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

Executive Overview

We are a holding company operating on a consolidated basis with our wholly-owned subsidiary, CWI Technology, Inc., and our majority-owned subsidiary, TRU Oiltech, Inc. CWI Technology, Inc. is developing the Continuous Water Injection technology ("CWI Technology"), which is designed to reduce harmful nitrogen oxide and smoke emissions, improve fuel efficiency and provide cleaner operations of diesel engines. TRU Oiltech, Inc. is developing the TRU ™ process, which is a mild, thermal reagent, primary upgrading process designed for heavy crude and oil sands bitumen which improves viscosity for acceptance by pipeline transportation systems. Both subsidiaries are development stage companies in the licensing and marketing stage for their technologies.

During the past quarters our management has been actively meeting with heavy oil producers to negotiate license agreements for the TRU™ process. In January 2008 we announced that TRU Oiltech had contracted with an independent engineering consultant to provide an unbiased linear program analysis of our synthetic crude product TRULITE™. In April we received that report which expressed concern regarding our testing methods and it recommended that we alter our testing methodology by undertaking a continuous feed pilot program that would simulate to a reasonable degree the expected operating conditions for a commercial production thermal cracker-solvent extraction process. However, management believes that the TRU™ process will provide benefits and the operation of a commercial unit can be projected from the existing test results. We intend to seek out oil industry partners to participate in the continuing testing phase for the commercial development of the TRU™ process. However, we may be unsuccessful at negotiating a partnership agreement and in that case we will delay further development of the TRU™ process.

In the last quarter, the Company moved to the second phase of the four phase business development plan of the TRU™ process; building a pilot plant. The Company commenced preliminary engineering and design for the pilot plant and construction is expected to begin in the fourth quarter of 2008 for completion in the third quarter of 2009. We are seeking financing to fund the final engineering and construction of the pilot plant and believe initial interest in the project remains positive.

Financial Condition

We have not received, nor recorded, consolidated revenue from ongoing operations for the past two years and have relied on equity transactions and loans to fund development of our subsidiaries' business plans. At September 30, 2008 we had cash and cash equivalents of $94,004, but we had negative working capital of $577,936. We will need to raise funds during the next twelve months and management is actively pursuing additional sources of financing and targeting strategic partners to increase income.

During the past two years we have relied on debt financing and sales of our common stock for cash, and to avoid using our cash we have issued common stock in consideration for services. At September 30, 2008, a convertible promissory note in the principal amount of $509,250 ($500,000 USD), with $59,945 ($40,845 USD) interest, was due; however, the holder of the note, Epsom Investment Services NV, agreed to extend the due date until March 31, 2009. For the nine month period ended September 30, 2008, we have not recognized any cash flows from other financing activities.

We anticipate that we will have research and development expenses in future periods as our subsidiaries further develop their

technologies. We do not anticipate hiring employees in the short term, but this action will be based upon the success of our subsidiaries' development of their respective technologies.

Our challenge for the next twelve months will be to obtain financing to engineer and build the TRU Oiltech pilot plant to assist the development of our subsidiaries' technology to a commercially viable application. However, we may not be able to obtain adequate financing for the TRU Oiltech pilot plant. In addition, our subsidiaries may be unable to develop each technology to a point where it satisfies the needs of the market. In that case, our subsidiaries may have to research and develop other applications for the technologies or abandon further development of the technologies.