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, 2006

                                       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
 incorporation or organization)                              Identification No.)

                              5078 S. 111th Street
                              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 |_|

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

      The number of shares of issuer's common stock outstanding as of August 4,
2006, was 10,771,391.

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

                                             (Unaudited)
                                            June 30, 2006   December 31, 2005
                                            -------------   -----------------
ASSETS
Current Assets
  Cash and cash equivalents                 $    851,213      $    742,626
  Investments                                    748,960         3,445,776
  Accounts receivable, net of allowance
    for doubtful accounts of $171,382
    in 2006 and $175,000 in 2005               1,894,649         1,618,473
  Investment interest receivable                   3,699             3,555
  Inventories                                    319,238           122,739
  Prepaid expenses and other                     200,589            83,360
                                            ------------      ------------
      Total current assets                     4,018,348         6,016,529
                                            ------------      ------------
Equipment, net of accumulated
  depreciation of $300,739
  in 2006 and $258,105 in 2005                   248,033           220,231
Leasehold Improvements, net of
  accumulated depreciation of $5,765
  in 2006 and $2,537 in 2005                      54,305            18,950
Monitoring Equipment, net of
  accumulated depreciation of $4,170,358
  in 2006 and $3,456,803 in 2005               2,640,483         2,563,193
Intangibles, net of accumulated
  amortization of $721,244
  in 2006 and $674,891 in 2005                   190,278           236,631
Goodwill                                       2,302,179         2,302,179
Other assets                                     107,728           118,260
                                            ------------      ------------
      Total assets                          $  9,561,354      $ 11,475,973
                                            ============      ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities
  Current maturities of long-term debt      $    743,284      $  1,326,502
  Accounts payable and accrued expenses          758,944           539,343
  Deferred revenues & gain on
    sale-leaseback transaction                   582,450           435,840
  Accrued interest payable                            --            12,738
                                            ------------      ------------
      Total current liabilities                2,084,678         2,314,423
                                            ------------      ------------
Long-term debt, less current maturities          576,452           546,290
                                            ------------      ------------
Redeemable convertible Series C
  preferred stock                             10,119,041         9,584,398
                                            ------------      ------------
Stockholders' (Deficit)
  Common stock                                    10,771            10,685
  Additional paid-in capital                  54,855,635        54,551,133
  Accumulated deficit                        (58,085,223)      (55,530,956)
                                            ------------      ------------
      Total stockholders' (deficit)           (3,218,817)         (969,138)
                                            ------------      ------------
      Total liabilities and stockholders'
        (deficit)                           $  9,561,354      $ 11,475,973
                                            ============      ============

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
                                                        --------------------------   -------------------------
                                                            2006           2005          2006          2005
                                                        ------------   -----------   -----------   -----------
<S>                                                     <C>            <C>           <C>           <C>
Revenues:
  Equipment sales                                       $   280,066    $    10,876   $   288,055   $    20,486
  Equipment leasing & hosting                             1,849,992      1,034,315     3,503,464     2,023,059
  Gain on sale-leaseback transactions - related party        83,378        195,058       183,699       376,942
  Service                                                    31,014         20,035        73,726        40,519
                                                        -----------    -----------   -----------   -----------
    Total revenues                                        2,244,450      1,260,284     4,048,944     2,461,006
                                                        -----------    -----------   -----------   -----------
Operating expenses:
  Cost of revenues                                          893,540        663,202     1,589,674     1,334,007
  Research and development                                  353,772        234,721       661,012       411,486
  Sales, general and administrative                       1,904,403      1,115,892     3,875,027     2,312,759
                                                        -----------    -----------   -----------   -----------
    Total operating expenses                              3,151,715      2,013,815     6,125,713     4,058,252
                                                        -----------    -----------   -----------   -----------
  Operating loss                                           (907,265)      (753,531)   (2,076,769)   (1,597,246)
                                                        -----------    -----------   -----------   -----------
Other income (expense):
  Interest income                                            26,180          1,961        62,801         1,966
  Interest expense                                          (42,102)      (241,675)     (103,914)     (467,407)
  Other, net                                                     --             --            --        31,837
                                                        -----------    -----------   -----------   -----------
  Total other income (expense)                              (15,922)      (239,714)      (41,113)     (433,604)
                                                        -----------    -----------   -----------   -----------
  Loss before provision for income taxes                   (923,187)      (993,245)   (2,117,882)   (2,030,850)
  Provision for income taxes                                     --             --            --            --
                                                        -----------    -----------   -----------   -----------
Net loss                                                $  (923,187)   $  (993,245)  $(2,117,882)  $(2,030,850)
                                                        ===========    ===========   ===========   ===========
Preferred stock dividends and accretion                    (268,528)        (7,233)     (534,644)       (7,233)
                                                        -----------    -----------   -----------   -----------
Net loss available to common stockholders               $(1,191,715)   $(1,000,478)  $(2,652,526)  $(2,038,083)
                                                        ===========    ===========   ===========   ===========
Basic and diluted loss per common share                 $     (0.11)   $     (0.11)  $     (0.25)  $     (0.22)
                                                        ===========    ===========   ===========   ===========
Weighted average shares of common stock outstanding      10,770,437      9,316,914    10,734,563     9,166,281
                                                        ===========    ===========   ===========   ===========
</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, 2006

