**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549-1004**




**Form
      10-Q**





**(Mark
      One)**


**x
      Quarterly report
      pursuant to Section 13 or 15(d) of the Securities Exchange**


**Act
      of 1934**




**FOR
      THE QUARTERLY PERIOD ENDED MARCH 31, 2008**





**or**




**o
      Transition report
      pursuant to Section 13 or 15(d) of the Securities**


**Exchange
      Act of 1934**





**For
      the transition period from _______________ to
      _______________**





**Commission
      File Number 000-26455**





**ISECURETRAC
      CORP.**


**(Exact
      name of registrant as specified in its charter)**


**DELAWARE**
              **87-0347787****(State
                  or other jurisdiction of**
              **(I.R.S.
                  Employer Identification No.)****incorporation
                  or organization)**





**5078
      S. 111** **th** **Street**


**OMAHA,
      NEBRASKA 68137**


**(Address
      of principal executive offices, Zip Code)**





**(402)
      537-0022**


**(Registrant’s
      telephone number, including area code)**




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
      the
      preceding 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
o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See
      the definitions of “large accelerated filer”, “accelerated filer” and “smaller
      reporting company in Rule 12b-2 of the Exchange Act. (check one)


Large
      accelerated filer o Accelerated
      filer o


Non-accelerated
      filer o (Do not check if a smaller
      reporting company) Smaller reporting company x





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





The
      number of shares of issuer’s common stock outstanding as of May 1, 2008 was
      10,782,756.










**PART
      I. FINANCIAL INFORMATION**




**Item
      1. Financial
      Statements**




***iSECUREtrac
      Corp. and SUBSIDIARIES***


***CONSOLIDATED
      BALANCE SHEETS***




(Unaudited)****
            
            March 31, 2008
            
            December 31, 2007**ASSETS**Current
                AssetsCash
                and cash equivalents
            
            $
            2,026,145
            
            $
            3,442,712Accounts
                receivable, net of allowance for doubtful accounts of $326,766 in
                2008 and
                $292,669 in 2007
            
            
            2,136,364
            
            
            1,941,902Inventories
            
            
            211,581
            
            
            135,376Prepaid
                expenses and other
            
            
            62,765
            
            
            92,750Total current assets
            
            
            4,436,855
            
            
            5,612,740Leasehold
                improvements and equipment, net of accumulated depreciation of $7,610,793
                in 2008 and $7,041,272 in 2007
            
            
            4,377,671
            
            
            3,875,728Intangibles,
                net of accumulated amortization of $860,657 in 2008 and $850,166
                in
                2007
            
            
            50,865
            
            
            61,356Goodwill
            
            
            2,302,179
            
            
            2,302,179Other
                assets
            
            
            114,504
            
            
            88,425Total assets
            
            $
            11,282,074
            
            $
            11,940,428**LIABILITIES
                AND STOCKHOLDERS' (DEFICIT)**Current
                LiabilitiesAccounts
                payable
            
            $
            1,279,378
            
            $
            1,069,577Accrued
                expenses
            
            
            591,161
            
            
            609,083Current
                maturities of long-term debt
            
            
            750,870
            
            
            622,340Deferred
                revenues & gain on sale-leaseback transactions
            
            
            289,517
            
            
            314,090Accrued
                interest payable
            
            
            230,248
            
            
            30,513Total current liabilities
            
            
            3,141,174
            
            
            2,645,603Long-term
                debt, less current maturities
            
            
            12,543,502
            
            
            12,381,598Redeemable
                convertible Series C preferred stock
            
            
            12,187,735
            
            
            11,882,545Stockholders'
                (deficit)Common
                stock
            
            
            10,782
            
            
            10,779Additional
                paid-in capital
            
            
            55,167,329
            
            
            55,109,333Accumulated
                deficit
            
            
            (71,768,448
            )
            
            (70,089,430
            )Total stockholders' (deficit)
            
            
            (16,590,337
            )
            
            (14,969,318
            )Total liabilities and stockholders'
                (deficit)
            
            $
            11,282,074
            
            $
            11,940,428





See
      Notes
      to Consolidated Financial Statements (unaudited).




Page
          1





***iSECUREtrac
      Corp. and SUBSIDIARIES***


***CONSOLIDATED
      STATEMENTS OF OPERATIONS***


***Three
      Months Ended March 31, 2008 and 2007***


***(Unaudited)***




2008
            
            2007**Revenues:**Equipment
                leasing
            
            $
            2,179,577
            
            $
            1,934,038Administrative,
                field & support service revenues
            
            
            74,453
            
            
            -Equipment
                sales
            
            
            22,242
            
            
            56,208Other
                revenues
            
            
            212,848
            
            
            119,510Gain
                on related party sale-leaseback transactions
            
            
            13,191
            
            
            44,862Total
                revenues
            
            
            2,502,311
            
            
            2,154,618**Operating
                expenses:**Cost
                of revenues
            
            
            1,087,894
            
            
            860,999Research
                and development
            
            
            339,811
            
            
            473,109Sales,
                general and administrative
            
            
            2,251,803
            
            
            2,067,227Total
                operating expenses
            
            
            3,679,508
            
            
            3,401,335Operating
                loss
            
            
            (1,177,197
            )
            
