ITRACKR SYSTEMS INC - FORM 10-Q

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EX-31.1 - ITRACKR SYSTEMS INC	v186101_ex31-1.htm
EX-31.2 - ITRACKR SYSTEMS INC	v186101_ex31-2.htm
EX-32.2 - ITRACKR SYSTEMS INC	v186101_ex32-2.htm
EX-32.1 - ITRACKR SYSTEMS INC	v186101_ex32-1.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2010

¨ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File No. 0-28413

ITRACKR SYSTEMS, INC.

(A Development Stage Company)(formerly Must Haves, Inc.)

(Exact name of registrant as specified in its charter)

Florida (State or other jurisdiction of incorporation or organization)	05-0597678 (I.R.S. Employer Identification Number)

20423 State Road 7 Suite F6490 Boca Raton, FL (Address of principal executive offices)	33498 (Zip Code)

(561) 213-4458 (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 requirement for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

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		Smaller reporting company	þ

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

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. At May 17, 2010 the registrant had outstanding 19,705,999 shares of common stock, no par value per share.

EXPLANATORY NOTE

On January 12, 2010, the Company closed a share exchange transaction (the “Share Exchange”) pursuant to which it (i) became the 100% parent of iTrackr, Inc., a Florida corporation (“iTrackr”), (ii) assumed the operations of iTrackr, and (iii) changed its name from Must Haves, Inc. to iTrackr Systems, Inc. The Company reported the closing of the Share Exchange in the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 19, 2010. This Quarterly Report on Form 10-Q contains information regarding the Company and iTrackr, as indicated herein.

ITRACKR SYSTEMS, INC.

FORM 10-Q

TABLE OF CONTENTS

		PAGE
PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2010 (Unaudited)
	and December 31, 2009	1

	Consolidated Statements of Operations (Unaudited)
	For the Three Months Ended March 31, 2010 and 2009	2

	Consolidated Statements of Cash Flows (Unaudited)
	For the Three Months Ended March 31, 2010 and 2009	3

	Notes to Consolidated Financial Statements (Unaudited)	4-16

Item 2.	Management's Discussion and Analysis of Financial Condition and
	Results of Operations	17-21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21

Item 4.	Controls and Procedures	21

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	22

Item 1A.	Risk Factors	22

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 3.	Defaults Upon Senior Securities	22

Item 4.	Removed and Reserved	22

Item 5.	Other Information	22

Item 6.	Exhibits	23

Signatures		2 3

Item 1. Financial Statements.

iTrackr Systems, Inc.
(A Development Stage Company)(formerly Must Haves, Inc.)
Balance Sheets

	March 31,			December 31,
	2010			2009
Assets
Current Assets
Cash	$	35,654		$	3,223
Accounts receivable		7,264			5,786
Other current assets		1,562			-
Total Current Assets		44,480			9,009

Fixed assets (Note B)		206,211			206,211
Accumulated depreciation		(115,908	)		(106,856	)
Net fixed assets		90,303			99,355
Goodwill (Note C)		92,697			-
Total Assets	$	227,480		$	108,364

Liabilities and Stockholders' Deficit
Current Liabilities
Accounts payable & accrued expenses (Note D)	$	549,815		$	524,879
Convertible promissory notes (Note E)		-			25,000
Promissory notes - related party (Note E)		152,312			151,312
Warrant liability (Note H)		50,000			-
Total Current Liabilities		752,127			701,191

Total Liabilities		752,127			701,191

Stockholders' Deficit (Note F)
Common stock, no par value 100,000,000 shares authorized; issued and outstanding 15,654,051 and 13,990,413 at March 31, 2010 and December 31, 2009, respectively.		1,473,788			980,148
Common stock payable		1,544,445			1,451,979
Deficit accumulated during the development stage		(3,542,880	)		(3,024,954	)
Total stockholders' deficit		(524,647	)		(592,827	)
Total Liabilities and Stockholders' Deficit	$	227,480		$	108,364

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.
(A Development Stage Company)(formerly Must Haves, Inc.)
Statements of Operation
For the Three Months Ended March 31, 2010 and 2009 and the Period May 10, 2006 (Inception) to March 31, 2010

	Three Months Ended						May 10, 2006
	March 31,						(Inception) to
	2010			2009			March 31, 2010
Revenue	$	10,742		$	1,095		$	40,072

Operating Expenses
Personnel		10,405			73,880			1,337,201
Professional fees		62,556			12,630			879,822
Stock compensation		428,459			8,443			1,031,816
Travel and entertainment		-			-			39,547
Facilities		-			-			30,238
Communications		1,899			2,131			21,001
Marketing		-			4,796			49,865
Website		6,242			4,981			132,737
Depreciation		9,051			8,949			115,907
General		6,313			6,249			35,591

Total operating expenses		524,925			122,059			3,673,725

Loss from operations		(514,183	)		(120,964	)		(3,633,653	)

Other Income and (Expense)
Interest expense		(3,743	)		(25,365	)		(179,960	)
Other expense		-			-			(173,000	)
Other income		-			-			443,733
Total other income and (expense)		(3,743	)		(25,365	)		90,773

NET LOSS	$	(517,926	)	$	(146,329	)	$	(3,542,880	)

Net loss per common share basic and diluted	$	(0.027	)	$	(0.010	)
Weighted average common shares outstanding basic and diluted		19,428,983			14,004,438

The average shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:

Warrants	1,844,133	1,050,000
Stock options	5,505,000	7,255,000
Convertible promissory notes	-	2,305,803

The accompanying notes are an integral part of these financial statements

iTrackr Systems, Inc.

(A Development Stage Company)(formerly Must Haves, Inc.)

