Summary of IVI COMMUNICATIONS INC

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (the "Quarterly Report") contains ''forward-looking statements'' that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are ''forward-looking statements'', including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management's beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as ''may'', ''will'', ''should'', ''could'', ''would'', ''predicts'', ''potential'', ''continue'', ''expects'', ''anticipates'', ''future'', ''intends'', ''plans'', ''believes'', ''estimates'' and similar expressions, as well as statements in the future tense, identify forward-looking statements.

These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business. Furthermore, industry forecasts are likely to be inaccurate, especially over long periods of time and in relatively new and rapidly developing industries such as oil and gas. Factors that may cause actual results, our performance or achievements, or industry results, to differ materially from those contemplated by such forward-looking statements include without limitation:

(a) volatility or decline of our stock price;

(b) potential fluctuation in quarterly results;

(d) inadequate capital and barriers to raising the additional capital or to obtaining the financing needed to implement its business plans;

(e) inadequate capital to continue business;

(f) changes in demand for our products and services;

(g) rapid and significant changes in markets;

(h) litigation with or legal claims and allegations by outside parties;

(i) insufficient revenues to cover operating costs.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management's belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings ''Risk factors'', ''Management's discussion and analysis of financial condition and results of operations'', ''Business'' and elsewhere in this report.

OVERVIEW

We are an ISP Management Company. We intend to acquire, consolidate and operate locally branded ISPs offering state of the art dialup and nationally branded wireless Internet access to residential and business customers. Management believes that local ISPs are hampered in their ability to provide the highest quality services and achieve profitability because they lack buying power. Through consolidation, economies of scale are achieved and profit can be maximized. We intend to deploy, market, and maintain a nationally branded fixed wireless broadband solution with newly acquired ISPs in tier 3 markets.

We currently operate one subsidiary, Futura, Inc.

On February 6, 2006 we entered into a Purchase Agreement to acquire 100% of the outstanding stock of Futura, Inc. from Francis and Lois Allen, the shareholders of Futura, Inc. In consideration for the Futura stock, we paid to the Allens $150,000 in cash (to be paid over a 10-month period) and $550,000 in shares of the Company's restricted common stock (an aggregate of 7,033 shares calculated as of the close of the transaction). Futura is an Internet Service Provider that provides dialup and DSL broadband Internet access, and associated services such as Email spam and virus filtering, VoIP telephony, "Kid Safe" surfing (Parental Control), and web accelerator services, to communities surrounding Little Rock Arkansas including Cabot, Carlisle, Clarendon, DeValls Bluff, DeWitt, England, Hazen, Jacksonville, and Stuttgart.

The Company expects operating losses and negative operating cash flows to continue for at least the next twelve months, because of expected additional costs and expenses related to brand development; marketing and other promotional activities; strategic relationship development; and potential acquisitions of related complementary businesses.

Liquidity and Capital Resources

As of September 30, 2008 the Company has an accumulated operating deficit of $27,396,447 and stockholders' deficit of $3,470,405.

The Company's principal source of operating capital has been provided by the sale of its stock and securities, corporate consulting services, and operations of its wholly owned subsidiaries.

Effective September 2, 2008, the Company approved a reverse split of its common stock. Each of the three hundred ninety-nine million, nine hundred and ninety-nine thousand, nine hundred and ninety-one shares of the Corporations common stock issued and outstanding immediately prior to the Reverse Split shall be converted into approximately one million validly issued, fully paid and non assessable shares of common stock. The par value of the common stock shall not be adjusted as a result of the reverse split, and shall remain at $.001 per share. The amount of authorized shares shall not be impacted by the reverse stock split.

On March 27, 2006, the Company entered into a securities purchase agreement with YA Global providing for the sale by the Company to Cornell of our 12% secured convertible debentures in the aggregate principal amount of $600,000 of which $200,000 was advanced immediately. The second installment of $200,000 was advanced on April 18, 2006 upon the filing of the SB2 Registration Statement. The last installment of $200,000 was advanced August 21, 2006, two (2) business days after the registration statement was declared effective.

