UNITED STATES


SECURITIESANDEXCHANGE COMMISSION


Washington,DC20549




FORM10-Q




(Mark One)


[X]
            QUARTERLY REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.For the Quarterly Period EndedAugust 31,
      2008[  ]
            TRANSITION REPORT PURSUANT TO
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934.




For the transition period from
______________ to ________________





Commission file number000-28506





Gate To Wire Solutions, Inc.


(Exact Name of Small Business
Issuer as Specified in Its Charter)




Nevada
            13-3411167(State or Other Jurisdiction of
      Incorporation)
            (I.R.S. Employer
      Identification No.)





3565 King Road, Suite
102


King City,Ontario,L7B 1M3,Canada


(Address of Principal Executive
Offices)





(905) 833-9845


(Issuer’s Telephone Number, Including
Area Code)





TrackPower, Inc.


(Former Name, Former Address and Former
Fiscal Year,


if Changed Since Last
Report)







Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90
days.


Yes [X] No
[  ]




Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act.




Large accelerated
      filer
            [  ]
            Accelerated
      filer
            [  ]Non-accelerated
      filer
            [  ](Do not check if a
      smaller reporting company)
            Smaller reporting
      company
            [X]




Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).


Yes [  ] No
[X]




Indicate the number of
shares outstanding of each of the issuer’s classes of common stock, as of the
latest practicable date:




The
number of shares of common stock(see Note 1)outstanding
as ofOctober 15,
2008:
25,102,430






















GATETOWIRESOLUTIONS, INC.











INDEX











PART I.
            Financial
      InformationItem 1.
            Condensed Consolidated Financial
      Statements (unaudited)Condensed Consolidated Balance
      Sheet
            3Condensed Consolidated Statements
      of Operations
            4Condensed Consolidated Statements
      of Stockholders’ Equity
            5Condensed Consolidated Statements
      of Cash Flows
            6Notes to Condensed Consolidated
      Financial Statements
            7Item 2.
            Management's Discussion and
      Analysis or Plan of Operation
            9Item 3.
            Controls and
      Procedures
            11PART II.
            Other
      InformationItem 2.
            Unregistered Sales of Equity
      Securities
            12Item 3.
            Defaults Upon Senior
      Securities
            12Item 6.
            Exhibits
            13Signatures and
      Certifications
            14








PARTI.Financial
Information





Item
1.Condensed
Financial Statements.





GATETOWIRESOLUTIONS, INC.ANDSUBSIDIARY


Consolidated Balance
Sheets








Assets


August 31,
              2008
            
            
            February 29,(Unaudited)
            
            
            2008Current
    assetsCash and cash
      equivalents
            
            $
            38,353
            
            
            $
            110,522Due from related parties (Note
      2)
            
            
            4,708
            
            
            
            -Total current
      assets
            
            
            43,061
            
            
            
            110,522License rights (Note
      3)
            
            
            50,000
            
            
            
            50,000Total
assets
            
            $
            93,061
            
            
            $
            160,522Liabilities
      and Stockholders’ DeficiencyCurrent
      liabilitiesAccounts
      payable
            
            $
            214,272
            
            
            $
            263,726Due to related parties (Note
      2)
            
            
            453,400
            
            
            
            212,000Restructured related party
      liabilities (Note 4)
            
            
            -
            
            
            
            99,875Accrued
      expensesProfessional
      fees
            
            
            33,000
            
            
            
            34,000Other
            
            
            6,683
            
            
            
            12,000Total current
      liabilities
            
            
            707,355
            
            
            
            621,601Total
      liabilities
            
            $
            707,355
            
            
            $
            621,601Stockholders’
      deficiencyPreferred stock, unlimited shares
      authorized, none outstanding
            
            
            -
            
            
            
            -Common stock, $.0001 par value;
      unlimited shares
              authorized, 2,510,243,040
      shares issued and outstanding
            
            
            251,024
            
            
            
            98,530Additional paid-in
      capital
            
            
            33,732,382
            
            
            
            30,137,832Common stock
      subscribed
            
            
            -
            
            
            