Statements of Cash Flows

For the Three Months Ended March 31, 2010 and 2009 and the Period May 10, 2006 (Inception) to March 31, 2010

	Three Months Ended						May 10, 2006
	March 31,						(Inception) to
	2010			2009			March 31, 2010

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(517,926	)	$	(146,329	)	$	(3,542,880	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Depreciation		9,051			8,949			115,906
Asset impairment		-			-			138,000
Compensation expense on fair market value of options issued		-			8,443			178,844
Compensation expense on fair value of warrants issued		320,459			-			342,959
Stock compensation expense		108,000			-			510,013
Common stock issued for accrued interest		466			-			163,237
Changes in operating accounts:								-
Accounts receivable		(1,478	)		-			(7,264	)
Other current assets		-			-			-
Accounts payable and accrued expenses		(4,236	)		22,759			520,643
Other current liabilities		-			-			-
CASH (USED) BY OPERATING ACTIVITIES		(85,664	)		(106,178	)		(1,580,542	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in merger		95			-			95
Acquisition of furniture and equipment		-			-			(206,211	)
Other investing activities		-			-			(138,000	)
CASH PROVIDED (USED) BY INVESTING ACTIVITIES		95			-			(344,116	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of stock warrants		50,000			-			50,000
Issuance of common stock for cash		50,000			-			50,000
Repayment of promissory notes		-			-			(45,000	)
Repayment of related party notes		-			-			(40,750	)
Proceeds from promissory notes		17,000			-			1,903,750
Proceeds from related party notes		1,000			-			42,312
CASH PROVIDED BY FINANCING ACTIVITIES		118,000			-			1,960,312

NET INCREASE (DECREASE) IN CASH		32,431			(106,178	)		35,654
CASH, beginning of period		3,223			183,144			-
CASH, end of period	$	35,654		$	76,966		$	35,654

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Taxes paid	$	-		$	-		$	-
Interest paid	$	-		$	-		$	-

NON-CASH OPERATING ACTIVITIES:
Value of Common Stock issued in exchange for services	$	108,000		$	-		$	510,013
Value of Common Stock issued for accrued interest	$	466		$	-		$	163,237
Value of Common Stock issued for debt principle	$	42,000		$	-		$	1,708,000

The accompanying notes are an integral part of these financial statements

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Note A-Organization and Summary Of Significant Accounting Policies

Basis of Presentation

The unaudited financial statements of iTrackr Systems, Inc. as of March 31, 2010 and for the three months ended March 31, 2010and 2009 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for complete financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2009 as filed with the Securities and Exchange Commission as part of our Form 10-K filed on April 12, 2010. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

Organization

iTrackr, Inc. (the “Company”) was formed on May 10, 2006 to develop, market and commercialize a product and inventory search application through a social networking site designed to leverage the best of Internet and Mobile technologies. We have taken the best of several burgeoning markets, including eCommerce, social networking and mobile content, and developed what we believe is a powerful platform that drives value to consumers, retailers and advertising and marketing firms.

iTrackr intends to introduce Internet and Mobile social merchandizing technology platforms. Social merchandizing applies the variety of traditional marketing practices to promote products and services to a community of individuals via social networking technologies. iTrackr is similar to MySpace and Facebook; however, our members’ interests are not in diary or event blogging, but in the timely location of products and services which can be acquired and consumed on a local level.

iTrackr enables consumers to search and track merchandise, letting the consumer know which retail locations in a local zip code are stocking the queried merchandise, as well as the comparative prices. In addition, if the item is not in stock, the consumer can request that iTrackr notify them via mobile text message or email when the item is delivered to a local retailer and where that retailer is located.

In 2009, iTrackr purchased online customers support software technology from Chatstat for approximately $95,000. iTrackr has launched its customer support chat software which facilitates real-time customer support and expert advice, and paid transactions.

On January 12, 2010, the Company closed a share exchange transaction pursuant to which it (i) became the 100% parent of iTrackr, Inc., a Florida corporation (“iTrackr”), (ii) assumed the operations of iTrackr, and (iii) changed its name from Must Haves, Inc. to iTrackr Systems, Inc.

Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplate continuation of the Company as a going concern. Since inception, the Company has been engaged primarily in product development. In the course of funding development activities, the Company has sustained operating losses since inception and has an accumulated deficit of $ 3,542,880and $3,024,954 at March 31, 2010 and December 31, 2009, respectively. In addition, the Company has negative working capital of $707,647 and $692,182 at March 31, 2010 and December 31, 2009, respectively.

The Company has and will continue to use significant capital to commercialize its products. These factors raise substantial doubt about the ability of the Company to continue as a going concern. In this regard, management is proposing to raise any necessary additional funds not provided by operations through loans or through additional sales of their common stock. There is no assurance that the Company will be successful in raising this additional capital or in achieving profitable operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Note A-Organization and Summary Of Significant Accounting Policies

Accounting estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents may at times exceed federally insured limits. To minimize this risk, the Company places its cash and cash equivalents with high credit quality institutions.

Accounts Receivable

Accounts receivable are reported at the customers' outstanding balances. The Company does not have a history of significant bad debt and has not recorded any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The Company evaluates receivables on a regular basis for potential reserve.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined on a first-in, first-out method. Management performs periodic assessments to determine the existence of obsolete, slow moving and non-salable inventories, and records necessary provisions to reduce such inventories to net realizable value.

Property and equipment

Property and equipment are stated at cost. Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed. At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts. Gains or losses from retirements or sales are credited or charged to income.

Depreciation of property and equipment is provided on the straight-line method over the estimated useful lives of the assets. Accelerated methods of depreciation of property and equipment are used for income tax purposes.

Revenue recognition policy

Revenue for our services is recognized when all of the following criteria are satisfied: (i) persuasive evidence of an arrangement exists; (ii) the price is fixed or determinable; (iii) collectibility is reasonably assured; and (iv) services have been performed.

Deferred Revenue: Revenue is deferred for any undelivered elements and is recognized upon product delivery or when the service has been performed.

Cost of sales

Cost of sales includes costs related to fulfillment, customer service, commissions, service personnel, telecommunications and data center costs.