<TABLE>
<CAPTION>
                                                         Common Stock        Additional
                                                     --------------------     Paid -in     Accumulated
                                                       Shares      Amount     Capital        Deficit        Total
                                                     ----------   -------   -----------   ------------   -----------
<S>                                                  <C>          <C>       <C>           <C>            <C>
Balance, December 31, 2005                           10,684,529   $10,685   $54,551,133   $(55,530,956)  $  (969,138)
  Shares issued upon conversion of notes                 83,958        83       189,337             --       189,420
  Shares issued upon exercise of options                  1,208         1         2,777             --         2,778
  Shares issued for director's fees                       1,696         2         3,998             --         4,000
  Compensation related to stock options issued               --        --       206,649             --       206,649
  Series C preferred stock dividends                         --        --            --       (436,385)     (436,385)
  Accretion to redemption value of preferred stock           --        --       (98,259)            --       (98,259)
  Net loss                                                   --        --            --     (2,117,882)   (2,117,882)
                                                     ----------   -------   -----------   ------------   -----------
Balance, June 30, 2006                               10,771,391   $10,771   $54,855,635   $(58,085,223)  $(3,218,817)
                                                     ==========   =======   ===========   ============   ===========
</TABLE>

See Notes to Condensed Consolidated Financial Statements.


                                     Page 4

<PAGE>

                       iSECUREtrac CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Six Months Ended June 30, 2006 and 2005
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                           2006          2005
                                                       -----------   ------------
<S>                                                    <C>           <C>
Cash Flows From Operating Activities
  Net loss                                             $(2,117,882)  $ (2,030,850)
    Depreciation and amortization                          805,770        958,466
    Expenses paid by issuance of stock, warrants,
      and options in lieu of cash                          210,649         14,302
    Accretion of investment discount                        (6,370)            --
    Gain on sale - leaseback transactions                 (183,699)      (139,802)
    Increase in deferred income                            330,309             --
    (Increase) in accounts receivable                     (276,176)       (55,311)
    (Increase) decrease in inventories                    (196,499)        78,399
    Increase (decrease) in accounts payable and
      accrued expenses                                     219,601     (1,322,257)
    Decrease in restricted cash                                 --        700,000
    Other                                                 (130,112)      (139,067)
                                                       -----------   ------------
Net cash used in operating activities                   (1,344,409)    (1,936,120)
                                                       -----------   ------------
Cash Flows From Investing Activities
  Purchases of leasehold improvements and equipment       (109,019)            --
  Purchases of monitoring equipment                       (790,845)      (625,283)
  Proceeds from maturity of investments                  6,350,000             --
  Purchase of investments                               (3,646,814)            --
  Decrease in other assets                                  10,532         56,045
                                                       -----------   ------------
Net cash provided by (used in) investing activities      1,813,854       (569,238)
                                                       -----------   ------------
Cash Flows From Financing Activities
  Principal proceeds from notes                                 --      1,700,000
  Principal payments on notes                                   --     (1,915,654)
  Principal proceeds from long-term debt                   500,000        400,000
  Principal payments on long-term debt                    (863,636)      (971,982)
  Proceeds from the exercise of options and warrants         2,778        192,175
  Proceeds from issuance of Series C preferred
    stock, net of offering costs                                --     10,578,686
                                                       -----------   ------------
Net cash provided by (used in) financing activities       (360,858)     9,983,225
                                                       -----------   ------------
Increase in cash                                           108,587      7,477,867
Cash at beginning of period                                742,626         44,997
                                                       -----------   ------------
Cash at end of period                                  $   851,213   $  7,522,864
                                                       ===========   ============
Supplemental Disclosure of Cash Payments for
  Interest                                                 116,652        595,612
</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 consolidated balance sheet of iSECUREtrac Corp ("Company", or "iSt") at
December 31, 2005, has been taken from audited consolidated financial statements
at that date. The consolidated financial statements for the three and six months
ended June 30, 2006, and for the three and six months ended June 30, 2005, 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 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, 2005. The results of operations and cash
flows for the three and six months ended June 30, 2006, are not necessarily
indicative of the results for the entire fiscal year ending December 31, 2006.
Where appropriate, items within the consolidated financial statements have been
reclassified from the previous periods' presentation.

