SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Information contained in this discussion, other than historical information, is considered "forward-looking statements" that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives including, without limitation, statements about the Company's ability to continue operations through October 31, 2012, the liability of the Company for claims made in pending litigation, plans for future products, strengthening our relationship with our various sales organizations, our marketing intentions, our anticipated products, efforts to expand distribution channels, Zurvita Holdings Inc. ("Zurvita") anticipated growth in sales and margins, and our ability to achieve profitability. In some cases, you may identify forward-looking statements by words such as "may," "should," "plan," "intend," "potential," "continue," "believe," "expect," "predict," "anticipate" and "estimate," the negative of these words or other comparable words. These statements are only predictions. One should not place undue reliance on these forward-looking statements. The forward-looking statements are qualified by their terms and/or important factors, many of which are outside the Company's control, involve a number of risks, uncertainties and other factors that could cause actual results and events to differ materially from the statements made. The forward-looking statements are based on the Company's beliefs, assumptions and expectations of our future performance, taking into account information currently available to the Company. These beliefs, assumptions and expectations can change as a result of many possible events or factors, including those events and factors described in "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended July 31, 2011 filed with the Securities and Exchange Commission on October 28, 2011 (the "2010 Annual Report"), not all of which are known to the Company. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in the aforementioned forward-looking statements. The Company will update this forward-looking information only to the extent required under applicable securities laws. Neither the Company nor any other person assumes responsibility for the accuracy or completeness of these forward-looking statements.

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto, and other financial information included elsewhere in this Form 10-Q.

Introduction

Management's discussion and analysis of results of operations and financial condition ("MD&A") is provided as a supplement to and should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto included elsewhere herein to help provide an understanding of our financial condition and results of our operations. The MD&A is organized as follows:

· Overview - This section provides a general description of our business.

· Results of operations - This section provides an analysis of our results of operations comparing the three months ended October 31, 2011 and 2010. This analysis is provided on a consolidated basis.

· Liquidity and capital resources - This section provides an analysis of our cash flows for the three months ended October 31, 2011 and 2010 as well as a discussion of our liquidity and capital resources.

Overview

Description of Business

Our consolidated financial statements include the accounts of Zurvita Holdings, Inc. (referred to herein as the "Company," "Zurvita Holdings," "we," "us" or "our") and our wholly-owned subsidiary Zurvita, Inc. (Zurvita). Material intercompany transactions and balances have been eliminated upon consolidation. Zurvita Holdings is a national network marketing company offering high-quality products and services targeting individuals, families and small businesses. Products are sold through Zurvita's network of independent sales consultants.

Business Strategy

Zurvita's business model embraces a direct sales approach that utilizes the power of network marketing. The business strategy relies on a marketing sales force that compensates independent business owners ("Consultants") not only for sales of Company products and services they personally generate, but also for the sales of other Consultants whom they introduced to the business, creating a sales organization of Consultants and a hierarchy of multiple levels of compensation. The products, services and business opportunities are typically marketed directly to potential business partners, consumers and small businesses by means of referrals, national advertising, video promotions, conferences, the Internet, and word-of-mouth marketing.

Consultants become associated with the Company through an independent contractor relationship and receive remuneration for selling products and services and for expanding their network of people doing the same by promoting Zurvita's business opportunity. This model provides each independent sales Consultant an opportunity to make a living on a full-time basis and to obtain long-term financial security through creating long-term residual income.

Recently, Zurvita entered into the growing Health & Wellness industry with its recent launch of "Zeal", a nutritional drink, and the weight management market with the launch of Zurvita's Zeal Weight Management Program.

Zurvita has developed business processes to dramatically increase performance success:

Strengthen Brand Recognition

National and regional marketing efforts are administrated to support corporate and "personal" branding initiatives. Inherent to the network marketing industry is the axiom that people do not follow products or features, but rather the people with whom they relate to on a personal level. Zurvita not only invests resources to promote its corporate brand, but has developed a technological platform allowing Consultants to build web-based personal branded sites enhancing their position as affiliate marketers of Zurvita programs and services.

