cash for the six months
ended June 30, 2004 of $227,010.  For the same period of 2003,  the Company used
$1,985,975 of cash in operating  activities and $9,802 in investing  activities.
$2,007,426 of cash was generated  from  financing  activities.  The total of all
cash flow activities resulted in an increase in the balance of cash of $11,649.

The Company  completed a  sale-leaseback  transaction  with an  unrelated  party
involving  100 Series 2100 PTUs for $120,000  during the first  quarter of 2003.
This  transaction  generated  a gain of  approximately  $45,000  that  is  being
amortized into income over the term of the lease (24 months).

The Company completed a second  sale-leaseback  transaction with a related party
(consisting of various stockholders) involving 312 Series 2100 PTUs for $375,000
during  the  third  quarter  of  2003.  This  transaction  generated  a gain  of
approximately  $164,000 that is being amortized into income over the term of the
lease (24 months).

A  third   sale-leaseback   transaction  was  completed  with  a  related  party
(consisting of various stockholders) involving 417 Series 2100 PTUs for $500,000
during  the  fourth  quarter  of  2003.  This  transaction  generated  a gain of
approximately  $274,000 that is being amortized into income over the term of the
lease (24 months).

A  fourth  sale-leaseback   transaction  was  completed  with  a  related  party
(consisting of various stockholders) involving 300 Series 2100 PTUs for $360,000
during  the  fourth  quarter  of  2003.  This  transaction  generated  a gain of
approximately  $198,000 that is being amortized into income over the term of the
lease (24 months).

The Company  completed a fifth  sale-leaseback  transaction with a related party
involving 100 Series 2100 PTUs for $125,000  during the fourth  quarter of 2003.
This  transaction  generated  a gain of  approximately  $71,000  that  is  being
amortized into income over the term of the lease (24 months).

The Company  completed a sixth  sale-leaseback  transaction with a related party
(consisting of various stockholders) involving 235 Series 2200 PTUs for $375,000
during  the  second  quarter  of  2004.  This  transaction  generated  a gain of
approximately  $199,000 that is being amortized into income over the term of the
lease (24 months).

The Company is in the process of completing one other sale-leaseback transaction
with a related party (consisting of various  stockholders)  involving 500 Series
2150 PTUs. As of June 30, 2004, iSt had received funding from this related party
totaling  $625,000.  The  Company  has sold and leased back 249 of the 500 units
under  this  lease   agreement.   This  transaction  has  generated  a  gain  of
approximately  $154,000 that is being amortized into income over the term of the
lease (24 months).

Other  sale-leaseback  opportunities  are being pursued with various third party
leasing  companies.  Lease  funding of PTUs  units can be an  ongoing  source of
funding to meet cash requirements.

Management  plans  to  continue  financing  development  of the  technology  and
operations  through external and related party financing.  On March 3, 2004, iSt
has received a private  placement  commitment of $5,000,000 in equity  financing
from a private  investor group to continue to fund the operations and production
of tracking devices and related services.  As of July 31, 2004, this funding had
not been received by the Company and there is substantial  doubt that it will be
received.


                                    Page 12
<PAGE>


iSt entered into a common stock purchase  agreement on March 7, 2003, as amended
and restated on April 14, 2003,  with Fusion  Capital Fund II, LLC  (Fusion),  a
Chicago based institutional investor. Under the agreement,  Fusion was to buy up
to $12.0  million of common  stock over a period of up to 40 months,  subject to
iSt's right to extend the agreement for six months. iSt had the right to control
the timing and amount of stock sold to Fusion with the purchase price based upon
the market price of the  Company's  common stock at the time of sale without any
discount.  On March 3, 2004,  iSt elected to terminate its common stock purchase
agreement with Fusion.

As of July 31, 2004,  the  following  additional  borrowing  facilities  were in
place:

A note  payable  from U.S.  Bank N.A.  of Omaha,  Nebraska.  This note calls for
monthly payments of $16,557,  including  interest,  through March 15, 2005, when
all  remaining  principal  and interest are due. The interest rate is a variable
rate based on the U.S. Bank N.A.  Reference  Rate (the "Index Rate") plus 1%. As
of July 31, 2004, the Index Rate was 4.25% and the outstanding  loan balance was
$202,446.  This loan is secured by a security interest in the Company's tangible
and intangible assets and the personal guarantees of various stockholders.