            (1,246,717
            )**Other
                income (expense):**Interest
                income
            
            
            19,224
            
            
            46,475Interest
                expense
            
            
            (264,984
            )
            
            (152,526
            )Total
                other income (expense)
            
            
            (245,760
            )
            
            (106,051
            )Loss
                before provision for income taxes
            
            
            (1,422,957
            )
            
            (1,352,768
            )Provision
                for income taxes
            
            
            -
            
            
            -**Net
                loss**
            
            $
            (1,422,957
            )
            $
            (1,352,768
            )Preferred
                stock dividends and accretion
            
            
            (305,190
            )
            
            (283,617
            )**Net
                loss available to common stockholders**
            
            $
            (1,728,147
            )
            $
            (1,636,385
            )**Basic
                and diluted loss per common share**
            
            $
            (0.16
            )
            $
            (0.15
            )**Weighted
                average shares of common stock outstanding**
            
            
            10,781,218
            
            
            10,773,675





See
      Notes
      to Consolidated Financial Statements (unaudited).




Page
          2




***iSECUREtrac
      Corp. AND SUBSIDIARIES***


***STATEMENT
      OF STOCKHOLDERS' (DEFICIT)***


***For
      the Three Months Ended March 31, 2008***


***(unaudited)***





**Additional****Common Stock**
            
            **Paid -in**
            
            **Accumulated****Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Total****Balance,
                December 31, 2007**
            
            
            10,779,680
            
            $
            10,779
            
            $
            55,109,333
            
            $
            (70,089,430
            )
            $
            (14,969,318
            )Shares
                issued for director's fees
            
            
            3,076
            
            
            3
            
            
            1,997
            
            
            -
            
            
            2,000Stock
                based compensation
            
            
            -
            
            
            -
            
            
            105,128
            
            
            -
            
            
            105,128Series
                C preferred stock dividends
            
            
            -
            
            
            -
            
            
            -
            
            
            (256,061
            )
            
            (256,061
            )Accretion
                to redemption value of preferred stock
            
            
            -
            
            
            -
            
            
            (49,129
            )
            
            -
            
            
            (49,129
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,422,957
            )
            
            (1,422,957
            )**Balance,
                March 31, 2008**
            
            
            10,782,756
            
            $
            10,782
            
            $
            55,167,329
            
            $
            (71,768,448
            )
            $
            (16,590,337
            )





See
      Notes
      to Consolidated Financial Statements (unaudited).




Page
          3





***iSECUREtrac
      CORP. AND SUBSIDIARIES***


***CONSOLIDATED
      STATEMENTS OF CASH FLOWS***


***Three
      Months Ended March 31, 2008 and 2007***


***(unaudited)***





**2008**
            
            **2007****Cash
                Flows From Operating Activities**Net
                loss
            
            $
            (1,422,957
            )
            $
            (1,352,768
            )Depreciation
                and amortization
            
            
            580,012
            
            
            427,581Stock
                based compensation
            
            
            107,128
            
            
            71,598(Increase)
                decrease in accounts receivable
            
            
            (194,462
            )
            
            269,696(Increase)
                in inventories
            
            
            (76,205
            )
            
            (58,892
            )Decrease
                in prepaid expenses
            
            
            29,985
            
            
            4,823Increase
                in accounts payable
            
            
            209,801
            
            
            12,134(Decrease)
                in accrued expenses
            
            
            (17,922
            )
            
            (122,480
            )(Decrease)
                in deferred revenues and gain on sale - leaseback
                transactions
            
            
            (24,573
            )
            
            (51,003
            )Increase
                in accrued interest payable
            
            
            199,735
            
            
            103,562**Net
                cash (used in) operating activities**
            
            
            (609,458
            )
            
            (695,749
            )**Cash
                Flows From Investing Activities**Purchases
                of leasehold improvements and equipment
            
            
            (1,071,464
            )
            
            (151,178
            )(Increase)
                in other assets
            
            
            (26,079
            )
            
            (1,125
            )**Net
                cash (used in) investing activities**
            
            
            (1,097,543
            )
            
            (152,303
            )**Cash
                Flows From Financing Activities**Principal
                proceeds from long-term debt
            
            
            500,000
            
            
            -Principal
                payments on long-term debt
            
            
            (209,566
            )
            
            (234,311
            )**Net
                cash provided by (used in) financing activities**
            
            
            290,434
            
            
            (234,311
            )**(Decrease)
                in cash**
            
            
            (1,416,567
            )
            
            (1,082,363
            )**Cash
                at beginning of period**
            
            
            3,442,712
            
            
            4,341,685**Cash
                at end of period**
            
            $
            2,026,145
            
            $
            3,259,322**Supplemental
                Disclosure of Cash Payments for**Interest
            
            
            65,249
            
            
            48,964





See
      Notes
      to Consolidated Financial Statements (unaudited).