            3,647,169Accumulated
      deficit
            
            
            (34,597,700)
            
            
            
            (34,344,610
            )Total stockholders’
      deficiency
            
            
            (614,294)
            
            
            
            (461,079
            )Total liabilities and
      stockholders’ deficiency
            
            $
            93,061
            
            
            $
            160,522








See notes to financial
statements











GATETOWIRESOULUTIONS, INC.ANDSUBSIDIARY


Consolidated Statement of
Operations


(Unaudited)











Three Months
      Ended
              August 31,
            
            
            Six Months
      Ended
              August
      31,2008
            
            
            2007
            
            
            2008
            
            
            2007Revenues
            
            $
            -
            
            
            $
            -
            
            
            $
            -
            
            
            
            -Costs and
      expensesManagement fees - related
      party
            
            
            80,770
            
            
            
            67,500
            
            
            
            159,689
            
            
            
            127,500Professional
      fees
            
            
            16,803
            
            
            
            3,778
            
            
            
            23,669
            
            
            
            8,175General and
      administrative
            
            
            26,346
            
            
            
            22,992
            
            
            
            69,732
            
            
            
            42,981Depreciation and
      amortization
            
            
            -
            
            
            
            382
            
            
            
            -
            
            
            
            764Interest
            
            
            -
            
            
            
            31,249
            
            
            
            -
            
            
            
            57,715Gain on disposal of marketable
      securities
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (7,550
            )Total costs and
      expenses
            
            
            123,919
            
            
            
            125,901
            
            
            
            253,090
            
            
            
            229,585Net loss
            
            
            (123,919
            )
            
            
            (125,901
            )
            
            
            (253,090
            )
            
            
            (229,585
            )Preferred
      dividends
            
            
            -
            
            
            
            60,493
            
            
            
            -
            
            
            
            120,986Net loss applicable to common
      shareholders
            
            $
            (123,919
            )
            
            $
            (186,394
            )
            
            $
            (253,090
            )
            
            
            (350,571
            )Loss per share of common
      stock
            
            $
            (0.000
            )
            
            $
            (0.0002
            )
            
            $
            (0.000
            )
            
            
            (0.0005
            )Weighted average number of common
      shares outstanding
            
            
            2,510,243,040
            
            
            
            779,851,873
            
            
            
            1,770,690,957
            
            
            
            775,226,873

















See notes to financial
statements








GATETOWIRESOLUTIONS, INC.ANDSUBSIDIARY


Consolidated Statement of Changes in
Stockholders’ Equity/ (Deficiency)


August31, 2008


(Unaudited)





Common
Stock
            
            
            Additional
      Paid-in
            
            
            Common
Stock
            
            
            AccumulatedShares
            
            
            Amount
            
            
            Capital
            
            
            Subscribed
            
            
            (Deficit)
            
            
            TotalBalanceFebruary 29,
      2008
            
            
            985,305,540
            
            
            
            98,530
            
            
            
            30,137,832
            
            
            
            3,647,169
            
            
            
            (34,344,610
            )
            
            
            (461,079
            )Common stock private
      placement
            
            
            15,000,000
            
            
            
            1,500
            
            
            
            103,500
            
            
            
            (105,000
            )
            
            
            -
            
            
            
            -Common stock issued pursuant to
      private placement associated with disposal of trade
      name
            
            
            200,000,000
            
            
            
            20,000
            
            
            
            82,333
            
            
            
            (102,333
            )
            
            
            -
            
            
            
            -Common stock issued to settle
      preferred share obligations
            
            
            1,220,000,000
            
            
            
            122,000
            
            
            
            3,317,836
            
            
            
            (3,439,836
            )
            
            
            -
            
            
            
            -Common stock issued pursuant to
      settlement with officers
            
            
            89,937,500
            
            
            
            8,994
            
            
            
            90,881
            
            
            
            -
            
            
            
            -
            
            
            
            99,875Net loss for the three months
      endedMay 31,
      2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (129,171
            )
            
            
            (129,171
            )BalanceMay 31,
2008
            
            
            2,510,243,040
            
            
            
            251,024
            
            
            
            33,732,382
            
            
            