The Company's financial statements have been presented on the basis that it is
able to continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company believes that its current working capital, combined with the line of
credit described in Note 7, are sufficient to meet its liquidity needs through
the first quarter of 2007. The Company further believes that it has access to
capital, if necessary, that would satisfy liquidity needs beyond the first
quarter of 2007.

Note 2. Common Stock Options and Warrants

For the three and six month periods ended June 30, 2006, the Company granted
options to purchase a total of 6,000 and 71,175 shares of common stock to seven
and sixty-nine employees, respectively, pursuant to the Company's 2001 Omnibus
Equity Incentive Plan (the "2001 Plan"). In addition, during the three and six
month periods ended June 30, 2006, 0 and 183,000 shares of common stock,
respectively, were issued outside the Company's 2001 Omnibus Equity Incentive
Plan. The exercise prices for these options were set at the fair market value of
iSt's common stock on each respective grant date. The options vest ratably over
two years. For the three and six month periods ended June 30, 2006, 17,225 and
24,956 options were forfeited, respectively, by option holders and 0 and 1,208
options were exercised, respectively. As of May 31, 2006, the 2001 Plan expired.
No further option grants may be issued in conjunction with the 2001 Plan.

On May 4, 2006, the stockholders of iSt voted in favor of the proposal at the
Company's annual meeting to approve the newly created 2006 Omnibus Equity
Incentive Plan (the "2006 Plan"). The 2006 Plan went into effect on May 31,
2006. During the quarter ended June 30, 2006, the Company granted options to
purchase a total of 36,000 shares of common stock to three employees and two
board members pursuant to the 2006 Plan. The exercise prices for these options
were set at the fair market value of iSt's common stock on each respective grant
date. The options granted to the three employees vest ratably over two years.
The options granted to the two board members do not vest until May 31, 2007, at
which time they will be fully vested. During the quarter ended June 30, 2006,
with respect to the 2006 Plan, no options were forfeited by option holders and
no options were exercised.


                                     Page 6

<PAGE>

For the three and six month periods ended June 30, 2006, 47,658 and 53,908
warrants expired, respectively, and no warrants were granted or exercised by
warrant holders. As of June 30, 2006, there were 11,238,305 outstanding
warrants.

At June 30, 2006, the Company had 1,385,423 outstanding stock options, 6,287,045
shares issuable upon exercise of warrants to be issued upon exchange of
Preferred Stock, and 4,951,260 shares issuable upon the exercise of outstanding
warrants that were not included in the computation of diluted EPS because to do
so would have been anti-dilutive for the period presented.

See Note 3 for additional information regarding stock options granted as
stock-based compensation.

Note 3. Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board ("FASB") published
FASB Statement No. 123 (revised 2004), "Share-Based Payment" ("FAS 123(R)" or
the "Statement"). FAS 123(R) requires that the compensation cost relating to
share-based payment transactions, including grants of employee stock options, be
recognized in financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. FAS 123(R) covers a wide
range of share-based compensation arrangements including stock options,
restricted share plans, performance-based awards, share appreciation rights, and
employee share purchase plans. FAS 123(R) is a replacement of FASB Statement No.
123, Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees, and its related interpretive guidance
(APB 25).

The Company adopted FAS123(R) as of January 1, 2006, using the modified
prospective transition method for valuing stock options. Under this method,
stock based compensation expense is recognized using the fair-value based
accounting method for all employee awards granted, modified, or settled during a
period. The effect of the Statement is to require the Company to measure the
cost of its employee services received in exchange for stock options based on
the grant-date fair value of the award, and to recognize the cost over the
period the employee is required to provide services for the award. The Company
is not restating any of the prior period stock based compensation disclosures.

Compensation expense related to the unvested portion of awards outstanding as of
January 1, 2006, were based on the grant-date fair value of those awards as
calculated under the original provisions of Statement No. 123. Accordingly, the
Company did not re-measure the grant-date fair value estimate of the unvested
portion of awards granted prior to January 1, 2006. The Company determined the
fair value of these awards using the Black-Scholes option pricing model.

As a result of adopting FAS123(R), the Company recorded compensation expense of
$49,790 and $206,649 for the three and six months ended June 30, 2006,
respectively.

As of May 31, 2006, the Company's 2001 Omnibus Equity Incentive Plan (the "2001
Plan"), that was approved by shareholders in June, 2001, expired. The 2001 Plan
provided for the granting of stock options and other equity incentives to the
Company's officers, employees, directors and consultants who provided services
to the Company. At June 30, 2006, there were 172,363 outstanding options in
conjunction with the 2001 Plan. No further options may be issued under this
plan.

On May 4, 2006, at the Company's annual meeting of shareholders, the
stockholders approved the adoption of the Company's newly created 2006 Omnibus
Equity Incentive Plan (the "2006 Plan"). The 2006 Plan became effective on May
31, 2006. The 2006 Plan provides for the granting of stock options and other
equity incentives to the Company's officers, employees, directors and
consultants who provide services to the Company. The 2006 Plan has a term of ten
years unless terminated by the board of directors. Stock options are granted
with an exercise price not less than fair market value of the common stock on
the date of the grant. Vesting schedules and expiration dates for the grants
issued under this plan are specified at the time of grant. At June 30, 2006,
there were 36,000 outstanding options in conjunction with the 2006 Plan.