Page
          4




**iSECUREtrac
      CORP. AND SUBSIDIARIES**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**




**Note
      1.** **General**




The
      consolidated balance sheet of iSECUREtrac Corp. (“iSECUREtrac”, or the
“Company”) at December 31, 2007, has been taken from audited consolidated
      financial statements at that date. The condensed consolidated financial
      statements for the three months ended March 31, 2008 and March 31, 2007 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 unaudited 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, 2007. The results
      of operations and cash flows for the three months ended March 31, 2008 are
      not
      necessarily indicative of the results for the entire fiscal year ending December
      31, 2008. Where appropriate, items of an insignificant nature within the
      condensed consolidated financial statements have been reclassified from the
      previous periods’ presentation.




The
      Company believes that its current working capital, combined with the expected
      amounts available through lease financing for its monitoring equipment described
      in note 5, are sufficient to meet its liquidity needs through 2008.   In
      the early part of 2009, depending on the results of operations for 2008, it
      is
      probable the Company will need additional equity or debt financing to have
      sufficient capital to satisfy liquidity needs  in
      2009.  The Company does not have any irrevocable commitments to provide any
      such additional capital at this time and there is no assurance that such
      additional equity or debt financing will be available.  If the Company is
      unable to obtain additional capital, it will need to take other steps, including
      imposition of significant cost reductions, in order to maintain
      operations.




**Note
      2. Common Stock Options and Warrants**




The
      Company may issue stock options and other types of equity-based compensation
      under its 2006 Omnibus Equity Incentive Plan (the “2006 Plan”) which was
      implemented on May 31, 2006. This is the only plan under which the Company
      may
      now issue additional equity-base compensation. The Company also has outstanding
      stock options that were issued under its 2001 Omnibus Equity Incentive Plan
      (the
“2001 Plan”) and which were issued under employment agreements with executive
      officers.




During
      the three months ended March 31, 2008, the Company granted options to purchase
      a
      total of 473,500 shares of common stock to fifty-seven employees pursuant to
      the
      2006 Plan. During the three months ended March 31, 2008, 31,044 options issued
      under the 2006 Plan were forfeited, 63 options issued under the 2001 Plan were
      forfeited and 0 options issued under employment agreements outside the 2006
      Plan
      and the 2001 Plan were forfeited. No options were exercised during the three
      months ended March 31, 2008. The following table shows stock option activity
      during the three month period ended March 31, 2008:




Page
          5


**Options**
            
            **Number of**
              **Shares**
            
            **Weighted Average**
              **Exercise Price Per**
              **Share**
            
            **Weighted Average**
              **Remaining**
              **Contractual Life**
              **(Years)**
            
            **Aggregate**
              **Intrinsic****Value**Outstanding
                at December 31, 2007
            
            
            1,817,580
            
            $
            2.30Granted
            
            
            473,500
            
            
            0.65Exercised
            
            
            -
            
            
            -Forfeited
            
            
            (31,107
            )
            
            1.02Outstanding
                at March 31, 2008
            
            
            2,259,973
            
            $
            1.98
            
            
            6.19
            
            $
            -Exercisable
                at March 31, 2008
            
            
            1,499,303
            
            $
            2.36
            
            
            4.62
            
            $
            -




As
      of
      March 31, 2008, the aggregate intrinsic value of outstanding and exercisable
      options, which is the actual value of the options if exercised, was $0 and
      $0,
      respectively.




During
      the three month period ended March 31, 2008, 295,890 warrants expired and no
      warrants were granted or exercised by warrant holders.




At
      March
      31, 2008, the Company had 2,259,973 outstanding stock options, 6,287,045 shares
      issuable upon exercise of warrants to be issued upon exchange of Preferred
      Stock, and 3,627,035 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.




On
      January 1, 2006, the Company adopted Financial Accounting Standards Board
      (“FASB”) Statement No. 123 (revised 2004), “ *Share-Based
      Payment* ”
(“FAS
      No. 123(R)” or the “Statement”) which requires that the compensation cost
      relating to share-based compensation awards, including grants of employee stock
      options, be recognized in financial statements as these awards become vested,
      based on the grant date fair value of the equity instruments
      issued.




For
      purposes of FAS No. 123(R), the Company estimated the grant date fair value
      of
      each option granted during the periods set forth below using the Black-Scholes
      option pricing model with the following weighted average
      assumptions:




**Three Months Ended**
            
            **Year Ended****March 31, 2008**
            
            **December 31, 2007**Risk
                free interest rate
            
            
            4.31
            %
            
            4.65
            %Expected
                volatility factor
            
            
            84.41
            %
            
            86.59
            %Expected
                option term in years
            
            
            3.5
                to 6.5
            
            
            3.5
                to 6.5Dividends
            
            $
            0.00
            
            $
            0.00Forfeitures
                for senior executives and non-senior executives
            
            
            19%
                and 20
            %
            
            19%
                and 20
            %




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 3.5 years to 6.5 years.




Expected
      volatilities are based on historical stock prices over the two years prior
      to
      the stock option award.




