The information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operation contains "forward looking statements." Actual results may materially differ from those projected in the forward looking statements as a result of certain risks and uncertainties set forth in this report. Although our management believes that the assumptions made and expectations reflected in the forward looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be materially different from the expectations expressed in this Annual Report. The following discussion should be read in conjunction with the unaudited Consolidated Financial Statements and related Notes included in Item 1.

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED JULY 31, 2012

Net revenues increased from $5,048,112 in the three-month period ending July 31, 2011 to $6,476,909 for the three-month period ending July 31, 2012. The increase in revenue is due to changes in the timing of various projects in Desert.

Cost of sales increased from $3,442,847 in the three-month period ending July 31, 2011 to $4,933,480 for the three-month period ending July 31, 2012. The increase is a result of the revenue increase described above.

Operating expenses decreased from $1,704,183 for the three months ending July 31, 2011 to $1,455,336 for the same period in 2012. This was mainly due to the decrease in the loss on transfer of assets.

Net loss increased from $92,594 for the three months ending July 31, 2011 to a net loss of $117,598 for the same period in 2012. This is due to higher cost of sales.

LIQUIDITY AND CAPITAL RESOURCES

Cash used in operations for the three month period ended July 31, 2011 was $57,101 as compared to cash provided by operations of $140,447 for the three months ended July 31, 2012. Cash used in investing activities for the three month period ended July 31, 2011 and July 31, 2012 was $0. Cash provided by financing activities for the period ended July 31, 2011 was $56,187, as compared to $14,257 used in financing activities for the three months ended July 31, 2012.

Our operating activities for the three months ended July 31, 2012, have generated adequate cash to meet our operating needs. As of July 31, 2011, we had cash and cash equivalents totaling $878,201, and receivables of $1,708,799.

As of the date of the filing the Company is attempting to restructure its debt with Boone and some other creditors. If successful there would be a significant decrease in the current portion of debt outstanding, interest rate reductions and extended maturity dates. If unsuccessful, we will continue to be in default on these loans and incur additional interest expense.

EBITDA

EBITDA for the 3 month period is $228,969. EBITDA is Earnings before interest,
tax, depreciation and amortization:

EBITDA                      31-July-12
Net income                     (117,598 )
Interest                        428,632
Derivative gain                (222,941 )
Tax                              21,904
Depreciation/Amortization       118,972
EBITDA                          228,969