                                     Page 7

<PAGE>

Prior to the adoption of the 2006 Plan, the Company also granted stock-based
compensation under executive employment agreements.

During the six months ended June 30, 2006, the Company granted 290,175 common
stock options to its executives and employees. The following table summarizes
the stock options outstanding:

<TABLE>
<CAPTION>
                                                            Weighted
                                               Weighted      Average
                                                Average     Remaining    Aggregate
                                               Exercise    Contractual   Intrinsic
Options                              Shares      Price    Life (Years)     Value
-------                            ---------   --------   ------------   ---------
<S>                                <C>           <C>          <C>         <C>
Outstanding at December 31, 2005   1,121,412     $2.62
Granted                              290,175      2.02
Exercised                             (1,208)     2.30
Forfeited                            (24,956)     4.90
                                   ---------     -----        ----        --------
Outstanding at June 30, 2006       1,385,423     $2.47        4.81        $279,853
                                   =========     =====        ====        ========
Exercisable at June 30, 2006       1,216,779     $2.52        4.69        $210,499
                                   ---------     -----        ----        --------
</TABLE>

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

The risk-free interest rate is determined on the date the grant is issued. This
rate is equal to the rates based on yields from U.S. Treasury zero-coupon issues
with maturity of ten years.

Expected volatilities are based upon looking back at historical stock prices
over the two years prior to the stock option award. 12 observations per year are
used in the calculation with the 15th of the month stock price. The company does
a 2-year look back for the following reasons: (i) 2 years is the option vesting
period; (ii) the stock price prior to two years ago is not reflective of
Company's expected future stock price; and (iii) the change in stock price prior
to two years ago is considered abnormal with respect to the Company's current
state.

Prior to adopting FAS123(R), the cancellation of stock options was accounted for
based on the actual cancellations during the reporting period. Under FAS123(R),
the Company is required to estimate forfeitures. The forfeiture rate is the rate
at which options are expected to be forfeited prior to full vesting. For options
issued to senior executives, the Company uses an assumed forfeiture rate of 0%.
For all other options, the forfeiture rate is determined based on actual
forfeiture rate experience as follows: For each historical year of option
issuance, the total options issued for the year is compared to the options
forfeited prior to having vested. For option years in which the two year vesting
period has not passed, past experience is used to project future forfeitures.
The total of pro forma forfeitures is then compared to total options awarded and
the resultant percentage is used as the forfeiture rate. The estimated
forfeiture rate for non-senior executive option grants is 21%. This rate is
recalculated on an annual basis.

The annual rate of quarterly dividends is 0% since iSECUREtrac does not pay
dividends on common stock.


                                     Page 8

<PAGE>

                                Six Months Ended       Year Ended
                                  June 30, 2006    December 31, 2005
                                ----------------   -----------------
Risk free interest rate                5.22%               5.00%
Expected volatility factor            97.79%             106.62%
Expected option term in years          3.91                3.50
Dividends                            $ 0.00             $  0.00

As of June 30, 2006, there was approximately $243,000 of total unrecognized
compensation costs related to non-vested share based compensation agreements
granted to the Company's executives and employees.

Stock-based compensation of $15,103 and $302 has been reflected in net loss for
the three and six months ending June 30, 2005. Prior to 2006, the Company
accounted for modifications of previously issued fixed stock option awards under
the accounting consequences of modifications to a fixed stock option or award of
APB Opinion No. 25 and related interpretations. Accordingly, the options granted
prior to 2006 were accounted for as variable from the date of the modification
to the date the option was exercised, forfeited, or expired unexercised.
However, with the implementation of FAS 123(R), variable accounting for equity
awards has been eliminated, and instead a fair value is calculated for our stock
options on the date granted.

The following table illustrates the effect on net loss for the three and six
months ending June 30, 2005, as if iSt had applied the fair value recognition
provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to
stock-based compensation.

                                           Three Months Ended   Six Months Ended
                                              June 30, 2005       June 30, 2005
                                           ------------------   ----------------
Net loss, as reported                          $(993,245)         $(2,030,850)
Add: Stock-based employee compensation
  expense included in reported net loss           15,103                  302
Deduct: Total stock-based employee
  compensation expense determined under
  fair value based method for all awards          (1,730)             (44,701)
                                               ---------          -----------
Pro forma net loss                              (979,872)          (2,075,249)
Preferred dividends and accretion                 (7,233)              (7,233)
                                               ---------          -----------
Pro forma net loss available to common
  stockholders                                 $(987,105)         $(2,082,482)
Basic and diluted loss per share:
  As reported                                  $   (0.11)         $     (0.22)
                                               ---------          -----------
  Pro forma                                    $   (0.11)         $     (0.23)
                                               ---------          -----------

In determining the pro forma amounts above during 2005, 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 106.94%.