Under
      FAS
      No. 123(R), the Company is required to estimate forfeitures of stock options.
      The forfeiture rate is the rate at which options are expected to be forfeited
      prior to full vesting. 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 senior executive and non-senior executive option grants
      is
      19% and 20%, respectively. This rate is recalculated on an annual basis.




Page
          6


The
      annual rate of quarterly dividends is 0% since iSECUREtrac has historically
      not
      paid dividends on its common stock.




The
      Company recorded compensation expense of $105,128 and $69,598 for the three
      months ended March 31, 2008 and March 31, 2007, respectively, related to
      stock-based compensation awards.




As
      of
      March 31, 2008, there was approximately $579,402 of total unrecognized
      compensation costs related to non-vested stock option agreements granted to
      the
      Company’s executives and employees. The future compensation expense the Company
      will recognize if and as these options vest according to their contractual
      terms
      is as follows:




2008
            
            $
            305,0142009
            
            
            265,8862010
            
            
            8,502Total
            
            $
            579,402




**Note
      3. Leasehold Improvements and Equipment**




The
      cost
      and accumulated depreciation of our leasehold improvements and equipment as
      of
      March 31, 2008 and December 31, 2007 are as follows:




**March
                31, 2008**
            
            **December
                31, 2007****Cost**
            
            **Accumulated**
              **Depreciation**
            
            **Net Book**
              **Value**
            
            **Cost**
            
            **Accumulated**
              **Depreciation**
            
            **Net Book**
              **Value**Equipment
            
            $
            916,815
            
            $
            481,833
            
            $
            434,982
            
            $
            844,307
            
            $
            446,991
            
            $
            397,316Leasehold
                improvements
            
            
            227,229
            
            
            68,690
            
            
            158,539
            
            
            227,229
            
            
            54,047
            
            
            173,182Monitoring
                equipment
            
            
            10,844,420
            
            
            7,060,270
            
            
            3,784,150
            
            
            9,845,464
            
            
            6,540,234
            
            
            3,305,230Total
                leasehold improvements and equipment
            
            $
            11,988,464
            
            $
            7,610,793
            
            $
            4,377,671
            
            $
            10,917,000
            
            $
            7,041,272
            
            $
            3,875,728




**Note
      4. Goodwill and Intangible Assets Subject to Amortization**




Goodwill
      is the excess of the cash paid over the fair value of the
      net
      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 at the end of each calendar year.  The
      Company determined that there was no impairment of goodwill as of December
      31,
      2007.




The
      Company also separately records other intangible assets that can be identified
      and assigned a value.  At March 31, 2008, such intangible assets consisted
      solely of customer monitoring contracts acquired in a prior acquisition. The
      Company amortizes the initial carrying value attributable to these monitoring
      contracts based on the projected revenue stream of the monitoring contracts.
      This amortization expense is included in sales, general and administrative
      expenses in the consolidated statements of operations and equaled $10,491 and
      $20,642 for the three month periods ended March 31, 2008, and March 31, 2007,
      respectively. These intangible assets are also tested for impairment on an
      annual basis.




Page
          7




The
      composition of goodwill and intangible assets at March 31, 2008 and December
      31,
      2007, is as follows:




**March
                31, 2008**
            
            **December
                31, 2007****Intangibles, subject**
            
            
            
            **Intangibles,****subject******
            
            **Goodwill**
            
            **to Amortization**
            
            **Goodwill**
            
            **to Amortization**Gross
                Carrying Amount
            
            $
            2,302,179
            
            $
            911,522
            
            $
            2,302,179
            
            $
            911,522Accumulated
                Amortization
            
            
            -
            
            
            (860,657
            )
            
            -
            
            
            (850,166
            )Balance
            
            $
            2,302,179
            
            $
            50,865
            
            $
            2,302,179
            
            $
            61,356





The
      estimated aggregate amortization expense of the intangibles is as
      follows:





2008
            
            
            31,4722009
            
            
            19,393Total
            
            $
            50,865




**Note
      5. Long-Term Debt**




Long-term
      debt consists of capital leases used to finance the acquisition of monitoring
      equipment and secured borrowings for working capital.





As
      of
      March 31, 2008, the Company had capital lease facilities in place which were
      used to finance the acquisition of approximately $2,250,000 of monitoring
      equipment with AHK Leasing, LLC (“AHK”), a company controlled by three
      stockholders, one of which is a current director. Under these sale-leaseback
      arrangements, the Company sells the inventory to AHK and then leases the
      equipment back. AHK has indicated that it will continue to provide lease
      financing for additional monitoring equipment throughout 2008. Maturity dates
      on
      these capital leases run from June 2009 to March 2011. 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 11.25% to 12.50%.
      As
      of March 31, 2008, the aggregate balance on these capital leases totaled
      $1,416,897. For the three months ended March 31, 2008 and March 31, 2007,
      interest expense to AHK was $34,409 and $44,015, respectively. There was no
      accrued interest at March 31, 2008 and December 31, 2007 to AHK.





