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 and six months ended August 31, 2012 and 2011.

We generated gross revenues of $31,093 during the three months ended August 31, 2012. Our cost of goods sold was $183,606 resulting in a gross loss of $152,513. Our total operating expenses during the three months ended August 31, 2012 were $145,854. Our operating expenses during the quarter consisted of salaries and wages of $66,328, general and administrative expenses of $63,392, commissions of $15,385, rent expense of $3,626, and negative professional fees in the amount of $2,877, resulting from a reclassification to offset an accrued liability. In addition, we incurred finance costs of $56,390 and net interest expense of $41,664. Our net loss for the three months ended August 31, 2012 was $396,421.

By comparison, during the three months ended August 31, 2011, we generated gross revenues of $1,960,646. Our cost of goods sold was $1,897,111 resulting in a gross profit of $63,535. Our total operating expenses during the three months ended August 31, 2011 were $363,793. Our operating expenses during the quarter consisted of professional fees of $13,465, salaries and wages of $66,500, general and administrative expenses of $80,930, commissions of $3,800, and promotional and marketing expenses of $199,098. Our net loss for the three months ended August 31, 2011 was $300,258.

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During the six months ended August 31, 2012, we generated gross revenues of $807,385. Our cost of goods sold was $1,029,438 resulting in a gross loss of $222,043. Our total operating expenses during the six months ended August 31, 2012 were $906,893. Our operating expenses during the period consisted of salaries and wages of $250,262, professional fees of $260,125, general and administrative expenses of $194,174, commissions of $15,385, rent expense of $23,216, promotional and marketing in the amount of $119,802, and consulting expenses of $43,929. In addition, we incurred finance costs of $96,295, net interest expense of $45,053, and a loss on sale of assets in the amount of $7,555. Our net loss for the six months ended August 31, 2012 was $1,277,839.

By comparison, during the six months ended August 31, 2011, we generated gross revenues of $2,497,157. Our cost of goods sold was $2,425,861 resulting in a gross profit of $71,296. Our total operating expenses during the six months ended August 31, 2011 were $428,391. Our operating expenses during the quarter consisted of professional fees of $38,465, salaries and wages of $67,823, general and administrative expenses of $95,594, commissions of $7,578, and promotional and marketing expenses of $218,931. Our net loss for the six months ended August 31, 2011 was $357,095.

Our sales and operating expenses were substantially lower during the three and six months ended August 31, 2012 compared to the same periods last year because our usual Chinese suppliers have refused to provide us with additional trade credit, rendering us unable to obtain products to fill orders from our customers. As a result, our total sales and overall level of business activity have declined significantly. We are presently seeking to establish relationships with additional manufacturers. There can be no assurance that such additional relationships will be established or that we will be able to obtain additional capital or trade credit on acceptable terms, or at all.

Liquidity and Capital Resources

As of August 31, 2012, we had current assets in the amount of $408,723, consisting of cash in the amount of $3,367, accounts receivable of $260,021, and prepaid expenses of $145,335. Our current liabilities as of August 31, 2012 were $17,478,391, consisting of accounts payable and accrued liabilities of $2,146,837, accrued compensation owed to related parties of $346,800, a convertible note payable of $42,157, net of discount, a note payable of $174,271, and a derivative liability in the amount of $14,768,326. The derivative liability is related to a promissory note that is convertible to common stock at a discount to our market share price. Our working capital deficit as of August 31, 2012 was therefore $17,069,668.

Our ability to obtain finished products and component parts is presently severely constrained by our limited access to sufficient working capital. At present, our usual Chinese suppliers have refused to provide us with additional trade credit, rendering us unable to obtain products to fill orders from our customers. We are presently seeking to establish relationships with additional manufacturers. There can be no assurance that such additional relationships will be established or that we will be able to obtain additional capital or trade credit on acceptable terms, or at all.

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. If we are unable to obtain that additional credit or capital, however, we will be unable 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.

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Off Balance Sheet Arrangements

As of August 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.