                                     Page 9

<PAGE>

Note 4. Monitoring Equipment

Monitoring equipment at June 30, 2006, is as follows:

<TABLE>
<CAPTION>
                                                             Breath
                                Active GPS   Passive GPS    Alcohol      Other        Total
                                ----------   -----------   ---------   ---------   -----------
<S>                             <C>          <C>           <C>         <C>         <C>
Monitoring Equipment            $1,848,832   $ 3,532,835   $ 964,896   $ 464,278   $ 6,810,841
Less accumulated depreciation     (889,996)   (2,417,831)   (638,478)   (224,053)   (4,170,358)
                                ----------   -----------   ---------   ---------   -----------
Monitoring Equipment, net       $  958,836   $ 1,115,004   $ 326,418   $ 240,225   $ 2,640,483
                                ==========   ===========   =========   =========   ===========
</TABLE>

No impairment charges were taken in 2005 or the six months ended June 30, 2006.

Note 5. 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, 2005.

The Company also records those other intangible assets that can be separately
identified and assigned a value. At June 30, 2006, all intangible assets consist
of customer monitoring contracts. The Company is amortizing the intangible
assets based on the revenue stream of the existing monitoring contracts.
Amortization expense is included in sales, general and administrative expenses
in the consolidated statements of operations and was $46,353 and $63,125 for the
six month periods ended June 30, 2006, and June 30, 2005, respectively. Included
in the accumulated amortization is $302,298 of impairment losses taken in 2004
reflecting the uncertainty of customer retention as the Company began replacing
their products with their tracNET24-based products.

The composition of goodwill and intangible assets at June 30, 2006, is as
follows:

                                                     Intangibles,
                                                      subject to
                                         Goodwill    Amortization
                                        ----------   ------------
Gross Carrying Amount                   $2,302,179    $ 911,522
  Accumulated Amortization, including
    $302,298 of impairment loss                 --     (721,244)
                                        ----------    ---------
Balance at June 30, 2006                $2,302,179    $ 190,278
                                        ==========    =========

Note 6. Redeemable Convertible Series C Preferred Stock

On June 27, 2005, the Company issued 1,000,000 shares of its $0.01 par value
Series C 8% Cumulative Compounding Exchangeable Preferred Stock. The Preferred
Stock is exchangeable for 4,782,609 shares of Common Stock and warrants to
acquire 6,287,045 shares of Common Stock at an exercise price of $2.30 per
share.

If after June 27, 2010, the closing price of the common stock exceeds $20.00 per
share for at least 120 consecutive trading days, the Company can require the
conversion of the Series C Preferred Stock into common stock in accordance with
the above exchange provisions.

The Preferred Stock is redeemable on the tenth anniversary of the original issue
date. The redemption price per share of the Preferred Stock will equal the per
share original issue price ($11 per share) plus an amount equal to all accrued
but unpaid dividends thereon (and any interest payable thereon). The interest
method will be utilized to accrete the carrying amount of the Preferred Stock
over the ten year period to the earliest redemption date so that the carrying
amount will equal the redemption amount at the earliest possible redemption
date. Due to the accumulated deficit position of the Company, the periodic
accretion will be charged to Additional Paid-In Capital. For the six months
ended June 30, 2006, the accretion amount charged to Additional Paid-In Capital
was $98,259, while the Series C Preferred dividend accrual was $436,385.


                                    Page 10

<PAGE>

Upon any liquidation of the Corporation, no distribution shall be made to the
holders of shares of Common Stock or other stock ranking junior to the Series C
Preferred Stock unless, prior thereto, the holders of shares of Series C
Preferred Stock shall have received an amount per share equal to the Per Share
Original Issue Price plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment,
multiplied by a factor of 105%.

Except as otherwise required by law, the holders of shares of Series C Preferred
Stock shall vote together with the holders of shares of the Common Stock of the
Corporation on all matters submitted to the stockholders of the Corporation and
not as a separate class, and each share of Series C Preferred Stock shall
entitle the holder thereof to 11 votes or the equivalent amount of voting power
thereof as determined by the Board of Directors. In addition, until such time
that less than 500,000 shares of Series C Preferred Stock are outstanding, the
Series C Preferred Stockholders have the ability to appoint a majority of
directors.

Note 7. Lease Obligations

During the quarter ended June 30, 2006, the Company financed the acquisition of
approximately $500,000 of monitoring equipment through two $250,000
sale-leaseback agreements with an entity owned by three shareholders of the
Company. The $500,000 was part of a $2.25 million asset-based credit facility
from the related party for the purchase of its monitoring equipment. The
advances against this line are secured by the Company's revenue generating
monitoring equipment.