Sales and marketing costs

Sales and marketing expenses include advertising expenses, seminar expenses, commissions and personnel expenses for sales and marketing. Marketing and advertising costs to promote the Company's products and services are expensed in the period incurred. For the three months ended March 31, 2010 and 2009, the Company incurred approximately $0 and $4,796, respectively in marketing and advertising expense.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Note A-Organization and Summary Of Significant Accounting Policies

Fair Value of Financial Instruments

The Company’s financial instruments include cash and accounts receivable. The carrying amount of these financial instruments has been estimated by management to approximate fair value.

“Disclosures about Fair Value of Financial Instruments,” requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation.

The company accounts for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1—inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. We have no Level 1 instruments as of December 31, 2009.

Level 2—inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and forward and spot prices for currencies and commodities. We have no Level 2 instruments as of December 31, 2009.

Level 3—inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. We have no Level 3 instruments as of December 31, 2009.

Earnings (Loss) per common share

The Company reports both basic and diluted earnings (loss) per share. Basic loss per share is calculated using the weighted average number of common shares outstanding in the period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using the “treasury stock” method and convertible securities using the “if-converted” method.

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on differences between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Note A-Organization and Summary Of Significant Accounting Policies

Income Taxes (Continued)

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax provisions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Impairment of Long-Lived Assets

Accounting for the Impairment or Disposal of Long-Lived Assets requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may not be recovered. The Company assesses recoverability of the carrying value of an asset by estimating the fair value of the asset. If the fair value is less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset's carrying value and fair value. The Company has never recognized an impairment charge.

Stock-Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement. We use the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. In calculating this fair value, there are certain assumptions that we use consisting of the expected life of the option, risk-free interest rate, dividend yield, volatility and forfeiture rate. The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

Recent Accounting Pronouncements

On July 1, 2009, the FASB officially launched the FASB ASC 105 - Generally Accepted Accounting Principles, which established the FASB Accounting Standards Codification (“the Codification”), as the single official source of authoritative, nongovernmental, U.S. GAAP, in addition to guidance issued by the Securities and Exchange Commission. The Codification is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending after September 15, 2009. Accordingly, the Company refers to the Codification in respect of the appropriate accounting standards throughout this document as “FASB ASC”. Implementation of the Codification did not have any impact on the Company’s consolidated financial statements.

On June 30, 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-01 (Topic 105) – Generally Accepted Accounting Principles – amendments based on – Statement of Financial Accounting Standards No. 168 –The FASB Accounting and Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. Beginning with this Statement the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standard Updates. This ASU includes FASB Statement No. 168 in its entirety. While ASU’s will not be considered authoritative in their own right, they will serve to update the Codification, provide the bases for conclusions and changes in the Codification, and provide background information about the guidance. The Codification modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. ASU No. 2009-01 is effective for financial statements issued for the interim and annual periods ending after September 15, 2009, and the Company does not expect any significant financial impact upon adoption.

In August 2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Note A-Organization and Summary Of Significant Accounting Policies

Recent Accounting Pronouncements (Continued)

In September 2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

In May 2009, the FASB issued FASB ASC 855, “Subsequent Events.” This Statement addresses accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. FASB ASC 855 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, the date issued or date available to be issued. The Company adopted this Statement in the second quarter of 2009. As a result the date through which the Company has evaluated subsequent events and the basis for that date have been disclosed in Note K, Subsequent Events.

In April 2009, the FASB issued an update to FASB ASC 820, “Fair Value Measurements and Disclosures,” related to providing guidance on when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. The update clarifies the methodology to be used to determine fair value when there is no active market or where the price inputs being used represent distressed sales. The update also reaffirms the objective of fair value measurement, as stated in FASB ASC 820, which is to reflect how much an asset would be sold in and orderly transaction, and the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. The Company adopted this Statement in the second quarter of 2009 without significant financial impact.

In April 2009, the FASB ASC 320, “Investments – Debt and Equity,” amends current other-than-temporary guidance for debt securities through increased consistency in the timing of impairment recognition and enhanced disclosures related to credit and noncredit components impaired debt securities that are not expected to be sold. Also, the Statement increases disclosures for both debt and equity securities regarding expected cash flows, securities with unrealized losses, and credit losses. The Company adopted this Statement in the second quarter of 2009 without significant impact to our financial statements.

In April 2009, the FASB issued an update to FASB ASC 825, “Financial Instruments,” to require interim disclosures about the fair value of financial instruments.” This update enhances consistency in financial reporting by increasing the frequency of fair value disclosures of those assets and liabilities falling within the scope of FASB ASC 825. The Company adopted this update in the second quarter of 2009 without significant impact to the financial statements.

In April 2009, the FASB issued an update to FASB ASC 805, “Business Combinations,” that clarifies and amends FASB ASC 805, as it applies to all assets acquired and liabilities assumed in a business combination that arise from contingencies. This update addresses initial recognition and measurement issues, subsequent measurement and accounting, and disclosures regarding these assets and liabilities arising from contingencies in a business combination. The Company adopted this Statement in the second quarter of 2009 without significant impact to the financial statements.

In November 2008, EITF issued new guidance under FASB ASC 350, “Intangibles – Goodwill and Other on accounting for defensive intangible assets.” The new guidance applies to all acquired intangible assets in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining or using the asset (a defensive asset). This guidance was adopted by the Company in January 2009 without impact to the financial statements.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

Note A-Organization and Summary Of Significant Accounting Policies

Recent Accounting Pronouncements (Continued)

In May 2008, the FASB issued an update to FASB ASC 470, “Debt,” with respect to accounting for convertible debt instruments that may be settled in cash upon conversion including partial cash settlement. This update applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB ASC 815, “Derivatives and Hedging.” Additionally, this update specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost recognized in subsequent periods. The update is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not currently have any debt instruments for which this update would apply. This update was adopted in January 2009 without significant financial impact.

In December 2007, the FASB issued an update to FASB ASC 805, “Business Combinations” which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree, and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. SFAS 141R is effective for the Company with respect to business combinations for which the acquisition date is on or after January 1, 2009. The Company adopted this SFAS in the first quarter of 2009.

