The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Form 10-Q for the quarter ending March 31, 2012 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amending, and Section 21E of the Securities Exchange Act of 1934, as amending. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and are considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Overview

QUADRANT 4 SYSTEMS CORPORATION ("Quadrant 4 Systems", "we", "us", "our", or the "Company") is a publicly held company engaged in the information technology sector. The Company was incorporated by the Florida Department of State on May 9, 1990 as Sun Express Group, Inc. and operated a series of technology related businesses ranging from CCTV security systems to VOIP systems. In May 2010, the Company changed its business model and, in June 2010, the Company acquired a new business involving IT consulting. This consulting business was greater in size than the existing businesses; so the opportunity was treated by the Company as a material shift in its business model and disclosed in a Current Report on form 8-K on June 2010. At present, the Company has developed its business model in two wholly-owned subsidiaries, Quadrant 4 Consulting, Inc. and Quadrant 4 Solutions, Inc. via a series of acquisitions of several assets as described in the 10-K form filed for the period ending December 31, 2011.

The Company completed certain significant acquisitions in the quarters ending June 30, 2010 and March 31, 2011 that are reflected in the accompanying financial statements. The Company is actively pursuing a business model that was changed and expanded in connection with the acquisition of assets and opportunities presented therein. Therefore, the significance of these recent acquisitions includes certain factors which represent risks and also require accentuation and explanation. The comparison to the previous year's first quarter is subject to this explanation.

The current operations of the Company consist of providing Information Technology (IT) and software-enabled services and consulting. The Company is focused on providing its services to companies in the Financial Services, Healthcare and Retail sectors. The Company intends to grow organically from the expansion of offerings and services to customers, most of which were acquired as relationships from acquisitions as well as the acquisition of new business relationships as part of its acquisition strategy.

The financial statements being reported in this Quarterly Report are based on assets acquired in the quarter ending March 31, 2011and during 2010. The Company has a limited operating history with these assets, their management and the implementation of controls. There can be no assurance that the assets will continue to perform in the manner and to the degree indicated by the financial results disclosed for the recently-ending first quarter. The risks associated with recently-acquired assets are also discussed as a risk in the Company's annual report under Form 10-K.

Business Strategy

Quadrant 4 Systems Corporation plans to expand its focus in the Information Technology (IT) and Information Technology Enabled Services (ITES) market segments through a series of strategic business combinations. The Company intends to establish a full spectrum of IT services that include consulting, products and solutions specific to Healthcare, Retail and Financial Services industries and intends to grow organically to meet all of these service markets. To assist in the implementation of this new strategy, the Company intends to augment its present management and staffing, and, in furtherance of this plan, has undertaken discussions with certain individuals that bring significant existing experience and relationships in the chosen vertical segments to join the management team and/or participate in some advisory capacity at various levels.

Many US corporations have deferred upgrading and implementing IT infrastructure projects during the most-recent economic downturn. As a result, Quadrant 4 Systems believes that there is a pent-up demand for IT services that include consulting and implementation to help these clients remain efficient and competitive during the recovery time. The Company believes the best way to accomplish its strategic goals will be to initially seek to establish an IT services company platform by acquiring a set of profitable assets with history, track record and satisfied client base. After building the initial platform to launch the new business plan, the Company believes that it will be able to rapidly grow in targeted sectors by attracting additional assets to the Company with subsequent acquisitions. The Company intends to exploit current market conditions where many small and medium size IT services companies (with revenues in the range of $5mm to $50mm), both public and privately held, with "marquee" client relationships would fit with the Company's strategic consolidation initiative. During the past year, the Company has identified and begun negotiations with several targets that qualify for Quadrant 4 Systems' criteria for acquisition and business combination.

Following acquisition of the projected assets and their integration, the Company intends to focus on organic growth both in adding additional revenues from existing clients and also adding new clients.

Core Business

Ultimately, the Company believes that it will focus its efforts as a provider of IT services. The Company intends to provide IT consulting services; managed services; software product architecture; software development, maintenance and outsourcing and industry-specific software solutions primarily to enterprises engaged in the Financial Services, Retail and Healthcare sectors.

Competition

While the Company currently operates in a highly competitive industry, we believe the Company will be able to compete effectively against well-capitalized competitors that have extensive experience, established distribution channels and facilities by building a scalable yet robust platform that allows the Company to be responsive to the needs of its customers with quality services with competitive pricing, a well-developed recruiting and retention model that ultimately provides a successful delivery to the customers.