The Convertible Debentures mature on the third anniversary of the date of issuance and the Company is not required to make any payments until the maturity date. Holders of the Debentures may convert at any time amounts outstanding under the debentures into shares of our common stock at a conversion price per share equal to the lower of (i) $0.20 or (ii) ninety percent (90%) of the lowest closing Bid Price of the Common Stock during the thirty (30) trading days immediately preceding the conversion date as quoted by Bloomberg, LP. Cornell has agreed not to short any of the shares of Common Stock. The Company has the right to redeem a portion or all amounts outstanding under the debenture prior to the maturity date at a 20% redemption premium provided that the closing bid price of our common stock is less than $0.20.

A holder of the Convertible Debenture may not convert or receive shares as payment of interest to the extent such conversion or receipt of such interest payment would result in the holder, together with any affiliate of the holder, beneficially owning in excess of 4.99% of the then issued and outstanding shares of Common Stock, including shares issuable upon conversion of, and payment of interest.

Since August 22, 2006 through March 31, 2008, 396,774 shares, valued at $408,345, were issued to convert debentures, contingent liability, accrued payroll and services.

On April 4, 2008, the debenture holder converted $1,547 of principal for 22,750 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On April 4, 2008, the debenture holder converted $1,615 of principal for 23,750 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On April 10, 2008, 35,178 shares valued at $7,458 were issued to convert a note.

On April 14, 2008, 36,933 shares valued at $8,421 were issued to convert a note.

On April 16, 2008, the debenture holder converted $1,700 of principal for 25,000 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On April 18, 2008, the debenture holder converted $1,853 of principal for 27,250 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On April 25, 2008, the debenture holder converted $1,955 of principal for 28,750 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On April 25, 2008, 85,807 shares valued at $16,475 were issued to convert a note.

On April 25, 2008, 16,892 shares valued at $3,243 were issued to convert a note.

On April 30, 2008, the debenture holder converted $2,040 of principal for 30,000 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On May 2, 2008, the debenture holder converted $627 of principal for 9,227 shares of common stock; the conversion price was $.000170, 90% of the lowest closing bid price during the prior 30 days.

On June 17, 2008, due to an agreement a debenture holder forgave the remaining balance of $19,405 on the debenture.

A beneficial interest charge of $97,566 was recognized on the conversions in the three months ending June 30, 2008.

The Company also issued to Cornell five-year warrants to purchase 5,000 and 3,750 shares of Common Stock at prices of $0.30, and $0.40, respectively. If at the time of exercise of the Warrants, the shares of Common Stock underlying the Warrant are not subject to an effective registration statement under the Securities Act of 1933, as amended (the "Act") or if an event of default under the Convertible Debentures has occurred, which is not cured in any applicable cure period, the holder of the Warrant, in lieu of making payment of the Exercise Price in cash, may elect a cashless exercise in accordance with the formula set forth in the Warrant. If, subject to the exceptions set forth in the warrants, during the time that the Warrants are outstanding, the Company issues or sells, or is deemed to have issued or sold, any shares of Common Stock for a consideration per share less than a price equal to the then exercise price, then the exercise price will be reduced to an amount equal to such consideration per share. Upon each such adjustment, the number of shares of Common Stock issuable upon exercise of the Warrants will be adjusted to the number of shares determined by multiplying the exercise price in effect immediately prior to such adjustment by the number of shares issuable upon exercise of the warrants immediately prior to such adjustment and dividing the product by the exercise price resulting from such adjustment. Similar adjustments will be made upon any issuance or sale by us of options to purchase Common Stock or convertible securities.

On August 8, 2006 the company issued stock at a market price of $.04. This increased the number of warrants from 8,750 to 75,000 at $.04 exercise price.

On December 19, 2006 the company issued stock at a market price of $.0242. This increased the number of warrants from 75,000 to 123,966 at $.0242 exercise price.

On January 17, 2007, by Board Resolution, the exercise price on the warrants was reduced to $.0085, resulting in an increase in the number of warrant shares to 352,941.