The Company has a total of seven capital leases which expire from October 2006
to June 2009. All seven of these capital leases are with related parties. The
assets and the related liabilities under the leases have been recorded at the
present value of the future minimum lease payments using discount rates of 9.50%
to 12.00%. As of June 30, 2006, the aggregate balance on these seven capital
leases totaled $1,319,736.

Note 8. Related Party Transactions

During the quarter ended June 30, 2006, the Company incurred $37,500 in
consulting fees due to Peter Michel, a related party. Mr. Michel is a beneficial
owner in iSECUREtrac Corp. and was appointed President and CEO of the Company
subsequent to June 30, 2006.


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<PAGE>

Item 2. Management's Discussion and Analysis.

General

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 for the year ended December 31, 2005.

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.

The Company develops, markets, and distributes electronic monitoring products
employing global positioning satellite ("GPS") technology and related services
to criminal justice agencies, both in the United States and internationally, for
use in offender management programs. The Company's three principal sources of
revenues are: (i) selling and leasing of monitoring units to criminal justice
agencies, (ii) providing agencies the use of Company's proprietary software
including its web-based tracking and monitoring system known as tracNET24(TM)
and (iii) providing ancillary services such as training, monitoring and data
archiving.

Results of Operations

Equipment Sales Revenue

Equipment Sales Revenue is derived from the sale of offender monitoring
equipment. For the three and six months ended June 30, 2006, equipment sales
revenues were $280,066 and $288,055 compared to $10,876 and $20,486 during the
same periods in 2005. The main reason for the three and six month increase is
the hosting equipment sold to a customer that implemented its own GPS host
monitoring system. Revenues from monitoring equipment sold in conjunction with a
hosting agreement for tracking and monitoring services on tracNet24 are
recognized ratably over the initial term of the hosting agreement which is
typically for one year. Revenues from monitoring equipment sold without a
hosting agreement and from hosting equipment are recognized when goods are
received by the customer. Equipment is shipped FOB destination.

Equipment Leasing and Hosting Revenue

Equipment Leasing and Hosting Revenue is derived from the fees charged to
customers for the use of the Company's offender monitoring software including
tracNET24, hosting offender data, the rental of offender monitoring equipment,
and ancillary charges directly related to the monitoring of offenders. For the
three and six month periods ended June 30, 2006, equipment leasing and hosting
revenues were $1,849,992 and $3,503,464 compared to $1,034,315 and $2,023,059
for the same periods in 2005. This increase is attributable to the increase in
the number of units under lease. Leasing, hosting, and service revenues are
recognized upon performance of the respective service. Leasing and hosting
contracts with customers are typically for twelve months.


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<PAGE>

Gain on Sale-leaseback Transactions

The Company finances much of its monitoring equipment through sale-leaseback
agreements, primarily with a leasing company owned by a related party. Under
these agreements, the Company purchases the monitoring equipment from the
manufacturer, sells it to the leasing company at a gain or at cost, and then
leases it back from the leasing company. If the monitoring equipment is sold to
the leasing company at a gain, this gain is recorded as a liability and
amortized into income over the life of the lease (typically 2-3 years). The Gain
on Sale-leaseback Transactions consists of amortization of this deferred gain.
For the three and six months ended June 30, 2006, the Gain on Sale-leaseback
Transactions with related parties was $83,378 and $183,699 compared to $195,058
and $376,942 during the same periods in 2005. This decrease is attributable to
the maturity of two of the capital leases associated with these transactions. As
of June 30, 2006, the Company had seven capital leases in conjunction with these
transactions. Two of the seven capital leases consisted of equipment being sold
at cost. As of June 30, 2005, the Company had seven capital leases in place in
conjunction with these transactions, all of which consisted of equipment being
sold at a gain.

Service Revenue

Service Revenue consists of sales of non-core services including licensing fees,
server maintenance agreements, and monitoring equipment repairs. For the three
and six months ended June 30, 2006, Service Revenue was $31,014 and $73,726
compared to $20,035 and $40,519 for the comparable periods of 2005. This
increase is attributable to an increase in equipment repairs of deployed
monitoring units.

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. Costs of revenues are recorded as
products are delivered or services are performed. A portion of the cost of
revenues consists of the amortization of product development costs, which began
in March 2002. For the three and six months ending June 30, 2006, Cost of
Revenues was $893,540 and $1,589,674 compared to $663,202 and $1,334,007 during
the same periods in 2005. This increase is primarily due to the increased
amortization, increased communication costs, and 3rd party service and
monitoring costs of supporting additional units in the field.

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 $353,772 and $661,012 for
the three and six months ended June 30, 2006, compared to $234,721 and $411,486
for the same periods in 2005. This increase in research and development expenses
was the result of additional testing and configuration expenses and increased
costs related to the development of our next generation product, including an
increase in research and development staff from seven employees at June 30,
2005, to 12 employees at June 30, 2006.

