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

General:

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto for the years ended July 31, 2011 and 2010.

The independent auditors' report on our financial statements for the years ended July 31, 2011 and 2010 includes a "going concern" explanatory paragraph that describes substantial doubt about our ability to continue as a going concern.
Management's plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 1 to the audited consolidated financial statements.

While our independent auditor has presented our financial statements on the basis that we are a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time, they have raised a substantial doubt about our ability to continue as a going concern.

(a)

Liquidity and Capital Resources.

For the year ended July 31, 2011, net cash used in operating activities was $159,692 compared to $108,250 for the year ended July 31, 2010. Net loss was $306,723 for the year ended July 31, 2011 compared to $772,061 for the year ended July 31, 2010. The net loss in the current period were impacted by a write off of bad debt of $52,855, a gain of $115,561 on a debt settlement with the CEO, whereby the market value of shares of preferred stock that were issued in exchange for debt cancellation were less than the debt cancelled and a gain on the sale of the shares of our equity position in IGAM of $493,454. Also included in the current period were non-cash expenses of $516,946 of which $313,437 is associated with the fair market valuation of the convertible debentures, $163,509 is amortization, and $40,000 of common stock based compensation to consultants.

The net loss in the year ago period includes net non-cash expenses of $628,551 of which $123,908 are costs associated with the issuance of common stock and warrants, $171,240 of depreciation and amortization expense and $333,403 related to impairment of assets. These non cash expenses were offset by a decrease in the derivative liability of $154,188 and a change in the minority interest of $5,036.

Net cash provided by financing activities for the year ended July 31, 2011 was $172,940 compared to $108,350 for the year ended July 31, 2010. For the year ended July 31, 2011 the Company received $206,000 on the issuance of convertible notes, $18,200 on the issuance of related party notes and $5,000 on the issuance of notes payable. For the year ended July 31, 2011 the Company repaid $38,760 of related party notes payable, paid $17,500 closing costs on the newly issued convertible notes. For the year ended July 31, 2010 the Company received proceeds of $117,385 on the issuance of notes payable, of which $79,485 were from related parties, and also repaid $9.035 of notes payable, including $7,550 of related party notes payable.

For the year ended July 31, 2011, cash and cash equivalents increased by $13,248 compared to an increase of $100 for the year ended July 31, 2010. Ending cash and cash equivalents at July 31, 2011 was $13,652 compared to $404 at July 31, 2010.

We have limited cash and cash equivalents on hand and need to raise funds to continue to be able to support our operating expenses and to meet our other obligations as they become due. Sources available to us that we may utilize include the sale of unsecured convertible debentures, as well as the exercise of outstanding options and warrants, all of which may cause dilution to our stockholders.

(b)

Results of Operations.

OPERATING EXPENSES

Operating expenses for the year ended July 31, 2011 were $383,566 compared to expenses of $392,679 for the year ended July 31, 2010. The 2010 expenses were comprised management fees of $166,000, stock compensation costs of $123,908 comprised of deferred stock compensation costs, legal and accounting costs of $58,348 and general and administrative costs of $44,423. The 2011 expenses includes a write off of bad debt of $52,855, management fees paid to related parties of $205,200, consulting of $68,500, accounting and legal costs of $31,825 and $25,186 of general and administrative costs.

OTHER INCOME (EXPENSE)

Other income, net for the year ended July 31, 2011 was $76,843 compared to other expenses of $379,382 for the year ended July 31, 2010. For the year ended July 31, 2011 there was a gain on settlement of debt of $115,561 and there was a gain of $493,454 on the sale of the majority owned shares of Interactive. The change in derivative liabilities included in other income (expenses) for the year ended July 31, 2010 was a credit of $154,188 compared to an expense of $313,437 for the year ended July 31, 2011. Interest expense for the years ended July 31, 2011 and 2010 is summarized as:

                                                           July 31,
                                                        2011      2010
            Amortization of debenture note discounts $ 163,514 $ 142,753
            Debenture interest                           9,610    14,530
            Notes interest, related                     23,369    28,637
            Note and other interest                     24,250    19,610
                                                     $ 220,743 $ 205,350

Off-Balance sheet arrangements

During the fiscal year ended July 31, 2011, the Company did not engage in any off-balance sheet arrangements as defined in Item 303 of Regulation S-K.