On February 22, 2007, Cornell exercised 952,941 warrants at a price of $.0085 for $29,750. This reduced the number of warrants from 352,941 to 344,191. Beneficial interest of $12,250 was recognized.

On May 3, 2007 the company issued stock at a market price of $.0051. This increased the number of warrants from 344,191 to 573,652 at $.0051 exercise price.

On August 30, 2007 the company issued stock at a market price of $.0031. This increased the number of warrants from 573,652 to 843,750 at $.0031 exercise price.

On December 3, 2007 the company issued stock at a market price of $.0019. This increased the number of warrants from 843,750 to 1,539,803 at $.0019 exercise price.

On February 27, 2008 the company issued stock at a market price of $.00076. This increased the number of warrants from 1,539,803 to 3,849,507 at $.00076 exercise price.

In connection with the Purchase Agreement, the Company also entered into a registration rights agreement with Cornell providing for the registration of the shares of common stock issuable upon conversion of the debentures and exercise of the warrants. The Company is obligated to use its best efforts to cause the registration statement to be declared effective no later than July 25, 2006 and to insure that the registration statement remains in effect until all of the shares of common stock issuable upon conversion of the debentures and exercise of the warrants have been sold. In the event of a default of the Company's obligations under the registration rights agreement, including its agreement to file the registration statement no later than May 11, 2006, or if the registration statement is not declared effective by July 25, 2006, the Company is required to pay to Cornell, as liquidated damages, for each month that the registration statement has not been filed or declared effective, as the case may be, either a cash amount or shares of its common stock equal to 2% of the liquidated value of the Debentures.

The registration statement was declared effective on August 14, 2006.

The Company's obligations under the purchase agreement are secured by substantially all of its assets and the assets of its subsidiaries. As further security for its obligations thereunder, Nyhl Henson, Former Chief Executive Officer, and Charles Roodenburg, Chief Executive Officer, have granted a security interest in an aggregate of 2,313 shares of their common stock and 3,300,000 shares of their Series A Preferred Stock. The Company also granted a security interest in 15,000,000 shares of its stock, issued from treasury.

On July 14, 2006, the Company entered into an agreement with YA Global to cancel the security interest in the 37,500 shares. These shares were subsequently returned and cancelled.

In May 2006 the company borrowed $5,000 on a one year note due May 22, 2007. This note carries no interest. At June 30, 2008 this note remains unpaid.

The Company sold a security for $12,500 to one entity in September 2006. This debenture carries no interest and has a conversion rate of 50% discount to market of the ten day average closing bid price. No conversion or repayment of the debenture has occurred as of June 30, 2008.

The Company sold a security for $12,500 to one entity in October 2006. This debenture carries no interest and has a conversion rate of 50% discount to market of the ten day average closing bid price. No conversion or repayment of the debenture has occurred as of June 30, 2008.

In December 2006 the company borrowed $4,000 on a one year note due December 22, 2007. This note carries no interest. At June 30, 2008 this note remains unpaid.

In January 2007 the company borrowed $6,756 from Nyhl Henson, former President, on a one year note due January 19, 2008. This note carries no interest and is convertible at the previous 10-day average closing price. This note was converted on April 10, 2008 and no further money is due on this note.

In January 2007 the company borrowed $3,243 from Charles Roodenburg, President, on a one year note due January 19, 2008. This note carries no interest and is convertible at the previous 10-day average closing price. This note was converted on April 25, 2008 and no further money is due on this note.

In February 2007 the company borrowed $20,000 from Nyhl Henson, President, on a note due on demand. The note carries no interest and is convertible at the previous 10-day average closing price. This note was converted on April 10, April 14, and April 25, 2008. There is no further money due on this note.

In February 2007 the company borrowed $25,000 from Nyhl Henson, President, on a note due on demand. The note carries no interest and is convertible at the previous 10-day average closing price. On April 25, 2008, $5,596 of this note was converted. The remaining balance on this note is $19,405 was forgiven on June 17, 2008.