Management's Discussion and Analysis of Financial Condition and Results of Operations

As a result of recent acquisitions, the Company is actively executing on its business model which consists of delivery of consulting services in the targeted market segments. The nature of our model involves engaging employees and consultants to provide services to our customers with billing accrued and due in normal billing cycles. We incur debt to meet payroll obligations, the largest component of our expenses, and service debt with the payments received from our customers. Many of our employees and consultants are assisted in the immigration process which process is an expense component. The Company utilizes few major capital items in the delivery of its services and requires no significant plant expenses beyond ordinary commercial office space for both use by the employees on a limited basis and the back-office support for those employees. Our financial statements reflect primarily income from billing for our consulting services and expenses incurred to pay employees and consultants, including financing to meet payroll in anticipation of receipt of billing income from customers as well as general administration expenses to manage the Company.

Results of Operations

In 2010, the Company changed its business model significantly and, acquired new
businesses in transactions which materially affected the amount of reported
revenue from continuing operations. The revenues, expenses and income reflect
the new businesses. Acquisition of the new businesses resulted in material
increases in revenues, expenses and income but these increases are not
attributed to changes in pricing or profitability of such businesses compared to
prior periods of such businesses but rather the acquisition of such business.

                                        Three months ending March 31,
                                                                               Increase/
                                           2012                 2011            Decrease           Percent
Revenue                               $     6,727,639       $  5,434,993     $    1,292,646               24 %
Cost of Revenue                            (5,316,123 )       (4,318,874 )         (997,249 )             23 %
Gross Margin                                1,411,516          1,116,119            295,397               26 %
General and administrative expenses          (731,916 )         (355,423 )         (376,493 )            105 %
Amortization of intangible assets          (1,011,562 )         (659,513 )         (352,049 )             53 %
Interest and derivative expense              (525,466 )         (268,790 )         (256,676 )             95 %

Net loss                              $      (857,428 )     $   (167,607 )   $      689,821              411 %

Comparison of Three Months Ending March 31, 2012 and 2011

REVENUES

Revenues for the three months ending March 31, 2012 totaled $6,727,639 compared to $5,434,993 of revenue during the same period in 2011. The increase in revenues of $1,292,646, or 24% over the previous first quarter, was primarily due to the acquisition of Quadrant 4 Solutions, Inc. (formerly MGL Solutions, Inc.) in the first quarter of 2011 and the expansion of the core businesses to include SaaS and other solutions tools. Revenues were comprised of service-related sales of software programming, consulting and development services.

COST OF REVENUES

Cost of revenue for the three months ending March 31, 2012 totaled $5,316,123 compared to cost of revenue of $4,318,874 during the same period in 2011. The increase in cost of revenue of $997,249, of 23% over the previous first quarter, was due primarily to the inclusion of cost of revenue from the Company's acquisition of Quadrant 4 Solutions, Inc., effective March 1, 2011. Cost of revenue is comprised primarily of the direct costs of employee and contract labor and related expenses.

GROSS MARGIN

The increase in gross margin of $295,397, or 26% over the previous first quarter, resulted primarily from increased revenues, the gross margin percentage remained approximately 21% (growing from 20.5% to 21% over the previous first quarter).

SELLING, GENERAL AND ADMINISTATIVE EXPENSES

Selling, general & administrative expenses for the three months ending March 31, 2012 totaled $731,916 compared to selling, general & administrative expenses of $355,423 during the same period in 2011. The increase in selling, general & administrative expenses of $376,493, or 26% over the previous first quarter, was due to the inclusion of selling, general & administrative expenses from the Company's acquisition on March 1, 2011.

AMORTIZATION AND WRITE-DOWN OF INTANGIBLE ASSETS

Amortization expense for the three months ending March 31, 2012 totaled $1,011,562 compared to $659,513 during the same period in 2011. The increase in amortization expense of $352,049 was due to the additional amortization expense from intangible assets (customer lists, software technology, and hardware technology) acquired in connection with the acquisition of Quadrant 4 Solutions, Inc., the business entity acquired by the Company in 2011. Amortization periods on the acquired intangibles range from 5 - 7 years.

INTEREST AND DERIVATIVE EXPENSE

Financing and interest costs and derivative expenses for the three months ending March 31, 2012 totaled $525,466 compared to $268,790 during the same period in 2011. The increase in financing and interest costs of $256,676, 95% over the previous first quarter, was due to increased interest on notes payable and long-term debt to finance the Company's acquisitions and the note payable-revolver, amortization of debt discount as well as the derivative expense associated with the issuance of certain warrants.

The Company reported a net loss of $857,428 for the three months ending March 31, 2012 compared to net loss of $167,607 for the same period in 2011. The increase of $689,821, or 411% over the previous first quarter, in the net loss was due to increased amortization and derivative expenses, in the current period as compared to the prior period.