In December 2007, the FASB issued an update to FASB ASC 810, “Consolidation,” which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of noncontrolling owners. This update is effective for the Company as of January 1, 2009. The Company adopted this update in January 2009 without significant impact on the consolidated financial position, results of operations, and disclosures.

NOTE B – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

	March 31,			December 31,
	2010			2009
Computers and office equipment	$	127,237		$	127,237
Software		78,974			78,974
Total PP&E		206,211			206,211
Accumulated depreciation		(115,908	)		(106,856	)
Fixed assets, net	$	90,303		$	99,355

During the three months ended March 31, 2010 and 2009, the Company recognized $9,051 and $8,949, respectively in depreciation expense.

NOTE C – GOODWILL

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE D – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at March 31, 2010 consisted of $389,500 of accrued payroll, $5,000 of accrued legal settlements, $31,421 of professional services, $3,379 of accrued interest and $117,136 of trade payables.

Accounts payable and accrued expenses at December 31, 2009 consisted of $389,500 of accrued payroll, $25,000 of accrued legal settlements, $15,126 of professional services, $102 of accrued interest and $95,049 of trade payables.

NOTE E – NOTES

Promissory Notes – 3rd Party

During the year ended December 31, 2009, the Company received $292,000 of convertible promissory notes from third parties. The Company converted $1,300,000 of principle and $137,467 of accrued interest into 3,721,257 shares of restricted common stock. As of December 31, 2009, the Company had outstanding $25,102 related to 3rd party notes, including $25,000 of principle and $102 of accrued interest.

During the three months ended March 31, 2010, the Company received $17,000 in exchange for two convertible notes that were also converted along with the $25,102 of notes outstanding on December 31, 2009. In total, during the three months ended March 31, 2010, the Company converted $42,466, including $42,000 of principle and $466 of accrued interest into 121,332 shares of common stock. As of March 31, 2010, the Company has no outstanding 3rd party notes payable.

Promissory Notes - Related Party

Note payable convertible into common (conversion price of 50% below the previous 10 day average closing price) upon default, bears interest at 9% per year, matures December 31, 2010

152,312

During the year ended December 31, 2009, the Company received $25,000 from Bluewater Advisors and issued a new note for $151,312 or $135,000 of principle and $16,312 of accrued interest.

During the three months ended March 31, 2010, the Company received $1,000 from Bluewater Advisors and issued a new note for $151,312 or $135,000 of principle and $16,312 of accrued interest.

Accrued Interest

During the three months ended March 31, 2010 and 2009, the Company recognized $3,743 and $25,365, respectively related to all our outstanding notes payable. As of March 31, 2010, the Company had outstanding $3,379 of accrued interest.

NOTE F – STOCKHOLDERS EQUITY

Preferred Stock

The Company has authorized 10,000,000 shares of no par value preferred stock available for issuance. No shares of preferred stock have been issued as of March 31, 2010.

Stock Issued for Debt Repayment

During the year ended December 31, 2009, the Company converted $1,300,000 of principle and $137,467 of accrued interest into 3,721,257 shares of common stock. As of March 31, 2010 the stock had not been issued and is recorded in the equity portion of our balance sheet as common stock payable.

During the three months ended March 31, 2010, the Company converted $42,000 of principle and $466 of accrued interest into 121,332 shares of common stock. As of March 31, 2010 the stock had not been issued and is recorded in the equity portion of our balance sheet as common stock payable.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE F – STOCKHOLDERS EQUITY (Continued)

Stock Issued for Cash

During the three months ended March 31, 2010, the Company received $50,000 in exchange for 166,666 shares of common stock. As of March 31, 2010 the stock had not been issued and is recorded in the equity portion of our balance sheet as common stock payable.

Stock Issued for Services

During the year ended December 31, 2009, the Company issued 150,000 shares in exchange for services valued at $7,500. As of December 31, 2009 the stock had not been issued and is recorded in the equity portion of our balance sheet as common stock payable.

During the three months ended March 31, 2010, the Company issued 360,000 shares of common stock as part of a legal settlement with Marc Falcone. The shares were valued on the date of grant, or $108,000.

Stock Options (See footnote I)

During the year ended December 31, 2009, the Company canceled 1 million options due to termination.

During the three months ended March 31, 2010, no option activity occurred.

NOTE G - COMMITMENTS

The Company has no commitments as of March 31, 2010.

NOTE H – WARRANTS

At March 31, 2010, the Company had 3,071,999 Warrants outstanding entitling the holder thereof the right to purchase one share of common stock for each warrant held as follows:

			Exercise
Issuance	Number of		Price Per		Expiration
Date	Warrants		Warrant		Date
3/25/2008		400,000	$	0.10	12/31/10
3/25/2008		400,000	$	0.10	12/31/10
1/19/2010		36,000	$	0.75	1/19/15
1/19/2010		56,000	$	0.75	1/19/15
2/1/2010		13,333	$	0.75	2/1/15
2/5/2010		1,000,000	$	0.40	12/31/15
3/15/2010		166,666	$	0.30	3/15/11
3/1/2010		1,000,000	$	0.10	10/31/11
Total		3,071,999

During the year ended December 31, 2009, the Company canceled 250,000 warrants issued to Marc Falcone as a result of the settlement agreement dated February 16, 2010. No warrants were issued or exercised in 2009.

During the three Months ended March 31, 2010, the Company issued 2,271,999 warrants to purchase one share of common stock for each warrant issued. The warrants were fully vested on the date of grant. The warrants fair value was calculated on the date of grant using the Black-Scholes Option Pricing Model using the following inputs: volatility of 250% based on the Dow Jones Internet Composite Index, risk free interest rate of 3.71%, spot price of $0.15, and the various exercise prices. As a result the company recognized $320,459 of stock compensation expense. In addition, the Company received $50,000 in exchange for the issuance of 1,000,000 warrants which is recorded as a warrant liability in the current liabilities section of our balance sheet.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE I – 2007 LONG-TERM EQUITY INCENTIVE PLAN

In June 2007 the Board of Directors of the Company adopted the 2007 Long-Term Equity Incentive Plan. The purpose of this Plan is to attract and retain directors, officers and other employees of iTrackr, Inc. and its Subsidiaries and to provide to such persons incentives and rewards for performance.