The Company anticipates expenditures for acquisitions in excess of $1,000,000 to expand its operation during the next twelve months. The Company believes that the current cash flows generated from its revenues will not be sufficient to fund the anticipated expansion of operations. The Company will require additional funding to finance its operations through private sales and public debt or equity offerings. However, there is no assurance that the Company can obtain such financing. Recurring revenues are anticipated from ISP management services but no management service contracts have been executed at this time. There can be no assurance that the Company will secure these contracts.

Results of Operations

Three Months Ended September 30, 2008 Compared to Three Months Ended September 30, 2007

The numbers below compare the condensed consolidated results of income September 30, 2008 and September 30, 2007, and also compare the results of existing operations, which are corporate and the Futura subsidiary, for the same periods.

Revenue for the three months ending September, 2008 was $2,026 compared to $80,044 for the three months ending September 30, 2007. This decrease of $78,018 is mainly due to a reduction in service fees provided by Futura.

Cost of operations for the three months ending September 30, 2008 was $17,345 compared to $42,299 for the three months ending September 30, 2007. Cost of operations decreased $24,954. The reduction in cost of operations is a result of the reduction of dial-up subscribers at the Futura subsidiary.

General and administrative expenses for the three months ending September 30, 2008 were $60,257 compared to $287,283 for the three months ending September 30, 2007. General and administrative decreased by $227,026. The largest components of general and administrative for the three months ending June 30, 2008, were corporate and operations compensation of $16,594, a $71,098 reduction from September 30, 2007. Occupancy expenses were $7,089 for the three months ending September 30, 2008, a reduction of $5,488 from September 30, 2007. Controllable expenses were $35,260 for the three months ending September 30, 2008, a reduction of $151,034 from September 30, 2007.

Depreciation and amortization expense for the three months ending September 30, 2008 was $58,269 compared to $41,959 for the three months ending September 30, 2007. This increase of $16,310 is primarily due to the increase in the amortization of the debt discount associated with the debentures in the amount of $21,589 and a decrease in deprecation of $5,279.

Interest expense for the three months ending September 30, 2008 was $29,036 compared to $113,430 for the three months ending September 30, 2007.

Other income for the three months ending September 30, 2008 was $0 compared to $166,532 for the three months ending September 30, 2007.

The Company had a loss on the revaluation of derivatives of $246,026 for the three months ending September 30, 2008 compared to the loss of $145,914 for the three months ended September 30, 2007.

The Company had a net loss for the three months ending September 30, 2008 of $429,430 compared to a net loss of $384,309 for the three months ending September 30, 2007. The Company expects additional losses through the next fiscal year.

Six Months Ended September 30, 2008 Compared to Six Months Ended September 30, 2007

Revenue for the six months ending September 30, 2008 was $46,769 compared to $171,517 for the six months ending September 30, 2007. This decrease of $124,748 is due to a reduction in service fees provided by Futura of $122,481.

Cost of operations for the six months ending September 30, 2008 was $35,108 compared to $105,867 for the six months ending September 30, 2007. Cost of operations decreased $70,759. The reduction in cost of operations is a result of the reduction of dial-up subscribers at the Futura subsidiary.

General and administrative expenses for the six months ending September 30, 2008 were $92,149 compared to $756,877 for the six months ending September 30, 2007. General and administrative decreased by $664,728. The largest components of general and administrative for the six months ending September 30, 2008, were corporate and operations compensation of $33,576, a $170,036 reduction from September 30, 2007. Occupancy expenses were $13,894 for the six months ending September 30, 2008, a reduction of $13,332 from September 30, 2007. Controllable expenses were $44,085 for the six months ending September 30, 2008, a reduction of $481,802 from September 30, 2007.

Selling expenses for six months ending September 30, 2008 were $200 compared to $696 for the six months ended September 30, 2007, a reduction of $496. This is a result of the reduction of direct advertising costs.