Sales, General and Administrative

Sales, General and Administrative (SG&A) expenses are all the expenses
associated with the operations of the Company, other than the expenses described
above. These expenses include executive, sales, administrative and accounting
staff payroll, taxes and benefits, rent on property, travel, communications,
office leases and supplies, marketing, advertising, 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, 2006, SG&A
expenses were $1,904,403 and $3,875,027 compared to $1,115,892 and $2,312,759 in
the comparable periods of 2005. The reason for the three and six month increase
was due to the increase in bad debt expense, increased stock based compensation
expense and the payroll associated with the hiring of additional non-Research
and Development staff from 47 employees at June 30, 2005, to 59 employees at
June 30, 2006.


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<PAGE>

Operating Loss

For the three and six months ended June 30, 2006, operating loss was $907,265
and $2,076,769, compared to $753,531 and $1,597,246 for the same periods in
2005. The increase is primarily attributable to increases in Research and
Development and SG&A expenses as described above.

Interest Income

For the three and six months ended June 30, 2006, interest income was $26,180
and $62,801, compared to interest income of $1,961 and $1,966 in the comparable
periods of 2005. This increase was due to the investment of the cash received
from the sale of Preferred Stock and warrants in June 2005, which was not needed
for immediate working capital needs or debt repayment. These funds have been
invested in government securities and certificates of deposits with the
Company's primary bank.

Interest Expense

For the three and six months ended June 30, 2006, interest expense was $42,102
and $103,914, compared to interest expense of $241,675 and $467,407 in the
comparable periods of 2005. This decrease was due to a significant reduction in
the Company's debt in 2005 pursuant to the Company's recapitalization plan.

Net Loss

For the three and six months ended June 30, 2006, the Company had a net loss of
$923,187 and $2,117,882 compared to a net loss of $993,245 and $2,030,850 in the
comparable periods of 2005, for the reasons described above.

Preferred Stock Dividends and Accretion

For the three and six months ended June 30, 2006, preferred stock dividends and
accretion were $268,528 and $534,644, as compared to $7,233 and $7,233 for the
comparable periods of 2005. This increase was due to the Series C Convertible
Preferred Stock being outstanding for the entire period in 2006 compared to
being outstanding for only the last three days of the period ending June 30,
2005. The Series C Convertible Preferred Stock accrues interest at a cumulative
compounded rate of 8.0% per annum.

Net Loss Available to Common Stockholders

For the three and six months ended June 30, 2006, there was a net loss available
to common stockholders of $1,191,715 and $2,652,526 compared to $1,000,478 and
$2,038,083 in 2005. The reasons for these changes are described above.

Liquidity and Capital Resources

For the six months ended June 30, 2006, the Company used $1,344,409 of cash in
operating activities, generated $1,813,854 in investing activities, and used
$360,858 in cash from financing activities. Included in the cash used in
financing activities was the repayment of $436,482 of notes payable held by
institutional investors in May 2006. The total of all cash flow activities
resulted in an increase in the balance of cash for the six months ended June 30,
2006 of $108,587. For the same period of 2005, the Company used $1,936,120 of
cash in operating activities, another $569,238 in investing activities, and
generated $9,983,225 of cash from financing activities. The total of all cash
flow activities through the second quarter of 2005 resulted in an increase in
the balance of cash of $7,477,867.


                                    Page 14

<PAGE>

The Company's principal uses of cash are the payment of operating expenses, the
acquisition of monitoring equipment and the financing of its receivables. In
general, the Company meets its liquidity needs from its current revenues, from
cash and cash equivalents, and through capital leasing arrangements. As of June
30, 2006, the Company had approximately $1.6 million in cash and cash
equivalents. To a large degree, these resources were the result of the sale of
1,000,000 shares of Series C Preferred Stock in June 2005, which resulting in
net proceeds to the Company of $10,578,686.

During the quarter ended June 30, 2006, the Company closed on a $2.25 million
asset-based credit facility from a related party for the purchase of its
monitoring equipment. The advances against this line are secured by the
Company's revenue generating monitoring equipment. During the quarter ended June
30, 2006, the Company took down two $250,000 draws against the established $2.25
million line and structured them as capital lease agreements. In total, as of
June 30, 2006, the Company had seven capital lease facilities in place which
were used to finance offender monitoring equipment. All seven of these capital
leases were sale-leaseback transactions with a related party. Under these
sale-leaseback arrangements, the Company sells the inventory to a third party
leasing company (which is owned by three shareholders of the Company) and then
leases the equipment back. All capital leases are treated as financing
transactions with five of the leases carrying interest rates of 9.50% and two of
them carrying interest rates of 12.00%. Maturity dates on these capital leases
run from October 2006 to June 2009. As of June 30, 2006, the aggregate balance
on these seven capital leases totaled $1,319,736.