The Company may issue each of the following under this Plan: Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or Performance Stock Award. The Plan was ratified at the 2007 shareholder’s meeting (the "Effective Date"). No Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or Performance Stock Award shall be granted pursuant to the Plan ten years after the Effective Date. The total number of shares available under the Plan is Fifteen Million (15,000,000). No Plan participant will be granted the right, in the aggregate, for more than Two Million (2,000,000) Common Shares during any calendar year.

Stock Options

During the year ended December 31, 2009 1 million options were canceled due termination of the people to whom they were granted and their failure to exercise according to the terms of the option grant.

During the three months ended March 31, 2010, the Company granted 250,000 fully vested common stock options.

The following table summarizes the Company's stock option activity for the three months ended March 31, 2010:

	March 31, 2010
			Weighted Average
	Shares		Exercise Price

Outstanding at beginning of year		5,255,000	$	0.18
Granted		250,000		0.25
Forfeited		-		-
Exercised		-		-
Outstanding at end of quarter		5,505,000	$	0.18

Options exerciseable at March 31, 2010		5,505,000

The following table summarizes information about the Company's stock options outstanding at March 31, 2010:

		Options Outstanding						Options Exercisable
		Number		Weighted		Weighted				Weighted
Range of		Outstanding		Average		Average				Average
Exercise		At March 31,		Contractural		Exercise		Number		Exercise
Prices		2010		Life (years)		Price		Outstanding		Price

$	0.40		1,000,000		-	$	0.40		1,000,000	$	0.07
0.25			1,250,000		-		0.25		1,250,000		0.06
0.10			2,375,000		-		0.10		2,375,000		0.04
0.05			880,000		-		0.05		880,000		0.01
Total			5,505,000		-	$	0.18		5,505,000	$	0.18

The Company measures the fair market value of stock options granted using the Black-Scholes Option Pricing Model on the date of grant and recognizes related compensation expense ratably over the options vesting period for all future grants.

During the three months ended March 31, 2010 and 2009, the Company recognized $0 and $8,443, respectively, of compensation expense related to stock options. From inception to date, the Company has recognized $178,844 of compensation expense related to stock options.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE J – MERGER

On December 10, 2009, Must Haves, Inc., iTrackr Acquisition, Inc. and iTrackr, Inc. entered into an Agreement and Plan of Merger which closed January 12, 2010. On the Closing Date, iTrackr was merged with and into iTrackr Acquisition, Inc. which is the surviving corporation and became a wholly-owned subsidiary of Must Haves, Inc. In accordance with the merger agreement, iTrackr’s stockholder’s received restricted common stock at the rate of 1:1 share for each of their 17,875,695 shares issued and outstanding in exchange for 100 percent of the outstanding capital stock of iTrackr. In total 19,169,333 shares are outstanding following the closing of the merger.

The Merger was accounted for as a “reverse merger,” as the stockholders of iTrackr, Inc. owned a majority of the outstanding shares of Must Haves, Inc. common stock immediately following the Merger. iTrackr, Inc. was deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations of iTrackr, Inc. prior to the Merger are reflected in the financial statements and have been recorded at the historical cost basis of iTrackr, Inc. Our financial statements, after completion of the Merger, include the assets and liabilities of both Must Haves, Inc. and iTrackr, Inc. Our historical operating statements include the operations of iTrackr, Inc. from the Effective Date of the Merger.

Following is a breakdown of the purchase price paid by iTrackr, Inc. for the merger:

	January 12, 2010
Assets acquired:
Current assets	$	1,657
Total assets acquired		1,657

Stock issued		65,182
Debt assumed:
Accounts payable		29,172
Total cost		94,354
GOODWILL (3)	$	92,697

The following unaudited financial information has been developed by application of pro forma adjustments to the historical financial statements of iTrackr, Inc. appearing elsewhere in this Current Report. The unaudited pro forma information gives effect to the Merger which has been assumed to have occurred on January 1, 2008 for purposes of the statement of operations

The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what the results of operations or financial position of iTrackr Systems, Inc. would have been had the transactions described above actually occurred on the dates indicated, nor do they purport to project the financial condition of iTrackr Systems, Inc. for any future period or as of any future date. The unaudited pro forma financial information should be read in conjunction with the iTrackr Systems, Inc. financial statements and notes thereto included elsewhere in this Current Report.

The summarized assets and liabilities of the purchased company (Must Haves, Inc.) on January 12, 2010 were as follows:

Cash	$	95
Other current assets		1,562
	$	1,657
Current liabilities	$	29,172
Total stockholders’ equity		(27,515	)
	$	1,657

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE J – MERGER (Continued)

The condensed pro forma results of operations for the year ended December 31, 2009 and 2008 are as follows:

iTrackr Systems, Inc.

Unaudited Pro Forma Statements of Operations

For the Year ended December 31, 2009 and 2008

	Year Ended									Year Ended
	December 31, 2009									December 31, 2008
				Must									Must
	iTrackr, Inc.			Haves, Inc.						iTrackr, Inc.			Haves, Inc.
	Actual			Actual			Pro Forma			Actual			Actual			Pro Forma

REVENUES
Sales	$	7,493		$	130		$	7,623		$	4,419		$	3,757		$	8,176
Cost of revenue		-			-			-			-			1,018			1,018
Gross profit		7,493			130			7,623			4,419			2,739			7,158

OPERATING EXPENSES		610,973			31,997			642,970			1,274,718			51,765			1,326,483

Income (loss) from operations		(603,480	)		(31,867	)		(635,347	)		(1,270,299	)		(49,026	)		(1,319,325	)

OTHER INCOME AND EXPENSES
Interest expense		(90,462	)		(2,312	)		(92,774	)		(58,574	)		(2,335	)		(60,909	)
Other expense		(163,000	)		-			(163,000	)		-			-			-
Total other income and expenses		(253,462	)		(2,312	)		(255,774	)		(58,574	)		(2,335	)		(60,909	)

NET INCOME (LOSS)	$	(856,942	)	$	(34,179	)	$	(891,121	)	$	(1,328,873	)	$	(51,361	)	$	(1,380,234	)

Weighted average shares outstanding
Basic and diluted		14,632,513						14,632,513			13,934,023						13,934,023
Shares to be issued for acquisition					1,303,638			1,303,638	1)					1,303,638			1,303,638
Total Weighted average common shares outstanding								15,936,151									15,237,661

Net (loss) per common share (basic and diluted)							$	(0.06	)							$	(0.09	)

1) Represents Must Haves, Inc. pre merger shares outstanding.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE J – MERGER (Continued)

The condensed pro forma balance sheet as of December 31, 2009 is as follows:

iTrackr Systems, Inc.