Increase Product and Service Offerings

Zurvita continues to explore the marketplace for new products and services that are anticipated by consumers. These are essential consumer and business solutions in large and growing markets. The network marketing industry mandates a state of continuous improvement by offering its Consultants and customers products and services that offer time, value and conveniences at cost competitive prices.

Marketing

Zurvita's marketing strategies open new, innovative marketing and sales avenues for Consultants to build income through expansion of their sales organization and the residual benefits offered through the sale of products and services. The marketing strategy features unique components beyond the traditional approach indicative of most network marketing companies.

Technology

Zurvita recognizes the Internet is a powerful platform for the network marketer. The highly social aspect of the Internet lends itself as a natural marketing vehicle and continuously opens a new population of prospects. Zurvita offers Consultants robust "back office" support complimented with sales and marketing tools.

Training and Support

The success of an external marketing program is only as effective as the internal marketing strategies to keep Consultants informed and engaged. Zurvita is committed to a variety of communication initiatives that promote leadership and business effectiveness. Weekly telephone/webinar meetings as well as informational seminars create opportunities to develop leaders and to promote Zurvita's business opportunity. National conferences and regional events further support Zurvita's efforts to train and develop its national sales force.

RESULTS OF OPERATIONS

Results of Operations

                                           For the Three Months Ended October 31,
                                                                            Increase
                                           2011              2010          (Decrease)

   Revenues                            $   1,310,285     $  1,312,785     $     (2,500 )
   Cost of Sales                           1,122,430          882,281          240,149

   Gross Profit                              187,855          430,504         (242,649 )

   Operating Expenses                      1,031,103        1,639,463         (608,360 )
   Operating Loss                           (843,248 )     (1,208,959 )       (365,711 )

   Other Income                              182,676        3,048,376       (2,865,700 )

   (Loss) income before income taxes        (660,572 )      1,839,417       (2,499,989 )

   Income Taxes                                  583            1,302             (719 )

   Net (Loss) Income                   $    (661,155 )   $  1,838,115     $ (2,499,270 )

   Basic (Loss) Earnings Per Share     $       (0.01 )   $       0.03

   Diluted (Loss) Earnings Per Share   $       (0.01 )   $       0.02

Revenue:

For the three months ended October 31, 2011 and October 31, 2010, total revenue was constant at $1.3 million. Despite material decreases in the administrative websites, marketing fees and materials and membership fees revenue components, the Company was able to achieve consistent total revenue due to the Company's new, consumable product that launched subsequent to October 31, 2010. The various components of total revenue are discussed below.

Administrative Websites
Administrative website sales were approximately $128 thousand for the three months ended October 31, 2011, as compared to approximately $462 thousand for the three months ended October 31, 2010. Prior to the Company's lunch of Zeal, the Company experienced various product issues that resulted in significant attrition of the Company's active consultant base who subscribe for such websites, resulting in an approximate $334 thousand decrease in administrative website revenue.

Advertising Sales
The Company's advertising sales were approximately $59 thousand for the three months ended October 31, 2011, as compared to approximately $241 thousand for the three months ended October 31, 2010. The Company has reduced its marketing of Zlinked due to its technology platform having technical shortcomings that led to adverse refund and persistency rates, which caused an approximate $182 thousand decrease in advertising sales. The Company is addressing these issues by redesigning the ZLinked technology platform to lower operating cost, to allow for more competitive product pricing, and to provide enhanced functions and services that are expected to increase the product's performance and market value.

Commissions
The Company's commission revenue for the three months ended October 31, 2011, was approximately $104 thousand as compared to approximately $111 thousand for the three months ended October 31, 2010. The approximate $7 thousand decrease is due to run off of the Company's residential energy block of business as well as lower commercial energy sales. The Company did not market residential energy during the three months ended October 31, 2011. The Company is currently marketing only commercial energy in the State of Texas on a limited basis.

Consumable Products
The Company's consumable products revenue represents Zeal product sales. For the three months ended October 31, 2011, consumable products revenue was approximately $898 thousand. Zeal was launched in February 2011; therefore, there is no prior period revenue.