As
      of
      March 31, 2008, the Company had outstanding borrowings of $11,877,475 under
      a
      secured Promissory Note payable and associated Credit and Security Agreement
      (the “Crestpark Note”) with Crestpark LP, Inc. (the “Lender”). Principal on the
      Crestpark Note is due on the earlier of (i) July 1, 2010 or (ii) the first
      date on which the Company either issues equity securities or arranges for
      additional indebtedness (other than trade indebtedness incurred in the ordinary
      course of its business) in a transaction or series of transactions which
      generates aggregate net proceeds to the Company of not less than the then
      current principal amount outstanding under the Crestpark Note, plus all accrued
      but unpaid interest. The Company may prepay the Crestpark Note at any time
      without premium or penalty. The Crestpark Note provides, among other things,
      that $6,455,250 of the borrowings thereunder bears interest at 7.0% per annum
      and that such interest will be due and payable at maturity of the Crestpark
      Note. The remaining $5,422,225 of borrowings (the “Floating Tranche”) under the
      Crestpark Note bears interest at a floating rate equal to 2% over the prime
      rate
      (the “Base Rate”). The portion of the interest on the Floating Tranche
      determined by the Base Rate will be payable at maturity, but the remaining
      portion of the interest representing the 2% premium over the Base Rate is
      payable monthly. Accrued interest on the Crestpark Note at March 31, 2008 and
      December 31, 2007, equaled $230,248 and $30,513, respectively.





Total
      interest expense for the Company for the three months ended March 31, 2008
      and
      March 31, 2007, was $264,984 and $152,526, respectively. Of that amount,
      $261,256 and $147,577 was expensed to related parties under the AHK Capital
      Leases and the Crestpark Note for the three months ended March 31, 2008 and
      March 31, 2007, respectively.




Page
          8




**Note
      6. Redeemable Exchangeable 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 “Series C Preferred Stock”).
 The Series C 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 at anytime at the discretion of the preferred
      stockholder.




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. As of
      March 31, 2008, the Company had accrued Series C Preferred Stock dividends
      totaling $2,612,022 and accretion to redemption value of the Series C Preferred
      Stock totaling $540,423. Of these amounts, $256,061 and $49,129, respectively,
      were the amounts accrued during the three months ended March 31, 2008.




Upon
      any
      liquidation of the Company, no distribution can 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 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
      vote together with the holders of shares of the common stock of the Company
      on
      all matters submitted to the stockholders of the Company and not as a separate
      class, and each share of Series C Preferred Stock entitles 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. Recent Accounting Pronouncements**




In
      September 2006, the FASB issued SFAS No. 157, *Fair
      Value Measurements* (“SFAS
      No. 157”). SFAS No. 157 defines fair value, establishes a framework for
      measuring fair value under generally accepted accounting principles and expands
      disclosure about fair value measurements. SFAS No. 157 emphasizes that fair
      value is a market-based measurement, not an entity-specific measurement.
      Therefore, a fair value measurement should be determined based on the
      assumptions that market participants would use in pricing the asset or
      liability. This statement clarifies that market participant assumptions include
      assumptions about risk. A fair value measurement should include an adjustment
      for risk if market participants would include one in pricing the related asset
      or liability, even if the adjustment is difficult to determine. This statement
      also clarifies that market participant assumptions should also include
      assumptions about the effect of a restriction on the sale or use of an asset.
      This statement clarifies that fair value measurement for a liability should
      reflect nonperformance risk (the risk that the obligation will not be
      fulfilled). This statement expands disclosures about the use of fair value
      to
      measure assets and liabilities in interim and annual periods subsequent to
      initial recognition. The disclosures focus on the inputs used to measure fair
      value and for recurring fair value measurements using significant unobservable
      inputs and the effect of the measurements on earnings (or changes in net assets)
      for the period. SFAS No. 157 is effective for financial statements issued for
      fiscal years beginning after November 15, 2007. In February 2008, FASB
      issued FASB Staff Position (“FSP”) FAS 157-2, *Effective
      Date of FASB Statement No. 157,* which
      delays the effective date of SFAS 157 for nonfinancial assets and nonfinancial
      liabilities that are recognized or disclosed in the financial statements on
      a
      nonrecurring basis. The FSP partially defers the effective date of SFAS 157
      to
      fiscal years beginning after November 15, 2008, and interim periods within
      those
      fiscal years for items within the scope of this FSP. The adoption of SFAS 157
      did not have a material effect on the Company’s financial position or results of
      operations.  FSP FAS 157-2 is not expected to have a future material effect
      on the Company’s financial position or results of
      operations.




Page
          9




In
      February 2007, the FASB issued SFAS No. 159, *The
      Fair Value Option for Financial Assets and Financial
      Liabilities* (“SFAS
      No. 159”). SFAS No. 159 permits entities to choose to measure many financial
      instruments and certain other items at fair value and establishes presentation
      and disclosure requirements designed to facilitate comparisons between entities
      that choose different measurement attributes for similar types of assets and
      liabilities. The statement is effective for fiscal years beginning after
      November 15, 2007. The adoption of SFAS No. 159 did not have a material effect
      on the Company’s financial condition or results of operations.





