Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements." These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to:
changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Management's Discussion and Analysis of Financial Condition and Results of Operations

We are a consumer electronics company, incorporated in the state of Nevada and doing business under the brand name Sigmac. Our business consists of the design, assembly, import, marketing and sale of our models of Sigmac branded flat panel televisions into the US market.

Results of operations for the three months ended May 31, 2012 and 2011.

We generated gross revenues of $776,292 during the three months ended May 31, 2012. Our cost of goods sold was $845,822 resulting in a gross loss of $69,530. Our total operating expenses during the three months ended May 31, 2012 were $761,039. Our operating expenses during the quarter consisted of professional fees of $263,002, salaries and wages of $183,934, general and administrative expenses of $130,782, promotional and marketing expenses of $119,802, consulting services of $43,929, and rent expense of $19,590. In addition, we incurred finance costs of $39,905, net interest expense of $3,389, and a loss on sale of assets of $7,555. Our net loss for the three months ended May 31, 2012 was $881,418.

By comparison, during the three months ended May 31, 2011, we generated gross revenues of $536,433. Our cost of goods sold was $512,709 resulting in a gross profit of $23,724. Our total operating expenses during the three months ended May 31, 2011 were $62,966. Our operating expenses during the quarter consisted of professional fees of $30,000, salaries and wages of $1,323, general and administrative expenses of $8,032, promotional and marketing expenses of $19,833, and commissions of $3,778. Our net loss for the three months ended May 31, 2011 was $39,242.

Our sales and operating expenses were substantially higher during the quarter ended May 31, 2012 compared to the same quarter last year because the quarter ended May 31, 2011 was our initial quarter of operations in the television business and our operations were substantially smaller at that time. Also, during the period ended May 31, 2012, our products were sold primarily under promotional pricing in order to generate growing consumer interest in our products as they were brought to market. Various discounts, points and price reductions granted to retailers to market our product resulted in a large reduction of our gross revenues in the as compared to the revenues which would have been generated by product sales under our listed regular prices. As a result, we experienced a gross loss for the three months ended May 31, 2012. As we move forward and continue to establish our brand, we expect that we will have to rely less on promotional pricing to generate sales of our products and, therefore, we anticipate that our gross profit margin, as well as our total sales, will increase; contingent, however, upon our obtaining sufficient working capital.

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Liquidity and Capital Resources

As of May 31, 2012, we had current assets in the amount of $985,426, consisting of cash in the amount of $50,602, accounts receivable of $610,292, inventory for resale of $174,957, and prepaid expenses of $149,575. As of May 31, 2012, the bulk of our outstanding accounts receivable were amounts due from our two largest customers, Fry's Electronics and Costco, together with amounts held in reserve by our factoring firm, PBCC.

Our current liabilities as of May 31, 2012 were $2,769,479, consisting of accounts payable and accrued liabilities of $1,905,195, accrued compensation owed to related parties of $286,813, a note payable of $174,271, and a line of credit in the amount of $403,200. Our working capital deficit as of May 31, 2012 was therefore $1,784,053. Our largest accounts payable as of May 31, 2012, were to our two primary Chinese suppliers, Anhui Technology Import & Export Co. and AHCOF International Development Co., Ltd.

On January 11, 2012, we entered into an accounts receivable financing arrangement with Pacific Business Capital Corporation ("PBCC"). The cost of the funding from PBCC is a discount of .813% of the gross amount of each receivable factored through PBCC, with an additional discount of .054% per day for accounts receivable that remain unpaid fifteen (15) days after they are purchased by PBCC. Under the agreement, PBCC will advance a portion of the invoice upon factoring (generally 70%), and reserve the remainder of the invoice amount. The reserve will be applied to amounts due from us to PBCC, with the remainder of the reserve funds to be rebated to us on an invoice-by-invoice basis. Our obligations to PBCC are secured by all of our assets, and are guaranteed by our officer, Edward Meadows, and by our former officer, Edward Wang. We are currently in the process of winding down our relationship with PBCC.

Our ability to obtain finished products and component parts is presently severely constrained by our limited access to sufficient working capital. At present, our existing Chinese suppliers have refused to provide us with additional credit, rendering us unable to obtain products to fill orders from our customers. We are presently negotiating with these suppliers to provide us with additional credit but there can be no assurance what we will be successful in obtaining that additional credit on acceptable terms, or at all. We are also seeking to establish a relationship with an additional manufacturer. We are also seeking equity and debt capital from other sources. With additional capital, we would be able to purchase additional product necessary for our current and expected distribution opportunities as well as negotiate more favorable supplier terms. In addition, if we are able to increase our equity base, we expect that we will be able to obtain better terms on our current accounts receivable and inventory financing. If we are unable to obtain that additional credit or capital, however, we will be unable to fill our existing orders or to make any additional sales and implementation of our business plan will be adversely affected.

In addition to the cost of producing and delivering product for sale, we anticipate incurring approximately $1,600,000 in general operating expenses over the course of the current fiscal year.

Off Balance Sheet Arrangements

As of May 31, 2012, there were no off balance sheet arrangements.

Going Concern

We have negative working capital and have incurred losses since inception. These factors create substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustment that might be necessary if we are unable to continue as a going concern.

Our ability to continue as a going concern is dependent on generating cash from the sale of our common stock and/or obtaining debt financing and attaining future profitable operations. Management's plans include selling our equity securities and obtaining debt financing to fund our capital requirement and ongoing operations; however, there can be no assurance we will be successful in these efforts.