Marketing Fees and Materials
The Company's marketing fees and materials revenue for the three months ended October 31, 2011, was approximately $75 thousand as compared to approximately $349 thousand for the three months ended October 31, 2010. The aforementioned attrition of the Company's active consultant base was the significant factor resulting in an approximate $274 thousand decrease in marketing fees and materials revenue.

Membership Fees
The Company's membership fees were approximately $46 thousand for the three months ended October 31, 2011, as compared to $150 thousand for the three months ended October 31, 2010. The decrease in membership revenue is a result of the Company's efforts to focus on the sale of advertising, energy, and consumable products as they are higher margin products.

Cost of Sales:

Total cost of sales for the three months ended October 31, 2011, was approximately $1.1 million as compared to approximately $882 thousand for the three months ended October 31, 2010. The increase in cost of sales is related to the commissions paid to sales consultants as well as consumable product costs related to the Zeal product. The various components of cost of sales are discussed below.

Benefit and Service Cost

Benefit and service cost represents the direct cost of the membership and subscription products sold such as administrative websites, advertising sales, marketing materials and membership fees. Benefit and service cost was approximately $173 thousand as compared to approximately $313 thousand. The decrease is due to less administrative website sales, advertising sales and membership fees.

Consumable Products Manufacturing Cost

Consumable products manufacturing cost represents Zeal's manufactured cost and the cost of shipping the product to customers. For the three months ended October 31, 2011, the Company recognized $270 thousand of such cost. Zeal was launched in February 2011; therefore, there is no such prior quarter cost.

Sales Commissions

The Company pays its independent sales agents on a commission basis. Sales commissions for the three months ended October 31, 2011, were approximately $680 thousand as compared to approximately $569 thousand for the three months ended October 31, 2010. The increase of $111 thousand is a result of various promotions implemented to stimulate consumable product sales growth.

Gross Profit:

For the three months ended October 31, 2011, gross profit was approximately $188 thousand or 14%, as compared to approximately $431 thousand or 33% for the three months ended October 31, 2010. Although total revenues were consistent between the periods, the gross profit amount and percentage decreased due to the significant increase in sales commissions.

Operating Expenses:

Our operating expenses for the three months ended October 31, 2011 and for the
three months ended October 31, 2010, were approximately $1.0 million and $1.6
million, respectively.

The table below sets forth components of our operating expenses for the three
months ended October 31, 2011, compared to the corresponding prior year period:

                                           Three Months Ended October 31,
                                   2011            2010          Increase (Decrease)

     Depreciation               $     8,716     $     9,787     $              (1,071 )
     Office Related Expenses        132,009         126,699                     5,310
     Payroll and Benefits           506,539         606,852                  (100,313 )
     Professional Fees              217,505         292,886                   (75,381 )
     Selling and Marketing          145,932         523,488                  (377,556 )
     Travel                          20,402          79,751                   (59,349 )

     Total operating expenses   $ 1,031,103     $ 1,639,463     $            (608,360 )

Depreciation expense for the three months ended October 31, 2011, was approximately $9 thousand, a decrease of approximately $1 thousand from the same prior year period. The decrease is due to lower carrying values of depreciable assets during the three months ended October 31, 2011 as compared to the same prior year period.

Office related costs include rent, insurance, utilities and office maintenance. For the three months ended October 31, 2011 these costs were approximately $29 thousand, $13 thousand, $11 thousand, and $79 thousand, respectively, as compared to $49 thousand, $12 thousand, $12 thousand, and $54 thousand for the three months ended October 31, 2010, an overall increase of approximately $5 thousand.

Payroll and related expenses for the three months ended October 31, 2011 was approximately $507 thousand, a decrease of approximately $100 thousand over the same prior year period. The decrease is due to certain employee salary reductions and less recognition of stock based compensation.

Professional fees consist of consulting, accounting fees, contract labor and legal costs. For the three months ended October 31, 2011, these costs were approximately $53 thousand, $88 thousand, $45 thousand and $32 thousand, respectively, as compared to $64 thousand, $101 thousand, $88 thousand, and $40 thousand for the three months ended October 31, 2010. Significant reductions in accounting fees and contract labor led to an overall professional fees decrease of approximately $75 thousand. The higher accounting fees in the prior period was due to the Company changing its auditors and the predecessor auditor's inability to provide consent to the use of their opinion on prior year financial statements which led to a re-audit of the prior year financial statements by the current auditor. The decrease in contract labor is a result of the Company reducing its dependency on contract labor for its Zlinked operations.