Unaudited Pro Forma Balance Sheet

As of December 31, 2009

				Must
	iTrackr, Inc.			Haves, Inc.			Merger
	Actual			Actual			Adjustments			Pro Forma
ASSETS
CURRENT ASSETS
Cash	$	3,223		$	95		$	-		$	3,318
Accounts receivable, net		5,786			1,562			-			7,348
TOTAL CURRENT ASSETS		9,009			1,657			-			10,666

Fixed assets
Cost		206,211			-			-			206,211
Accumulated Depreciation		(106,856	)		-			-			(106,856	)
Net		99,355			-			-			99,355

Goodwill								92,697			92,697
TOTAL ASSETS	$	108,364		$	1,657		$	92,697		$	202,718

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	524,777		$	29,172		$	-		$	553,949
Accrued interest payable		102			-						102
Convertible promissory notes		25,000			-						25,000
Shareholder loans		151,312			-			-			151,312
TOTAL CURRENT LIABILITIES		701,191			29,172			-			730,363

COMMITMENT		-			-						-

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock payable		1,451,979			-			-			1,451,979
Common stock		980,148			189,416	1)		(124,234	)		1,045,330
Accumulated earnings (deficit)		(3,024,954	)		(216,931	)		216,931			(3,024,954	)

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)		(592,827	)		(27,515	)		92,697			(527,645	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	108,364		$	1,657		$	92,697		$	202,718
		-			-			-			-

Reverse merger requirement to treat Must Haves, Inc. as the puchased company requires the recognition of the issuance of 1,303,638 shares of already outstanding shares of Must Haves, Inc. as newly issued, which was valued at $0.05 per share, or $65,182 and is adjusted down by $189,416 which represents Must Haves historical common stock balance for a total adjustment of $124,234.

ITRACKR SYSTEMS, INC

(A Development Stage Company) (formerly Must Haves, Inc.)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE MONTHS ENDED MARCH 31, 2010 AND 2009

NOTE J – LEGAL PROCEEDINGS

As of December 31, 2009, the Company was party to a lawsuit brought by Marc Falcone. In this action, Mr. Falcone asserted numerous claims against certain defendants arising out of his former service to iTrackr, Inc. as a contracted consultant. The Company asserted numerous defenses and affirmative defenses, including, but not limited to, the fact that Falcone failed to fulfill his obligations under the agreement. On February 16, 2010, the Company and Mr. Falcone executed a settlement agreement without either side admitting fault. The terms of the settlement agreement call for the payment of $25,000 and the issuance of 360,000 shares of common stock in exchange for a full release of all claims. As of March 31, 2010, the Company has a remaining accrued balance due of $10,000.

NOTE K – SUBSEQUENT EVENTS

On April 28, 2010, the Company issued 4,051,948 shares of common stock that was recorded to common stock payable in the amount of $1,501,980 as of March 31, 2010.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

This quarterly report contains forward-looking statements including statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes” or similar language. These forward-looking statements involve risks, uncertainties and other factors. All forward-looking statements included in this quarterly report are based on information available to us on the date hereof and speak only as of the date hereof. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. The factors discussed elsewhere in this quarterly report are among those factors that in some cases have affected our results and could cause the actual results to differ materially from those projected in the forward-looking statements.

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this quarterly report.

Recent Events

On February 1, 2010, Must Haves, Inc. amended its articles of incorporation with the State of Florida, changing its name to iTrackr Systems, Inc.

On December 10, 2009, Must Haves, Inc., iTrackr Acquisition, Inc. (“Merger Sub”) and iTrackr, Inc., a Florida corporation (“iTrackr”), entered into an Agreement and Plan of Merger (the “Agreement”), which closed January 12, 2010. On the Closing Date, iTrackr was merged with and into Merger Sub, which is the surviving corporation and became a wholly-owned subsidiary of the Registrant.

At the closing of the Merger, subject to and pursuant to the terms and conditions of the Agreement, each outstanding share of Purchaser common stock was converted into one share of common stock of the Registrant. Upon consummation of the Merger, the shareholders of the Purchaser received an aggregate of 17,875,695 shares of Registrant common stock and thus owned 93.5% of Must Have’s common stock. Must Haves also assumed 6,555,000 options and warrants of iTrackr, which are exercisable at prices from $0.01 to $0.40.

In addition, pursuant to the Plan of Merger Agreement, Stella Gostfrand submitted her resignation as an officer and director of the Company, and Michael Uhl, Dave Baesler and John Rizzo were appointed to serve as members of the board of directors of the Company, all of which will be effective following the expiration of the ten day period following the mailing of the information statement required by Rule 14f-1 under the Exchange Act. Upon the consummation of the Reverse Merger, Ramesh Anand was appointed to serve as Chief Operating of the Company, and Mr. Rizzo was appointed to serve as Chief Executive Officer and Chief Financial Officer of the Company.