Depreciation and amortization expense for the six months ending September 30, 2008 was $95,071 compared to $121,331 for the six months ending September 30, 2007. This decrease of $26,260 is primarily due to the decrease in the amortization of the debt discount associated with the debentures.

Interest expense for the six months ending September 30, 2008 was $49,018 compared to $53,434 for the six months ending September 30, 2007. The decrease of $4,416 was primarily the result in the reduction in debenture and notes payable principal balances.

Beneficial interest expense on debt conversions for the six months ending September 30, 2008 was $97,566 compared to $289,624 for the six months ending September 30, 2008. The decrease of $192,058 was primarily due to the reduction in the debentures.

Other income for the six months ending September 30, 2008 was $0 compared to $176,163 for the six months ending September 30, 2007.

Forgiveness of debt totaled was $602,019 for the six months ending September 30, 2008 compared to $0 for the six months ending September 30, 2007. In the six months ending September 30, 2008, the Company had settled agreements with the former owners.

The Company had a loss on the revaluation of derivatives of $216,859 for the six months ending September 30, 2008 compared to the loss of $232,292 for the six months ended September 30, 2007.

The Company had a net income for the six months ending September 30, 2008 of $42,294 compared to a net loss of $1,212,519 for the six months ending September30, 2007. This gain was due to the debt forgiveness income of $602,019 due to settlement agreements with the former owners of the Company. The Company expects additional losses through the next fiscal year.

Critical Accounting Policies

Revenue Recognition

The Company recognizes revenues in accordance to Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements."

Derivative Instruments

The Company has an outstanding convertible debt instrument that contains free-standing and embedded derivative features. The Company accounts for these derivatives in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", and EITF Issue No. 00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock". In accordance with the provisions of SFAS No. 133 and EITF Issue No. 00-19, the embedded derivatives are required to be bifurcated from the debt instrument and recorded as a liability of fair value on the consolidated balance sheet. Changes in the fair value of the derivatives are recorded at each reporting period and recorded in net gain(loss) on derivative, a separate component of the other income (expense).

Inflation

In our opinion, inflation has not had a material effect on our operations.

Risk Factors and Cautionary Statements

We Have a History of Losses and We Expect Continuing Losses and May Never Achieve Profitability

For the six months ending September 30, 2008 and 2007, we generated revenues of $46,769 and $171,517 respectively. The Company has a condensed consolidated net income of $42,294 for the six months ended September 30, 2008 as compared to a net loss of $1,212,519 for the six months ended September 30, 2007. We cannot assure you that we can achieve or sustain profitability on a quarterly or annual basis in the future. Our operations are subject to the risks and competition inherent in the establishment of a business enterprise.

There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether our services will achieve market acceptance. We may not achieve our business objectives and the failure to achieve such goals would have an adverse impact on us. These matters raise substantial doubt about our ability to continue as a going concern.

Our Auditors Have Included a Going Concern in Their Opinion which Could Cause Investors to Lost their Investment In the Company

Our auditors have included in their opinion to our financial statements for the years ending March 31, 2008 and 2007, a paragraph that addressed concerns about our ability to continue as a going concern. These concerns arise from the fact that we have sustained operating losses for the years ending March 31, 2008 and 2007 and have sustained large capital deficits and have been unable to come to mutually acceptable terms to cure the default by the Company on the terms of the Purchase Agreement ("Agreement") dated January 1, 2005 by and between IVI Communications, Inc. ("Buyer"), Internet Business Consulting, Inc. ("IBC") and AppState.Net, LLC ("AppState"), jointly referred to as ("Sellers"). Sellers have exercised the remedies for default as provided in the Agreement and confirmed that the Remedies, which were that foreclosure and repossession occurred December 31, 2006, are in effect. Purchase Agreement, Exhibit 2.4, is incorporated by reference to the exhibits filed in the Company's Form 8-K filed February 4, 2005.

Pursuant to those remedies, ownership of Sellers reverted to James Hollis, effective December 31, 2006.

Per the terms of the Agreement, Sellers were to return 6,436 shares of IVI common stock. The stock was returned and cancelled on July 6, 2007.

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