In
      December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in
      consolidated Financial Statements - an Amendment of ARB No. 51." This statement
      requires that noncontrolling or minority interests in subsidiaries be presented
      in the consolidated statement of financial position within equity, but separate
      from the parents' equity, and that the amount of the consolidated net income
      attributable to the parent and to the noncontrolling interest be clearly
      identified and presented on the face of the consolidated statement of income.
      SFAS No. 160 is effective for the fiscal years beginning on or after December
      15, 2008. Currently the Company does not anticipate that this statement will
      have an impact on its financial statements.





In
      December 2007, the FASB issued SFAS No. 141 (Revised) “Business Combinations”.
      SFAS No. 141 (Revised) establishes principles and requirements for how the
      acquirer of a business recognizes and measures in its financial statements
      the
      identifiable assets acquired, the liabilities assumed, and any noncontrolling
      interest in the acquiree. The statement also provides guidance for recognizing
      and measuring the goodwill acquired in the business combination and determines
      what information to disclose to enable users of the financial statements to
      evaluate the nature and financial effects of the business combination. The
      guidance will become effective for the fiscal year beginning after December
      15,
      2008. Management does not anticipate that SFAS No. 141 (Revised) will have
      an
      impact on the Company’s financial statements upon adoption.





In
      March
      2008, the Financial Accounting Standards Board (“FASB”) issued Statement of
      Financial Accounting Standards No. 161, *Disclosures
      about Derivative Instruments and Hedging Activities* (“Statement No. 161”) *.* The new
      standard is intended to improve financial reporting about derivative instruments
      and hedging activities by requiring enhanced disclosures to enable investors
      to
      better understand their effects on an entity’s financial condition, financial
      performance, and cash flows. It is effective for financial statements issued
      for
      fiscal years and interim periods beginning after November 15, 2008.
      Statement No. 161 will impact disclosures only and will not have an impact
      on the Company’s consolidated financial condition, results of operations or cash
      flows.




**Note** **8.
      Contingencies**




On
      November 27, 2007, iSecureTrac Corp. (the “Company”) and Pro Tech
      Monitoring, Inc. (“Pro Tech”) entered into a Confidential Settlement Agreement
      (the “Settlement Agreement”), pursuant to which the parties agreed to compromise
      and settle all claims and disputes related to a lawsuit filed by Pro Tech
      against the Company in the United States District Court for the Middle District
      of Florida in which Pro Tech alleged that the Company had infringed on a U.S.
      patent held by Pro Tech relating to GPS tracking and monitoring apparatus and
      systems. Pro Tech was seeking an injunction and substantial monetary damages
      from the Company.




Page
          10




Pursuant
      to the Settlement Agreement, Pro Tech has caused the dismissal of its lawsuit
      against the Company. In consideration, the Company paid Pro Tech $800,000 in
      cash upon execution of the Settlement Agreement and agreed to, and did purchase
      $600,000 worth of sobriety monitoring equipment from Pro Tech prior to December
      31, 2007. The $800,000 was included in sales, general and administrative
      expenses for the year ended December 31, 2007. In addition, the Company has
      agreed to make a modification to its GPS tracking equipment to eliminate or
      disable a component that allegedly infringed on Pro Tech’s patent. To the extent
      this component is not removed or disabled from the Company’s equipment by
      January 27, 2008, the Company will be subject to royalty payments on unmodified
      equipment in the field which escalate over time. As of March 31, 2008, the
      Company has expensed and accrued $25,615 and $13,670 of settlement royalty
      costs, respectively. The Company entered into the Settlement Agreement without
      admission of liability and solely to avoid the expense and uncertainty of
      litigation.





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




**I** **tem
      2. Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations.**




**General**




Discussions
      of certain matters contained in this Quarterly Report on Form 10-Q 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-Q, 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 the Company’s Form 10-KSB filed for the year ended December 31,
      2007.




The
      following discussion is intended to provide a better understanding of the
      significant changes in trends relating to the Company’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.




**Overview**




iSECUREtrac
      develops, markets, leases and services products that assist in “monitoring
      compliance and modifying behavior” of individuals who are under the supervision
      of the criminal justice system and social service agencies, primarily in the
      United States.




The
      Company’s principal sources of revenue are daily leasing of electronic
      monitoring equipment including access to the corresponding web-based monitoring
      software, and providing administrative, field and support services, generally
      charged on a per offender basis.




Page
          11




**Results
      of Operations** ****





***Total
      Revenues***


For
      the
      three month period ended March 31, 2008, the Company had total revenue of
      $2,502,311, an increase of 16% over the total revenue of $2,154,618 recorded
      for
      the three months ended March 31, 2007. The Company’s principal sources of
      revenue (daily leasing of electronic monitoring equipment and administrative,
      field and support services) grew 17% during the comparable periods. The increase
      in revenue is a result of an increase in the number of units under lease and
      the
      expansion of monitoring center services revenue to include GPS equipment.