Overview

iTrackr Systems, Inc. (“iTrackr”, the “Company”, “we”, “us” or “our”) was formed in May 2006 to develop, market and commercialize a product and inventory search application through a social networking site designed to leverage the best of Internet and Mobile technologies. We have taken the best of several burgeoning markets, including eCommerce, social networking and mobile content, and developed what we believe is a powerful platform that drives value to consumers, retailers and advertising and marketing firms.

iTrackr Systems intends to introduce and commercialize Internet and Mobile social merchandizing technology platforms to retailers and consumers. “Social merchandizing” applies the variety of traditional marketing practices to promote products and services to a community of individuals via social networking technologies. iTrackr is similar to MySpace and Facebook; however, our members’ interests are not in diary or event blogging, but in the timely location of products and services which can be acquired and consumed on a local level.

iTrackr Systems’ technology enables consumers to search and track merchandise, letting the consumer know which retail locations in a local zip code are stocking the queried merchandise, as well as the comparative prices. In addition, if the item is not in stock, the consumer can request that iTrackr Systems notify them via mobile text message or email when the item is delivered to a local retailer and where that retailer is located.

In 2009, iTrackr purchased online customers support software technology from Chatstat for approximately $95,000. iTrackr has subsequently launched its customer support chat software (“ChatTrackr”) which facilitates real-time customer support and expert advice, and paid transactions.

iTrackr generates revenues primarily through the licensing of its ChatTrackr to two customers, Respond Q and Saveology. These customers use our application service provider (“ASP”) system, outsourcing our chat applications for a monthly fee-per-agent, or license fee and in certain cases, an annual enterprise fee.

In addition, we offer customers a hosted ChatTrackr solution, enabling them to download our software on their website, where agents download a fee-based desktop application, while we manage the service on our network for an additional fee. Examples of websites we manage include www.buycomcast.com and www.buytimewarner.com. We also bill customers for maintenance and upgrades to our service.

Our plans for to grow our customer support business is to position ChatTrackr as a sales tool for online retailers, increasing fees through customer additions, traffic and through the number of agents using ChatTrackr. We intend to expand our product search business by offering this service to existing ChatTrackr customers as a means of driving further traffic to their own websites and transactional volume. Our target markets include all ecommerce businesses, financial services, healthcare and automotive.

Our primary sources of operating funds have been historically through the issuance of debt and equity. For the three months ended March 31, 2010, we raised $18,000 in debt and $50,000 from the sale of common stock. For the year ended December 31, 2009, we raised $333,312 in debt. To finance our growth strategy, we may continue to actively pursue additional funds through equity financing, including the sale of additional shares of common and preferred stock, asset sales, accelerated payments of maintenance and management fees, debt financing, or a combination thereof.

At March 31, 2010, iTrackr Systems had assets of $227,480. For the fiscal quarter ended March 31, 2010, the Company had revenue of $10,742, and net losses of $517,926. iTrackr Systems has incurred losses since inception and may not be able to generate sufficient net revenue from its business in the future to achieve or sustain profitability. At March 31, 2010, the Company had approximately $35,654 of unrestricted cash on hand and assuming there is no change in sales and expense trends experienced since the first quarter of fiscal 2010, the Company believes that its cash on hand is insufficient to continue operations. The Company currently needs approximately $130,000 to $160,000 per quarter to maintain and expand our sales and operations. Thus, the Company will need approximately $390,000 to $480,000 to continue through December 31, 2010.

Impact of Inflation

General inflation in the economy has driven the operating expenses of many businesses higher, and, accordingly we have experienced increased salaries and higher prices for supplies, goods and services. We continuously seek methods of reducing costs and streamlining operations while maximizing efficiency through improved internal operating procedures and controls. While we are subject to inflation as described above, our management believes that inflation currently does not have a material effect on our operating results. However, inflation may become a factor in the future.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that affect the amounts reported. Note A of Notes to Financial Statements describes the significant accounting policies used in the preparation of the financial statements. Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition and results of operations. Specifically, critical accounting estimates have the following attributes:

We are required to make assumptions about matters that are highly uncertain at the time of the estimate; and

Different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, would have a material effect on our financial condition or results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty. We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances. These estimates may change as new events occur, as additional information is obtained and as our operating environment changes. These changes have historically been minor and have been included in the consolidated financial statements as soon as they became known. Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, management believes that our financial statements are fairly stated in accordance with accounting principles generally accepted in the United States, and present a meaningful presentation of our financial condition and results of operations.

In preparing our financial statements to conform to accounting principles generally accepted in the United States, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. These estimates include useful lives for fixed assets for depreciation calculations and assumptions for valuing options and warrants. Actual results could differ from these estimates.

Long-lived Assets

Long-lived assets, comprised of equipment, and identifiable intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that may cause an impairment review include significant changes in technology that make current computer-related assets that we use in our operations obsolete or less useful and significant changes in the way we use these assets in our operations. When evaluating long-lived assets for potential impairment, we first compare the carrying value of the asset to the asset’s estimated future cash flows (undiscounted and without interest charges). If the estimated future cash flows are less than the carrying value of the asset, we calculate an impairment loss. The impairment loss calculation compares the carrying value of the asset to the asset’s estimated fair value, which may be based on estimated future cash flows (discounted and with interest charges). We recognize an impairment loss if the amount of the asset’s carrying value exceeds the asset’s estimated fair value. If we recognize an impairment loss, the adjusted carrying amount of the asset becomes its new cost basis. The new cost basis will be depreciated (amortized) over the remaining useful life of that asset. Using the impairment evaluation methodology described herein, there have been no long-lived asset impairment charges for each of the last two years.

Our impairment loss calculations contain uncertainties because they require management to make assumptions and to apply judgment to estimate future cash flows and asset fair values, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows.

We have not made any material changes in our impairment loss assessment methodology during the past two fiscal years. We do not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions we use to calculate long-lived asset impairment losses. However, if actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to losses that could be material.

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current period and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

When accounting for Uncertainty in Income Taxes, first, the tax position is evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company underwent a change of control for income tax purposes on October 8, 2003 according to Section 381 of the Internal Revenue Code. The Company’s utilization of U.S. Federal net operating losses will be limited in accordance to Section 381 rules. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

Results of Operations

Three Months Ended March 31, 2010 Compared With Three Months Ended March 31, 2009.