            -
            
            
            
            (34,473,781
            )
            
            
            (490,375
            )Net loss for the three months
      endedAugust 31,
      2008
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            -
            
            
            
            (123,919)
            
            
            
            (123,919)BalanceAugust 31,
    2008
            
            
            2,510,243,040
            
            
            
            251,024
            
            
            
            33,732,382
            
            
            
            -
            
            
            
            (34,597,700)
            
            
            
            (614,294)






See notes to financial
statements








GATETOWIRESOLUTIONS, INC.ANDSUBSIDIARY


Consolidated Statement of Cash
Flows


(Unaudited)





Six Months
      Ended
              August 31,2008
            
            
            2007Operating
      activitiesNet (loss)
            
            $
            (253,090)
            
            
            $
            (229,585)Adjustments to reconcile net
      (loss) to net cash (used) by operating activities:Depreciation and
      amortization
            
            
            -
            
            
            
            764Gain on disposal of
      investment
            
            
            -
            
            
            
            (7,550)Changes in:Prepaid
      expenses
            
            
            -
            
            
            
            (13,440)Due from/to  related
      parties
            
            
            236,692
            
            
            
            243,208Accounts payable and accrued
      expenses
            
            
            (55,771)
            
            
            
            (95,823
            )Net cash (used) in operating
      activities
            
            
            (72,169)
            
            
            
            (102,426)Investing
      activitiesProceed on disposal of
      investment
            
            
            -
            
            
            
            37,100Net cash (used in) investing
      activities
            
            
            -
            
            
            
            37,100Financing
      activitiesProceeds from common stock
      subscribed
            
            
            -
            
            
            
            65,500Net cash provided by financing
      activities
            
            
            -
            
            
            
            65,500Increase (decrease) in cash and
      cash equivalents
            
            
            (72,169)
            
            
            
            174Cash and cash equivalents,
      beginning of year
            
            
            110,522
            
            
            
            11,833Cash and cash equivalents, end ofperiod
            
            $
            38,353
            
            
            $
            12,007





Non-cash activities:





During the
six months ended August 31, 2008 the Company:





1.
            issued 200,000,000 common shares
      valued at $102,333 pursuant to a private placement associated with
      disposal of trade name.2.
            issued 89,937,500 common shares
      valued at $99,875 pursuant to settlement with
    officers.3.
            issued 1,220,000,000 common shares
      valued at $3,439,836 pursuant to settlement of preferred share
      obligations.4.
            issued 15,000,000 common shares
      valued at $105,000 pursuant to common stock
    subscribed.





During the
six months ended August 31, 2007 the Company:





1.
            issued 10,000,000 shares of its
      common stock, valued at $36,000 pursuant to a settlement agreement with
      the Company’s former CEO





The Company did not make cash interest
or tax payments during thesixmonth periodsendedAugust31, 2008or 2007.





See accompanying notes to financial
statements





GATETOWIRESOLUTIONS, INC.ANDSUBSIDIARY


Notes to Condensed Consolidated
Financial Statements


August31, 2008











Note 1 -
Summary of Significant Accounting Policies





Agreement
and Plan of Merger





OnJuly25, 2008at the Annual Meeting of Shareholders,
shareholdersapproveda proposal to ratify and approve an
Agreement and Plan of Merger providing for the merger of the Company with Gate
to Wire Solutions, Inc., aNevadacorporation which is a newly formed
special purpose wholly owned subsidiary of the Company.The Agreement and Plan of Merger became
effectiveSeptember 3,
2008. Following the merger
the Company will conduct business under the name Gate to Wire Solutions, Inc.,
which will more accurately reflect the nature of the business the Company is
engaged in. Upon consummation of the Reincorporation, each one hundred (100)
outstanding shares of the Company’s Common Stock will automatically be converted
into one (1) fully paid and nonassessable share of outstanding Common Stock.
Further information can be reviewed in the Company’s Notice of Annual
Shareholder Meeting and Proxy Statement.





Nature of
Business





Our present business strategy and
direction is to develop and operate a horseracing video distribution venture in
international markets.