***Cost
      of Revenues***


Cost
      of
      revenues represents all direct costs related to delivery of monitoring equipment
      including amortization of the acquisition costs, repairs and maintenance of
      the
      monitoring equipment, transportation costs, communication costs associated
      with
      the equipment, as well as costs to upgrade existing units for advancements
      in
      technology. Certain costs such as communication costs, shipping and amortization
      increased during the three months ended March 31, 2008 compared to the three
      months ended March 31, 2007, as a result of additional units under lease.
      However, these increases were offset by reductions in equipment upgrade costs
      resulting in total cost of revenues for the quarter ended March 31, 2008
      increasing $226,895 over the same period of 2007.





***Research
      and Development Expenses***


Research
      and Development (R&D) expenses represent the on-going direct costs
      associated with the development of the Company’s proprietary hardware and
      software including staffing expenses for the Company’s own engineers and
      software developers, the cost of outside contracted engineering and design,
      and
      the actual costs of components, prototypes, and testing equipment and services
      used in the product development functions.





Research
      and Development expenses for the three months ended March 31, 2008 were
      $339,811, a decrease of $113,298 (28%) over the $473,109 expensed during the
      three months ended March 31, 2007. The main reason for the decrease in R&D
      costs over the comparable periods was the completion of the development and
      testing of the Company’s next generation product, the System 5000, in the fourth
      quarter of 2007.





***Sales,
      General and Administrative Expenses***


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 payroll, taxes and benefits and related travel for
      executive, sales, administrative, customer support and accounting staff. In
      addition these costs include rent on property, corporate communications, office
      leases and supplies, marketing, advertising, trade shows, recruiting and
      training expenses, professional fees and bad debt expense.





For
      the
      three months ended March 31, 2008, SG&A expenses increased $184,576 or 9%,
      to $2,251,803 from $2,067,227 incurred in the comparable period in 2007.
      Significant increases and decreases of SG&A expense in the comparable
      periods are highlighted below:




o
            Compensation
                expense increased $160,989 due to the increase in staffing levels
                made in
                mid 2007 in customer facing areas such as sales, repair and our monitoring
                center.




Page
          12




o
            Consulting
                fees increased $82,836 as the Company relied more heavily on outside
                consultants and lobbyists to respond to an increasing number of requests
                for proposals and changes in legislation.




o
            Stock
                option expenses increased approximately $36,000 as a result of the
                stock
                options issued by the Company in January 2008.  There were fewer
                stock options issued in the first quarter of
                2007.




o
            Various
                other expenses including Bad Debt Expense, Insurance Expense and
                Scrapped
                or Damaged Equipment declined an aggregate of approximately $95,000.




***Interest
      Expense, Net***


Net
      interest expense represents the total interest expense incurred by the Company
      reduced by the interest income earned by the Company during the year. Net
      interest expense increased by $139,709 from $106,051 during the three months
      ended March 31, 2007 to $245,760 during the comparable period in 2008. The
      increase is attributable to the increase in equipment purchased under capital
      leases, as well as the additional borrowings from Crestpark LP, Inc in late
      2007. As a result of the additional borrowing from Crestpark LP and the
      Company’s continuing use of capital leases to finance its equipment purchases,
      we expect to see net interest expense continue to grow throughout 2008.





***Net
      Loss***


The
      Company’s net loss for the three months ended March 31, 2008 was $1,422,957, an
      increase of $70,189 over the comparable period in 2007 for the reasons described
      above.





***Preferred
      Stock Dividends and Accretion***




For
      the
      three months ended
      March 31, 2008, preferred stock dividends and accretion totaled $305,190, as
      compared to $283,617 for the three months ended March 31, 2007. This increase
      was due to compounding interest on accrued but unpaid dividends on our Series
      C
      Preferred Stock. The Series C Exchangeable Preferred Stock accrues interest
      at a
      cumulative compounded rate of 8.0% per annum.




**Liquidity
      and Capital Resources**




For
      the
      three months ended March 31, 2008, the Company used $609,458 of cash in
      operating activities, used another $1,097,543 in investing activities, and
      generated $290,434 in cash from financing activities. The total of all cash
      flow
      activities resulted in a decrease in the balance of cash for the three months
      ended March 31, 2008 of $1,416,567. For the same period of 2007, the Company
      used $695,749 of cash in operating activities, used another $152,303 in
      investing activities, and used $234,311 in cash from financing activities.
      The
      total of all cash flow activities through the first quarter of 2007 resulted
      in
      a decrease in the balance of cash of $1,082,363.