Revenues

Net Revenue for the three months ended March 31, 2010 and 2009 was $10,742 and $1,095, respectively. The increase in revenue is primarily due to the purchase of ChatStat and resulting sales of live chat software which began in our fourth quarter of 2009

Operating Expenses

Total operating expenses for the three months ended March 31, 2010 were $524,925, an increase of $402,866 from $122,059 for the three months ended March 31, 2009. The increase in expense is mainly due to the recognition of $420,016 in non-cash stock compensation primarily related to the grant of warrants and legal settlement with Marc Falcone. Excluding stock compensation of $420,016 in 2010 and $8,443 in 2009, operating expenses were $96,466 in 2010 compared to $113,616 in 2009, or $17,150 lower in the current year compared to the three months ended March 31, 2009.

Other Income and Expense

Other expense decreased $21,622, or 85% to $3,743 for the three months ended March 31, 2010 compared to $25,365 of expense during the same period last year. The decrease is primarily due to the reduction of interest expense as a result of converting most of our debt to common stock at the end of 2009.

Net Loss

As a result of the foregoing, our net loss was $517,926, or $0.03 per share, for the three months ended March 31, 2010 compared to a loss of $146,329, or $0.01 per share for the three months ended March 31, 2009. Excluding one-time, non-cash charges totaling $420,016 in 2010 and $8,443 in 2009 related to stock compensation, the Company’s loss decreased $48,419, or 35% to $89,467 for the three months ended March 31, 2010 compared to $137,886 for the three months ended March 31, 2009.

Liquidity and Capital Resources

From inception to March 31, 2010, we have incurred an accumulated deficit of $3,542,880. This loss has been incurred through a combination of stock compensation of $1,031,816, professional fees and expenses supporting our plans to develop our website and brand our services as well as continued operating losses. Since inception, we have financed our operations primarily through debt and equity financing. During the three months ended March 31, 2010 we had a net increase in cash of $32,431. Total cash resources as of March 31, 2010 was $35,654 compared with $3,223 at December 31, 2009.

Our available working capital and capital requirements will depend upon numerous factors, including the sale of live chat services, the timing and cost of expanding into new markets, the cost of developing competitive technologies, the resources that we devote to developing new products and commercializing capabilities, the status of our competitors, our ability to establish collaborative arrangements with other organizations, and our ability to attract and retain key employees.

Net cash used by operating activities was $85,664 for the three months ended March 31, 2010 as compared to $106,178 for the three months ended March 31, 2009.

Net cash provided by investing activities was $95 for the three months ended March 31, 2010 as compared to $0 for the three months ended March 31, 2009.

Net cash provided by financing activities was $118,000 for the three months ended March 31, 2010 as compared to $0 for the three months ended March 31, 2009.

The Board of Directors periodically reviews our capital requirements in light of our proposed business plan. Our future capital requirements will remain dependent upon a variety of factors, including cash flow from operations, the ability to increase sales, increasing our gross profits from current levels, reducing sales and administration expenses as a percentage of net sales, continued development of customer relationships, and our ability to market our new products successfully. However, based on our results from operations, we may determine that we need additional financing to implement our business plan, and there can be no assurance that it will be available on terms favorable to us or at all. If adequate financing is not available, we may have to delay, postpone or terminate product and service expansion and curtail general and administrative operations in order to maintain sufficient operating capital. The inability to raise additional financing may have a material adverse effect on us. We may seek additional capital prior to December, 2010 both to meet our projected operating plans after December, 2010 and to fund our longer term strategic objectives. To the extent we are unable to raise additional cash or generate net income prior to December, 2010 to meet our projected operating plans, we will revise our projected operating plans accordingly.

Off-Balance Sheet Arrangements

We have no off-balance sheet transactions.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation as required by paragraph (b) of Rule 13a-15 and 15d-15 of the Exchange Act, under the supervision and with the participationof our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13(a)-15(e) and 15d-15(e) under the Exchange Act as of March 31, 2010. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including the CEO and CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1a. Risk Factors.

Not applicable.

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

During the fiscal quarter ended March 31, 2010, iTrackr Systems, Inc. issued 647,998 shares of its common stock in private transactions not involving a public offering, as follows:

·	We issued 166,666 shares of common stock in exchange for $50,000 that were payable as of quarter-end.

·	We issued 360,000 shares of common stock as a result of a legal settlement for prior services.

·	We issued 121,332 shares of common stock in exchange for a $42,466 reduction of notes payable.

All funds received from the sale of our shares were used for working capital purposes.

All shares bear a legend restricting their disposition.

The shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act or Rule 506 of Regulation D promulgated under the Securities Act. Each investor took his securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the purchase of our shares. Our securities were sold only to an accredited investor, as defined in the Securities Act with whom we had a direct personal preexisting relationship, and after a thorough discussion. Finally, our stock transfer agent has been instructed not to transfer any of such shares, unless such shares are registered for resale or there is an exemption with respect to their transfer.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Removed and Reserved.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No.		Identification of Exhibit

3.1		Articles of Amendment (incorporated by reference filed with the Company’s 8-K on March 31, 2010)

10.1		Employment agreement of John Rizzo (Incorporated by reference filed with the Company’s 8-K on January 19, 2010)

10.2		Employment agreement of Ramesh Anand (Incorporate by reference filed with the Company’s 8-K on January 19, 2010)

10.3		iTrackr Stock Option Plan (Incorporated by reference filed with the Company’s 8-K on January 19, 2010)

31.1*		Certification of John Rizzo, Chief Executive Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of John Rizzo, Chief Financial Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of John Rizzo, Chief Executive Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of John Rizzo, Chief Financial Officer of iTrackr Systems, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

* Filed Herewith

SIGNATURES

In accordance with Section 13 or 15(d) 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.

	ITRACKR SYSTEMS, INC.

Date: May 20, 2010
	By	/s/ John Rizzo
	John Rizzo, Chief Executive Officer & Chief Financial Officer

ITRACKR SYSTEMS INC - FORM 10-Q - May 21, 2010

Attached files

ITRACKR SYSTEMS INC Reports