EBITDA

Earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the three months ending March 31, 2012 and March 31, 2011 is calculated as
follows:

                                          March 31, 2012        March 31, 2011
       Net Loss (GAAP Basis)               $     (857,428 )       $    (167,607 )
       Interest and derivative expense            525,466               268,790

       Amortization expense                     1,011,562               659,513

       Income Taxes                                     -                     -
       EBITDA                              $      679,600         $     760,696

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the three months ending March 31, 2012 decreased by $81,096 or 11% over the previous first quarter decreased as a result of increased first year integration and administrative expenses incurred in the acquisition of a new business entity on March 1, 2011.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2012, we had an accumulated deficit of $4,415,713 as compared to $3,558,285 at March 31, 2011. As of March 31, 2012, we had a working capital deficit of $1,084,145 as compared to $5,739,529 at March 31, 2011.

We have no material commitments for capital expenditures.

Net cash provided by operations for the three months ending March 31, 2012 was $11,521 as compared to net cash provided by operations of $141,830 primarily relating to an increase in other assets and higher operating loss.

There were no cash flows used in investing operations in the three month periods ending March 31, 2012 and 2011. The acquisition of assets in 2011 did not require any cash during the first quarter ending March 31, 2011.

Net cash used in financing activities was 1,013,110 for the three months ending March 31, 2012 compared to cash used in financing activities of $196,599 in the previous first quarter. The increase in cash used in financing activities in 2012 compared to 2011 was due primarily to increased collections and receipt of convertible debt proceeds in late 2011 that were utilized to pay down other debt, offset in part by an increase in proceeds from the sale of stock in 2011.

The Company was reliant on proceeds from the sale of stock in 2011 and proceeds from borrowings to provide working capital. A tightening of capital markets can reduce or eliminate funding sources causing a decrease in our liquidity and an inability to generate revenues from new lending activities.

Liquidity. The Company is continuing to expand its IT business operations through acquisitions and organic internal growth. Acquisitions of target company assets will require additional financing. Currently the Company anticipates that additional financing to fund these acquisitions of assets will be provided by sales of stock or borrowings. Also, the Company is exploring alternatives for its trade receivable factoring which carries a very high interest rate. Refinancing of this receivable factoring financing will reduce the Company's interest expenses thereby increasing the Company's liquidity position.

The Company believes its resources are adequate to fund its current operations for the next 12 months.

Off Balance Sheet Arrangements

There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Impact of Inflation

We believe that inflation has not had a material impact on our results of operations for the three months ending March 31, 2012. We cannot assure you that future inflation will not have an adverse impact on our operating results and financial condition.

CRITICAL ACCOUNTING POLICIES

A summary of significant accounting policies is included in Note 3 to the unaudited financial statements included elsewhere in this Report and in Note 2 to the financial statements included in our Annual Report filed under Form 10-K for the year ending December 31, 2011. We believe that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. The following are a summary of the significant accounting estimates and policies that we believe are most critical to aid in fully understanding and evaluating our reported financial results.

Critical Accounting Estimates and Policies

General

The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles, which require management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, net revenue and expenses, and the disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Senior management has discussed the development, selection and disclosure of these estimates with the audit committee of our Board of Directors.

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Management believes the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of the Consolidated Financial Statements.

A summary of significant accounting policies is included in Note 3 to the consolidated financial statements included elsewhere in this Report. We believe that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our operating results and financial condition. The following are a summary of the significant accounting estimates and policies.

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, liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. We have made estimates for doubtful accounts of accounts receivable, fair values of our customer lists and the estimated useful lives for the amortization of our customer lists. Management believes that the accounting estimates employed and the resulting balances are reasonable; however, actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the value of customer lists and other intangible assets, values which are not readily apparent from other sources.

Fair Value of Financial Instruments. The Company considers the carrying amounts of financial instruments, including cash, accounts receivable and accounts payable and accrued expenses to approximate their fair values because of their relatively short maturities and notes payable.

Accounts and Unbilled Receivables. Accounts and unbilled receivables consist of amounts due from customers. The Company records a provision for doubtful receivables, if necessary, to allow for any amounts which may be unrecoverable, which is based upon an analysis of the Company's prior collection experience, customer creditworthiness and current economic trends.

Intangible Assets. Intangible assets are recorded at fair value and amortized on the straight-line method over the estimated useful lives of the related assets. The carrying value of intangible assets are reviewed for impairment by management at least annually or upon the occurrence of an event which may indicate that the carrying amount may be greater than its fair value. If impaired, the Company will write-down the intangible assets for such impairment. In addition, the useful life of the intangible assets will be evaluated by management at least annually or upon the occurrence of an event which may indicate that the useful life may have changed. Customer lists were valued based on management's forecast of expected future net cash flows, with revenues based on projected revenues from customers acquired and are being amortized over five years.

Revenue Recognition. Revenue is recognized when it has persuasive evidence of an arrangement, the fee is fixed and determinable, performance of service has occurred and collection is reasonably assured. Revenue is recognized in the period the services are provided.