An unsecured note payable from Merrill Corporation resulting from the conversion
of accounts  payable.  This  short-term  note carries an interest rate of 5% and
matured on March 31, 2004. As of July 31, 2004, the outstanding loan balance was
$49,710.

A $73,366 note payable from Nebraska  State Bank of Omaha.  This  long-term note
matures on May 10,  2005 and carries an interest  rate of 6.50%.  Principal  and
interest  payments are due monthly.  As of July 31, 2004, the  outstanding  loan
balance was $72,485.

A $3,452,239  note payable from Westburg Media Capital,  LP. This long-term note
calls for monthly payments  including interest of $67,000 with a balloon payment
for the  remaining  amount due in full in November  2007.  The interest  rate is
based on the U.S.  Bank of  Washington  prime rate plus 4%. As of July 31, 2004,
the rate in effect was 8.25% and the  outstanding  loan balance was  $2,772,950.
This note payable is secured by all corporate assets.

A $200,000  note  payable from  Keystone  Venture IV, LP (a  stockholder).  This
unsecured,  long-term  note matures on August 31, 2006,  and carries an interest
rate  of 8%  which  is  payable  annually  in  arrears.  This  note  payable  is
subordinated to the Westburg Media Capital, LP note payable.

A $200,000  note  payable  from Penn Janney  Fund,  Inc. (a  stockholder).  This
unsecured,  long-term  note  matures on August 31,  2006 and carries an interest
rate  of 8%  which  is  payable  annually  in  arrears.  This  note  payable  is
subordinated to the Westburg Media Capital, LP note payable.

A $300,000 note payable from Oddyssey  Capital Group, LP (a  stockholder).  This
unsecured,  long-term  note  matures on August 31,  2006 and carries an interest
rate  of 8%  which  is  payable  annually  in  arrears.  This  note  payable  is
subordinated to the Westburg Media Capital, LP note payable.

A $1,000,000 subordinated convertible note with MicroCapital Fund LLC. This long
term note carries an interest rate of 10% with quarterly  interest  payments and
matures in October 2008.

A series  of  notes  with  nine  entities  totaling  $1,900,000  at 4%  interest
convertible into shares of the Company's common stock at $0.23 per share.  These
convertible notes mature on May 28, 2006.

A 10%,  convertible  debenture,  currently due, convertible into Common Stock at
$6.06 per share. iSt currently owes $30,000 on this debenture.


                                    Page 13
<PAGE>


Six capital leases with related and unrelated  parties  carrying  interest rates
ranging from 10.475% to 10.50% and maturing in January 2005 to July 2006.  As of
July 31, 2004, the aggregate balance on these leases totaled $1,536,172.

The majority of the remaining  $2,086,388  in notes payable  consists of amounts
owed to  individuals,  primarily  directors of iSt, which mature within one year
and carry interest rates of 5% to 10%.

As of July 31, 2004, the Company lacked sufficient operating capital to fund its
ongoing  development and operations and did not have commitments  other than the
following for either debt or share  purchases to meet its planned 2004 operating
capital  requirements.  On March 3,  2004,  iSt  received  a  private  placement
commitment of $5,000,000 in equity  financing  from a private  investor group to
continue to fund the operations  and production of tracking  devices and related
services. Based on revenue forecasts and expense budgets, management expects the
proceeds from this  financing to fund operating  requirements  until the Company
achieves  breakeven from  operations by 2005. As of July 31, 2004,  this funding
had not been received by the Company and there is substantial doubt that it will
be received.