Basis of
Presentation





The accompanying unaudited
consolidated financial
statements of Gate To Wire Solutions, Inc.have been prepared in accordance with
generally accepted accounting principles for interim financial information and
withthe instructions to
Form 10-Qand item 310 (b)
of Regulation S-B. Accordingly they do not include all of the information and
footnotes required by generally accepted accounting principlesin theUnited Statesfor complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for thesixmonths endedAugust31, 2008are not necessarily indicative of the
results that may be expected for the fiscal year endingFebruary 28, 2009. For further information, refer to the
financial statements and footnotes thereto included in the Company’s annual
report on Form 10-KSB for the fiscal year endedFebruary 29, 2008.





Going
Concern





The accompanying financial statements
have been prepared assuming the Company will continue on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company has suffered recurring losses from
operations during its operating history. The ability of the Company to continue
as a going concern is dependent upon obtaining future financing and profitable
operations. Management is in the process of evaluating future business
opportunities, which would generate revenue to sustain the operations of the
Company. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.





Use of
Estimates





The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Significant estimates include the recoverability of
assets and the fair value of common stock and other equity securities issued.
Actual results could differ from those estimates.








Note 2 - Due
to/from Related Parties





Periodically, the Company advances funds
and pays expenses on behalf of related parties and funds are advanced and
expenses are paid by related parties on behalf of the Company.  These
transactions result in non-interest bearing payables or receivables to related
parties.








Amounts due from related parties
were:





August31, 2008Entities with common directors
      and/or officers
            
            $
            4,708





Amounts due to related parties
were:





August 31,
    2008Entities with common directors
      and/or officers
            
            $
            235,400Shareholder
            
            
            218,000Total
            
            $
            453,400





Amounts due to or from related parties
are non-interest bearing, unsecured and do not have any specific repayment
terms.








Note 3 –
Licensing Rights





During fiscal 2008, the Company acquired
the exclusive licensing rights forLatin Americafor a horseracing proprietary video
distribution service from Bettor Solutions Inc. Under the license the Company
will share net revenues with Bettor Solutions Inc.





As ofAugust31, 2008the Company had not yet begun to
receive revenues under the arrangement, and therefore, the Company has not yet
begun to amortize the intangible asset.








Note 4 -
Restructuring of Liabilities and Preferred Stock





OnFebruary 29, 2008, the Company entered into a series of
agreements to restructure certain related party liabilities and Series A
convertible preferred shares.





Related Party
Liabilities:





The Company agreed to issue 89,937,500
common shares to existing and former officers and directors for
past services provided of $99,875.  Such shares were issued in
the three months endedMay
31, 2008





Series A Convertible Preferred
Stock:





The Company had $3,000,000 principal
value of 8% Series A convertible preferred share obligations and $439,836 of
accrued and unpaid dividends outstanding and the Company agreed to; 1) issue
1,220,000,000 restricted shares of its common stock valued at $3,439,836, and 2)
provide an earn out arrangement of ten percent (10%) of cumulative earnings
before interest, taxes, depreciation and amortization paid in cash, quarterly,
45 days following fiscal quarter end, to a maximum of $1,000,000, collectively,
to the members and affiliates of Asolare II, LLC, (“Asolare”) as full and
complete settlement of its preferred share obligations including any related
obligations of Asolare to its affiliates.  The 1,220,000,000
restricted common shares were issued in the three months endedMay 31, 2008.







Note 5 -
Loss per Share








Loss per common share is based on the
weighted average number of shares outstanding during each period presented.
Warrants to purchase stock are included as common stock equivalents only when
dilutive.








Note 6 -
Related Party Transactions





During thesixmonth period endedAugust31, 2008, the Company paid $159,689in compensation to officers and
directors as management fees for their services. The Company also issued
89,937,500 to officers in payment of obligations owed(Note 4).