Selling and marketing expenses for the three months ended October 31, 2011, were $146 thousand as compared to $523 thousand for the three months ended October 31, 2010, a decrease of approximately $377 thousand over the prior reporting period. The significant decrease is due to less amortization of deferred costs such as agent advanced compensation and other prepaid marketing costs between the periods.

Business travel expenses for the three months ended October 31, 2011, were approximately $20 thousand, a decrease of approximately $59 thousand as compared to the three months ended October 31, 2010. Travel expenses decreased as the Company limited its business travel to reduce expenses.

Other Income (Expense):

Gain on change in fair value of embedded share conversion feature

An embedded share conversion feature exists within the Company's convertible note payable. The Company has determined the conversion feature to be a derivative instrument and has estimated its at fair value at the time of issuance and at each subsequent reporting period. We recorded an unrealized gain on the conversion feature for the three months ended October 31, 2011 of approximately $0 as compared to the unrealized gain for the three months ended October 31, 2010 of approximately $323 thousand. These unrealized gains are a non-cash item not impacting operating cash flows or results of operations before other income and expenses. See Note 9 - Assets and Liabilities Measured at Fair Value, to financial statements contained within Item 1 of Part 1 of this Form 10Q for additional information with respect to the estimation of the fair value of this conversion feature.

Gain on change in fair value of warrants

The Company's liability warrants are recorded at fair value. Their fair value is subject to remeasurement on a recurring basis. For the three months ended October 31, 2011 and 2010, the change in fair value of these warrants was approximately a gain of $228 thousand and a gain of $3.1 million, respectively. The gain in fair value for the three months end October 31, 2011 is a result of the significant decline in share price from $0.04 to $0.02 which is used as an input in fair valuing the warrants. The gain in fair value for the three months ended October 31, 2010 is a result of the significant decline in share price from $0.32 to $0.14. These gains are a non-cash item not impacting operating cash flows or results of operations before other income and expenses. See Note 9 - Assets and Liabilities Measured at Fair Value, to financial statements contained within Item 1 of Part 1 of this Form 10Q for additional information with respect to the estimation of the fair value of these warrants.

Interest expense

Interest expense for the three months ended October 31, 2011 was approximately $94 thousand, as compared to $84 thousand for the three months ended October 31, 2010. The increase in interest expense is a result of accreting the discount recognized on the Company's $2 million interest bearing convertible note issued on October 9, 2009. Accretion of $86 thousand is included within interest expense for the three months ended October 31, 2011, as compared to $78 thousand of accretion included within interest expense for the three months ended October 31, 2010.

Loss on change in fair value of marketable securities

The Company's marketable securities consist of non-registered common stock. The Company fair values these securities on a recurring basis. The Company recorded an unrealized loss of $33 thousand for the three months ended October 31, 2011, as compared to the unrealized loss of $320 thousand recorded for the three months ended October 31, 2010. These losses are a non-cash item not impacting operating cash flows or results of operations before other income and expenses. See Note 9- Assets and Liabilities Measured at Fair Value, to financial statements contained within Item 1 of Part 1 of this Form 10Q for additional information with respect to the determination of fair value for the Company's marketable securities.

Income Taxes:

For the three months ended October 31, 2011, the Company estimated approximately $583 in tax expense as compared to $1 thousand for the three months ended October 31, 2010. The decrease between the periods is a result of the Company's gross margin is the basis for estimating Texas gross margin tax.

The Company realized no federal tax benefit from the deferred tax asset resulting from its historical net operating loss carryforwards as the deferred tax asset is fully reserved.

Net (Loss) Income:

The Company had net loss of approximately $661 thousand for the three months ended October 31, 2011, as compared to a net income of approximately $1.8 million for the three months ended October 31, 2010. The main reason the Company went from earnings to a loss is due to the Company recognizing less of an unrealized gain on the change in fair value of the Company's liability warrants between the periods.