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

FOR THE THREE AND SIX MONTHS ENDED OCTOBER 31, 2008 AND 2007

SALES

Our revenues from operations for the three months ended October 31, 2008 were $197,813. Our revenues from operations for the three months ended October 31, 2007 were $327,878. Our sales decreased as we have been unable to increase our customer base. Our cost of sales was $82,513 in 2008 compared to $ 62,766 in 2007.

For the six months ended October 31, 2008 sales were $449,656 compared to $649,352 and cost of sales were $135,196 compared to $156,233.

RESEARCH AND DEVELOPMENT

During the three months ended October 31, 2008, we incurred research and development expenses of $1,174 compared with $370,761 in the prior year Most of these expenses were from our two wholly-owned subsidiaries, Knock-Out Technologies, Inc. and MedElite, Inc. Our research and development decreased as we have mostly concluded our testing.

For the six months ended October 31, 2008 $10,898 was incurred compared to $392,269.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

A summary of our Selling, General and Administrative costs is as follows:

During the three months ended October 31, 2008, the Company incurred sales and marketing expenses of $85,150 compared to sales and marketing expenses of $8,673 during the three months ended October 31, 2007 as we began marketing our product more aggressively. Six months figures reflected a slight increase to $111,410 versus $97,032 as we had more operating entities.

Cash and stock compensation were paid for consulting fees for outside directors, legal advisors and marketing consultants. The Company incurred $303,079 in consulting fees in 2008 compared to $604,054 in 2007.

For the six months $855,894 was incurred compares to $1,484,910. Stock for services amounted to $715,766 of the total of $855,894.

General and administrative expenses increased to $152,375 from $124,865 for the three months and was $305,256 versus $267,130 for the prior year.

LIQUIDITY AND CAPITAL RESOURCES

As of October 31, 2008, we had working capital of $2,806,082. As a result of our operating losses during the three months ended October 31, 2008, we generated a cash flow deficit of $299,305.from operating activities.

By adjusting the Company's operations and development to the level of capitalization, management believes it has sufficient capital resources to meet projected cash flow deficits through the next twelve months. However, if thereafter we are not successful in generating sufficient liquidity from operations or in raising sufficient capital resources on terms acceptable to us, this could have a material adverse effect on our business, results of operations, liquidity and financial condition.

Our independent certified public accountants have stated in their report which is included as part of our audited financial statements for the fiscal years ended April 30, 2008 and 2007, that we have suffered recurring losses from operations , and this matter raise substantial doubt about our ability to continue as a going concern.

We have no off-balance sheet arrangements, special purpose entities, financing partnerships or guarantees.

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