Recent
Accounting Pronouncements





In March 2008, the
Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standard (“SFAS”) No. 161, "Disclosures about Derivative
Instruments and Hedging Activities—an amendment of FASB Statement No.
133”.  SFAS 161 requires enhanced disclosures about an entity’s
derivative and hedging activities.  SFAS


161 is effective
for financial statements issued for fiscal years and interim periods beginning
after November 15, 2008 with early application encouraged.  As such,
the Company is required to adopt these provisions at the beginning of the fiscal
year ended February 28, 2010.  The Company is currently evaluating the
impact of SFAS 161 on its consolidated financial statements but does not expect
it to have a material effect.





In May 2008, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standard (“SFAS”) No. 162, "The Hierarchy of Generally Accepted
Accounting Principles”.  SFAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States.  SFAS 162 is effective 60 days following the SEC’s
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted
Accounting Principles. The Company is currently evaluating the impact of SFAS
162 on its consolidated financial statements but does not expect it to have a
material effect.





In May 2008, the
Financial Accounting Standards Board (“FASB”) issued Statement of Financial
Accounting Standard (“SFAS”) No. 163, "Accounting for Financial Guarantee
Insurance Contracts—an interpretation of FASB Statement No. 60" (“SFAS
163”).  SFAS 163 interprets Statement 60 and amends existing
accounting pronouncements to clarify their application to the financial
guarantee insurance contracts included within the scope of that
Statement.  SFAS 163 is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and all interim periods within
those fiscal years.  As such, the Company is required to adopt these
provisions at the beginning of the fiscal year ended February 28,
2010.  The Company is currently evaluating the impact of SFAS 163 on
its consolidated financial statements but does not expect it to have a material
effect.











Item
2.Management’s
Discussion and Analysis or Plan of Operation.





Forward
Looking Statements





Certain matters discussed in this
Quarterly Report may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and as such may involve
risks and uncertainties. These forward-looking statements relate to, among other
things, expectations of the business environment in which the Company operates,
projections of future performance, perceived opportunities in the market and
statements regarding the Company's goals. The Company's actual results,
performance, or achievements expressed or implied in such forward-looking
statements may differ.  We are under no duty to update, and do not
undertake to update, any of the forward-looking statements contained in this
quarterly report to conform them to actual results or to changes in our
expectations.








Plan ofOperations





Bettor Solutions Inc.
Agreement





OnDecember 4, 2007, the Company announced that it entered
into an agreement with Bettor Solutions Inc. (BSI) to jointly develop and marketBSI's proprietary Video Distribution
Service inLatin
America.





This isGate To Wire Solutions'first major step in a restructuring
strategy, as it positions itself to offer a range of products and services to
the Latin American marketplace.Gate To Wire SolutionsandBSIare combining efforts to deliver a
package of products, services and advisory expertise to racing and wagering
interests to this region.





Gate To Wire Solutionsobtained an exclusive license to
operate the Video Distribution Service inLatin Americain exchange for 50,000,000 shares of
its common stock. Pursuant to the license,Gate To Wire SolutionsandBSIagree to share the net profit from the
video distribution and wager processing on a 50/50 basis.Gate To Wire Solutionswill be responsible for the expenses
associated with obtaining distribution agreements andBSIwill be responsible for delivering the
technology and operational support on a day-to-day basis. The initial term for
the license runs untilNovember 21, 2009and may be extended for additional
one-year terms.





The Company will need to raise
additional cash to continue to pay its operating expenses in the next twelve
months until the distribution from the new ventures exceed the day to day
operating costs. The Company also plans to seek other racing and gaming
opportunities in theUnited
States.




The Company plans to raise additional
funds, in the next twelve months, through the issuance of its common stock or
through a combination of equity and debt security instruments. It is anticipated
that the debt security instruments will have conversion features that would
cause further dilution to existing shareholders.







Results of
Operations





For the three month period endedAugust31, 2008and 2007





Costs and expenses totaled $123,919during the three-month period endedAugust31, 2008,$1,982lower than during the three month period
endedAugust31, 2007.  The Company experienced
very little activity during thesecondquarter of the current year as
management and directors transitioned our business strategy and direction to
develop and operate a horseracing video distribution venture in international
markets.





Management fees paid to related parties
were $80,770 for the three month period endedAugust 31, 2008and $67,500 in the comparative period
in the prior year.