The Company is pursuing an additional $2.75 million credit facility to satisfy
its equipment purchases for the near future.

The Company's financial statements have been presented on the basis that it is
able to continue as a going concern, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The
Company believes that its current working capital, combined with the line of
credit described in Note 7, are sufficient to meet its liquidity needs through
the first quarter of 2007. The Company further believes that it has access to
capital, if necessary, that would satisfy liquidity needs beyond the first
quarter of 2007.

Item 3. 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.


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<PAGE>

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

On December 22, 2004, a lawsuit was filed by Satellite Tracking of People, LLC
("STOP") against the Company in United States District Court for the Middle
District of Tennessee. STOP plans to enter into the market for tracking and
monitoring individuals using GPS technology in the United States and has
acquired U.S. rights to the BluTag(R) remote electronic monitoring, tracking and
surveillance technologies. Among other things, STOP alleged that the Company
notified STOP's predecessor in interest that the technology underlying the
BluTag(R) system infringes on two U.S. patents held by the Company. The action
filed by STOP sought a declaratory judgment that (i) STOP's BluTag(R) technology
does not infringe on the Company's patents, (ii) the Company's patents are
invalid and/or (iii) the Company has granted STOP a license under its asserted
patents. The Company denied all material allegations made by STOP and filed a
counter-claim against STOP for patent infringement, seeking an injunction and
damages. In May 2006, the Company entererd into a settlement agreement with
STOP. As a result of the settlement, this litigation has been dismissed.

The Company is not subject to any other material pending or threatened lawsuits.

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

On May 16, 2006, the Company issued a total of 700 shares of common stock to two
directors in partial payment of directors' fees. The shares had a market value
on the date of the board meeting of $2,000. The issuance of these shares is
exempt from registration under Section 4(2) of the Securities Act of 1933.

Item 3. Defaults Upon Senior Securities.

Not Applicable

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

iSt held its 2006 Annual Meeting of Stockholders on May 4, 2006. All matters
placed before security holders received the necessary votes to pass. The
following three individuals were elected to continue a one year term as
directors of iSECUREtrac Corp. until the 2007 Annual Meeting of Stockholders:
Roger J. Kanne, 9,011,702 votes for and 48,000 votes withheld, Ravi Nath
8,926,479 votes for and 133,223 votes withheld, and Thomas E. Wharton Jr.
9,011,752 votes for and 47,950 votes withheld.

Mykonos, as the sole holder of the Series C Preferred Stock, re-appointed Robert
W. Korba, Joseph A. Ethridge, Bruce Leadbetter and General Goh Yong Siang to
serve as directors of the Company for an additional one year term.

Also receiving the necessary votes to pass was the ratification of McGladrey &
Pullen, LLP as our independent auditors for 2006. The results were as follows:
1,000,000 shares of Series C Preferred Stock (each of which is entitled to 11
votes on this matter) and 9,033,019 shares of Common Stock voted for
ratification, 24,308 shares of Common Stock voted against ratification, and
2,375 shares of Common Stock abstained.

The proposal to approve an amendment to the Certificate of Incorporation to
decrease the number of authorized shares of Common Stock from 150,000,000 to
75,000,000 passed. 1,000,000 shares of Series C Preferred Stock (each of which
is entitled to 11 votes on this matter) and 8,939,665 shares of Common Stock
voted for the amendment, 116,052 shares of Common Stock voted against the
amendment, and 3,985 shares of Common Stock abstained.


                                    Page 16

<PAGE>

The proposal to approve the Company's 2006 Omnibus Equity Incentive Plan passed.
1,000,000 shares of Series C Preferred Stock (each of which is entitled to 11
votes on this matter) and 4,279,330 shares of Common Stock voted for the Plan,
1,448,331 shares of Common Stock voted against the Plan, and 96,861 shares of
Common Stock abstained.

Item 5. Other Information.

Not Applicable

Item 6. Exhibits

3.01    Amended and Restated Certificate of Incorporation of the Company, as
        amended.

3.02    Restated Bylaws of the Company (1)

3.03    Certificate of Designations, Preferences and Rights of Series C
        Convertible Preferred Stock of iSt (2)

4.01    Form of Common Stock Certificate (1)

10.01   2006 Omnibus Equity Incentive Plan

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.

(1)   Incorporated by reference from the registrant's registration statement on
      Form 10-SB, filed on June 22, 1999 (Commission File No. 0-26455).

(2)   Incorporated by reference from the registrant's current report under Form
      8-K, filed on June 23, 2005 (Commission File No. 0-26455).


                                    Page 17

<PAGE>

                                    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/ Peter A. Michel
                                            ------------------------------------
                                            Peter A. Michel
                                            President & CEO

                                        Dated: August 11, 2006


                                    Page 18