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
      March
      31, 2008, the Company had approximately $2,026,145 in cash and cash equivalents.
      These resources are what remain of the additional amount borrowed by the Company
      in the fourth quarter of 2007 under its secured loan from Crestpark LP, Inc.
      (“Crestpark”) an affiliate of Mykonos 6420 LP (“Mykonos”), the sole holder of
      the Company’s Series C Preferred Stock (the “Crestpark Note”). The total amount
      of the Crestpark Note is $11,877,475. Principal on the Crestpark Note is due
      on
      the earlier of (i) July 1, 2010 or (ii) the first date on which the Company
      either issues equity securities or arranges for additional indebtedness (other
      than trade indebtedness incurred in the ordinary course of its business) in
      a
      transaction or series of transactions which generates aggregate net proceeds
      to
      the Company of not less than the then current principal amount outstanding
      under
      the Crestpark Note, plus all accrued but unpaid interest. The Company may prepay
      the Crestpark Note at any time without premium or penalty. The Crestpark Note
      provides, among other things, that $6,455,250 of the borrowings thereunder
      bears
      interest at 7.0% per annum and that such interest will be due and payable at
      maturity of the Crestpark Note. The remaining $5,422,225 of borrowings (the
      “Floating Tranche”) under the Crestpark Note bears interest at a floating rate
      equal to 2% over the prime rate (the “Base Rate”). The portion of the interest
      on the Floating Tranche determined by the Base Rate will be payable at maturity,
      but the remaining portion of the interest representing the 2% premium over
      the
      Base Rate is payable monthly. Borrowings under the Crestpark Note are secured
      by
      a first security interest in all of the assets of the Company except that
      Crestpark’s security interest in certain monitoring equipment is subordinate to
      the interest of AHK under capital lease facilities described below. The terms
      of
      the Crestpark Note were approved by a Special Committee of the Board of
      Directors consisting solely of disinterested directors.




Page
          13




As
      of
      March 31, 2008, the Company had capital lease facilities in place which were
      used to finance the acquisition of approximately $2,250,000 of monitoring
      equipment with AHK Leasing, LLC (“AHK”), a company controlled by three
      stockholders, one of which is a current director. Under these sale-leaseback
      arrangements, the Company sells the inventory to AHK and then leases the
      equipment back. AHK has indicated that it will continue to provide lease
      financing for additional monitoring equipment throughout 2008. Maturity dates
      on
      these capital leases run from June 2009 to March 2011. 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 11.25% to 12.50%.
      As
      of March 31, 2008, the aggregate balance on these capital leases totaled
      $1,416,897, of which $750,870 is current and the balance of $666,027 is
      classified as long-term debt.




The
      Company believes that its current working capital, combined with the expected
      amounts available through lease financing for our monitoring equipment described
      above are sufficient to meet its liquidity needs through 2008.   In the
      early part of 2009, depending on the results of operations for 2008, it is
      probable the Company will need additional equity or debt financing to have
      sufficient capital to satisfy liquidity needs  in
      2009.  The Company does not have any irrevocable commitments to provide any
      such additional capital at this time and there is no assurance that such
      additional equity or debt financing will be available.  If the Company is
      unable to obtain additional capital, it will need to take other steps, including
      imposition of significant cost reductions, in order to maintain
      operations.




**Application
      of Critical Accounting Estimates**




Management
      uses estimates and assumptions in preparing our financial statements in
      accordance with accounting principles generally accepted in the United States.
      These estimates and assumptions affect the reported amounts of assets and
      liabilities, the disclosure of contingent assets and liabilities, and the
      reported revenues and expenses. On an on-going basis, we evaluate our estimates
      and assumptions based upon historical experience and various other factors
      and
      circumstances. Management believes that our estimates and assumptions are
      reasonable under the circumstances; however, actual results may vary from these
      estimates and assumptions under different future circumstances. We do not
      believe that any of the accounting estimates are critical at this time, however
      we expect to continue to review our accounting estimates in order to determine
      if any of these accounting estimates are critical. For further discussion of
      our
      significant accounting policies, refer to Note 1 - “Nature
      of Business
      and Significant Accounting Policies” to the Consolidated Financial Statements in
      our Annual Report on Form 10-KSB for the fiscal year ended December 31,
      2007.


Page
          14




**Off-Balance
      Sheet Arrangements**





We
      do not
      have any off-balance sheet arrangements.




**Item
      3. Quantitative and Qualitative Disclosures About Market
      Risk**





Management
      does not believe that there is any material market risk exposure with respect
      to
      derivative or other financial instruments that would require disclosure under
      this item.




**Item
      4. 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.




The
      Company’s principal executive officer and principal financial officer determined
      that 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




**PART
      II. OTHER INFORMATION**




**Item
      1. Legal Proceedings.** ****




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




**Item
      1A. Risk Factors.**




Not
      Applicable




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




On
      February 25, 2008, the Company issued a total of 3,076 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.**




None




**Item
      5. Other Information.**




None




**Item
      6. Exhibits.**




3.1
            Amended
                and Restated Certificate of Incorporation of the Company, as amended
                (3)




3.2
            Restated
                Bylaws of the Company (1)




3.3
            Certificate
                of Designations, Preferences and Rights of Series C 8% Cumulative,
                Compounding Exchangeable Preferred Stock of the Company
                (2)




4.1
            Form
                of Common Stock Certificate (1)




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 on Form 8-K, filed on
                June 23, 2005 (Commission File No.
                0-26455).*




*(3)*
            *Incorporated
                by reference from the registrant’s current report on Form 8-K, filed on
                December 14, 2006 (Commission File No.
                0-26455).*




Page
          16




**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. MichelPeter
                A. Michel*President
                & CEO*Dated:
                May 7, 2008




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          17