Professional and consulting fees for the
three month period endAugust31, 2008was $16,803in comparison to $3,778for the prior year. For the three month
period endAugust31, 2008the professional and consulting fees
consisted of: $6,500 in
audit fees; and
$10,303in legal costs.The Company experienced an increase in
legal costs relating to the Agreement and Plan of Merger with Gate to Wire
Solutions, Inc.





General and administrative expenses were
$26,346during the three month period endedAugust31, 2008compared to $22,992during the three month period endedAugust 31, 2007. General and administrative expenses
are higher than the previous year due to management’s transition of the
company’s business strategy. General and administrative expenses during the
three month period endedAugust31, 2008included: 1)corporate fees of $17,269 2)travel, meals and
entertainment of $5,150,3)insuranceof $6,513, 4) foreign exchange gain of
$9,025, 5) other miscellaneous costs of $6,439.





Amortization decreased from $382 during
the three month period endedAugust31, 2007to $nil during the current
quarter.





Interest expense during the three month
period endedAugust31, 2008was nil and $31,249in the prior year. Interest expense has
been reduced due to the Company settling a 15%, $700,000 promissory
note.





Preferred dividends for the three month
periodAugust 31,
2008was $nil compared to
$60,493 during the three month period endedAugust 31, 2007. Preferred dividends has been reduced
due to the Company restructuring its Series A convertible preferred shares.
(Note 4)





For the six month period ended
August31, 2008 and
2007





Costs and expenses totaled $253,090during thesix-month period endedAugust31, 2008,$23,505 higherthan during thesixmonth period endedAugust31, 2007.  The Company experienced
very little activity during the firstsix months of thecurrent year as management and
directors transitioned our business strategy and direction to develop and
operate a horseracing video distribution venture in international
markets.





Management fees paid to related parties
were $159,689 for the six month period endedAugust 31, 2008and $127,500 in the comparative period
in the prior year.





Professional and consulting fees for thesixmonth period endAugust31, 2008was $23,669in comparison to $8,175for the prior year. For thesixmonth period endAugust31, 2008the professional and consulting fees
consisted of: $13,000 in
audit fees; and
$10,669in legal costs.The Company experienced an increase in
legal costs relating to the Agreement and Plan of Merger with Gate to Wire
Solutions, Inc.





General and administrative expenses were
$69,732during thesixmonth period endedAugust31, 2008compared to $42,981during thesixmonth period endedAugust31, 2008. General and administrative expenses
are higher than the previous year due to management’s transition of the
company’s business strategy. General and administrative expenses during thesixmonth period endedAugust31, 2008included:1)corporate fees of $21,599, 2)travel, meals and
entertainment of $24,129,
3)insuranceof $9,549, 4) foreign exchange gain of
$6,844, other miscellaneous costs of $21,299.





Amortization decreased from
$764during thesixmonth period endedAugust31, 2007to $nil during the current
quarter.





Interest expense during thesixmonth period endedAugust31, 2008was nil and $57,715in the prior year. Interest expense has
been reduced due to the Company settling a 15%, $700,000 promissory
note.




Preferred dividends for the six month
periodAugust 31,
2008was $nil compared to
$120,986 during the six month period endedAugust 31, 2007. Preferred dividends has been reduced
due to the Company restructuring its Series A convertible preferred shares.
(Note 4)











Critical Accounting Policies and
Estimates





The discussion and analysis of results
of operations and financial condition are based upon the financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP). The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. Management evaluates
the estimates on an on-going basis, including those related to bad debts,
investments, customer accounts, intangible assets, income taxes, and
contingencies and litigation. Management bases its estimates on historical
experience and on various other assumptions that they believe to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Note 2 of the "Notes to
Financial Statements" of the Company’s Annual Audited Financial Statements
include a summary of the significant accounting policies and methods used in the
preparation of the financial statements. The following is a brief description of
the more significant accounting policies and methods the Company
uses.





Fair Value of Financial
Instruments:





Cash, accounts payable, accrued
expenses, note payable and loans receivable are carried in the financial
statements at amounts which approximate fair value.