                                    Page 14
<PAGE>


ITEM 3. DISCOLSURE CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures designed to ensure that
the information the Company must disclose in its filings with the Securities and
Exchange Commission is recorded, processed,  summarized and reported on a timely
basis. The Company's principal executive officer and principal financial officer
have reviewed and evaluated the Company's  disclosure controls and procedures as
defined in Rules  13a-15(e) and 15d-15(e)  under the Securities  Exchange Act of
1934,  as amended (the  "Exchange  Act") as of the end of the period  covered by
this report (the "Evaluation  Date").  Based on such  evaluation,  such officers
have  concluded  that,  as of the  Evaluation  Date,  the  Company's  disclosure
controls and procedures are effective in bringing to their attention on a timely
basis material  information  relating to the Company  required to be included in
the Company's periodic filings under the Exchange Act.

There have not been any changes in the Company's internal control over financial
reporting  (as defined in  Exchange  Act Rules  13a-15(f)  and  15d-15(f))  that
occurred  during the Company's most recent fiscal  quarter that have  materially
affected,  or are reasonably likely to materially affect, the Company's internal
control over financial reporting.


                                    Page 15
<PAGE>


                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is subject to pending or  threatened  lawsuits  that are ordinary to
its business.  In the opinion of  management,  no material loss is expected from
any of such pending claims or lawsuits. The Company is also subject to a variety
of  federal  and  state  laws and  regulations,  especially  those  relating  to
electronic devices and wireless communications.

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 second quarter of 2004.

      1.    Board members were  compensated in total with 22,915 shares of stock
            valued at $9,000 for  attending (2) second  quarter board  meetings.
            10,415 of the 22,915  shares  are  comprised  of five board  members
            receiving 2,083 shares each on April 01, 2004. The remaining  12,500
            shares were given to four board members, each receiving 3,125 shares
            on June 17, 2004.

      2.    On May 24, 2004, we issued  400,000 and 600,000 shares of our common
            stock  valued at  $100,000  and  $150,000  respectively,  to (2) two
            outside investors for purchasing stock via our private placement.

      3.    On June 1, 2004, we issued  525,937 and 344,805 shares of our common
            stock  valued  at  $180,000  and  $86,201  respectively,  to (2) two
            outside investors for purchasing stock via our private placement.

      4.    On June 23, 2004, we issued 75,000 shares of our common stock valued
            at $17,250 to a company for  services per their  investor  relations
            agreement.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable

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

We held our 2004 Annual  Meeting of  Stockholders  on June 4, 2004.  All matters
placed  before  security  holders  received  the  necessary  votes to pass.  The
following six individuals  were elected to continue a one year term as directors
of  iSECUREtrac  Corp.  until the 2005 Annual  Meeting of  Stockholders:  Robert
Badding,  46,924,424  votes  for and  2,697,385  votes  against,  Martin  Halbur
46,924,424  votes for and 2,697,385 votes against,  Roger Kanne 47,691,273 votes
for and 1,930,536  votes  against,  Ronald  Muhlbauer  47,718,507  votes for and
1,903,302  votes against,  Ravi Nath  47,691,273  votes for and 1,930,536  votes
against,  and  Thomas  Wharton  Jr.  47,691,273  votes for and  1,930,536  votes
against.

The  proposal to increase the number of  authorized  shares of common stock from
100,000,000 to 150,000,000  passed.  There were 47,154,806 votes for,  2,407,977
votes against, and 59,026 votes abstained.


                                    Page 16
<PAGE>

Also receiving the necessary  votes to pass was the  ratification of McGladrey &
Pullen,  LLP as our independent  auditors for 2004. The results were as follows:
48,550,345 votes for, 984,078 votes against, and 87,386 votes abstained.

ITEM 5. OTHER INFORMATION.

Not Applicable

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

(A)   Exhibits

31.1  Certification  of Chief Executive  Officer  pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.


31.2  Certification  of Chief Financial  Officer  pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.


32 Certification of Chief Executive Officer and Chief Financial Officer pursuant
to  18  U.S.C.   Section  1350  as  adopted  pursuant  to  Section  906  of  the
Sarbanes-Oxley Act of 2002.

(B)   Reports on Form 8-K


Not Applicable


                                    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.

                                      By: /S/ THOMAS E. WHARTON JR.
                                          Thomas E. Wharton Jr.
                                          President & CEO

                                      Dated:  August 16, 2004


                                    Page 17