Financial
Condition





During the sixmonth period endedAugust31, 2008, total assets decreasedfrom $160,552to $93,061. The decrease is primarily the result
of the loss from operationsfor the sixmonth period and payment of
liabilities.




The most significant asset of the
Company is its license rights, which it carries at $50,000 (unchanged since last
fiscal year end).





The Company’s liabilities
increasedfrom
$621,601at the beginning of the year to
$707,355atAugust31, 2008. Theincreaseis primarily a result ofanincrease of amounts due to related
parties of $241,400 offset by a decrease in restructured liabilities from asettlement with former
officers and directors for past services provided in which the Company issued
89,937,500 common shares valued at $99,875.





Accounts payable decreased
from$263,726at the beginning of the year to
$214,272atAugust31, 2008.





Due to related parties increased
from $212,000 atFebruary
29, 2008to $453,400atAugust31, 2008. Periodically, the Company is advanced
and expenses are paid by related parties on behalf of the
Company.  Amounts due to related parties are unsecured, non-interest
bearing and have no specific repayment terms.





The stockholders’ deficiency increased
from $461,079 atFebruary
29, 2008to $614,294atAugust31, 2008. The increase is substantially
attributable to an increase in the accumulated deficit arising from the
$253,090loss for thesixmonth period endedAugust31, 2008.




Liquidity
and Capital Resources





Operations were financed primarily
through related parties with common officers and directors. During the
sixmonth period endedAugust31, 2008, the Company used $72,169in cash from operating activities
primarily as a result of operating losses and adjustments to working capital
accounts. Related parties provide $236,692during thesixmonth period endedAugust31, 2008.




Cash provided by financing activities for the
sixmonth period
endedAugust31, 2008totaled $nil




The revenues of the Company during
thesix month period endedAugust31, 2008were zero therefore did not play a
significant role in financing operations. The Company in the past has
financed operations through the issuance of
restricted equity securities and has occasionally relied heavily on that
practice. There can be no assurance that the Company’s ability to raise capital
through private placements will continue.







Management is hopeful that the future
business direction of the Company will substantially decrease the history of
operating losses and provide the ability to improve the Company’s
liquidity.  The Company will require additional capital over the next
year in order to satisfy existing liabilities and to provide further capital
contributions to its investments.  Failure to obtain such capital
could adversely impact the Company's operations and
prospects.




Off-balance sheet
arrangements.




The Company does not have any off
balance sheet arrangements.










Item
3. Controls and Procedures.





As of the end of the period covered by
this report, an evaluation was carried out under the supervision and with the
participation of the Company’s management, including the Company’s Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
Company’s disclosure controls and procedures, as defined in Rule 13a-15(e)
promulgated under the Securities and Exchange Act of 1934 (the “Exchange Act”).
Based on their evaluation, the Company’s Chief Executive Officer and Chief
Financial Officer have concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.





There have been no changes in the
Company’s internal controls over financial reporting during the Company’s most
recently completed fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal controls over financial
reporting.








PART II.
Other Information






Item 2.Unregistered
Sales of Equity Securities.





The Company issuednilunregistered securities during
thethreemonth period endedAugust31, 2007.







Item 3.
Defaults upon Senior Securities





None






Item
6.Exhibits and
Reports on Form 8-K





a)           Exhibits





Exhibit No.
            Description31.1
            Certification pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.*31.2
            Certification pursuant to Section
      302 of the Sarbanes-Oxley Act of 2002.*32.1
            Certification pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002. *32.2
            Certification pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
*




(*)           Filed
with this Report.




b)           Reports
on Form 8-K




OnJuly 31, 2008, the Company filed form 8-K providing
details in whichthe Board
of Directors of the Company appointed a new director.




(Remainder of page left intentionally
blank)














SIGNATURES





In accordance with the registration
requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.











Date:October 15, 2008
            By:
            /s/ John G.
      SimmondsName:
      John G. SimmondsTitle:   President
      and Chief Executive OfficerDate:
      October15,
      2008
            By:
            /s/
      Gary N. HokkanenName:
      Gary N. HokkanenTitle:  
      Chief Financial Officer(Principal
      Financial Officer)