The following discussion of the Company's financial condition and results of operation should be read in conjunction with the consolidated financial statements and accompanying notes thereto in Item 7 of this report.

Critical Accounting Policies and Procedures

The Company believes its critical accounting policies (see Note 1 to the consolidated financial statements) are revenue recognition, software development costs, accounting for research and development expenses, accounting for convertible securities with beneficial conversion features and share based payments under accounting principles generally accepted in the United States and that they are adhered to in the accompanying consolidated financial statements.

Revenue Recognition
The Company's primary revenue is derived by delivering software as a service, or hosted solutions for its clients. Revenue derived from the sale of these services are billed monthly or quarterly and is recognized in accordance with Statement of Position 97-2 (as amended), Software Revenue Recognition, over the term of the agreement . The Company bills for its service in advance; payments from customers received in advance of the month of usage are reflected as deferred revenue until the month of usage, when they are recognized as earned revenue. In addition to the software license revenue the company derives revenue from professional services fees associated with custom software development and project management services it provides to customers.

Software Development Costs
The Company capitalizes internally generated software development costs in accordance with Statement of Financial Accounting Standards ("SFAS") No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. Capitalization of software development costs begins when a product's technological feasibility is established. Costs incurred for research and development of products where technological feasibility has not yet been established are expensed as incurred. Costs eligible for capitalization have been immaterial for the periods presented.

Receivables
Receivables consist of amounts due to the Company from normal business activities generated from contracts with its clients for the use of its software. Customers are invoiced in the month preceding the use of the service. Many of the Company's customers remit payment for the subsequent month's services during the month billed for the use of the software. The collected funds are recognized as deferred revenue in the Company's financial statements until the actual month of service at which time they are classified as revenue. Accounts receivable thus include only funds due from customers who have not paid for the monthly service provided.

Insurance
The Company carries Directors and Officers Liability insurance, comprehensive liability insurance on its assets both at its main offices and at the data hosting service center and mandatory worker compensation on its employees.

Results of Operations - Fiscal Year Ended June 30, 2008 compared to Fiscal Year Ended June 30, 2007

Revenues: The Company's primary revenues are derived by delivering software as a service, or hosted solutions for its clients billed on a monthly basis for each location serviced or from solutions developed at specific customer's requests. Customers are billed on a monthly basis for each location serviced or at a project's completion. For the year ended June 30, 2008, the Company generated $1,457,884 in revenues compared to $1,076,354 in the prior year. This increase in revenues is primarily attributable to the licensing of the Company's solutions by additional customers and professional service fees. In 2007, the Company had received payment under a contract for the development of one of its solutions, subject to a multi-year licensing agreement, that is recognized under Statement of Position 97-2 (as amended), Software Revenue Recognition, over the term of the licensing fee agreement. As of June 30, 2008, the Company had received payment under a separate contract for another of its solutions included in deferred revenue that will also be recognized over the term of a multi-year licensing agreement, under Statement of Position 97-2 (as amended), Software Revenue Recognition.

Cost of Revenues: The costs for the year ended June 30, 2008 were $534,562 compared to $524,527 in the prior year. Part of the increase, $47,454 was attributable to the non-cash compensation expense under SFAS 123R, Share-Based Payments. Other costs consist primarily of personnel, related payroll costs and technical support costs to our customers. During 2008, the Company's production hosting facility costs and licensing agreements increased significantly from $32,355 to $60,475 and from $30,783 to $65,235, respectively. These increases were offset by termination of our outside technical support services in January 2007 in the amount of $62,810 as the Company brought technical support in house. Other offsets included lower telecommunications costs of $7,844. All of the other operational costs minimally decreased as management continues to maximize its operating efficiencies including a move to a lower cost data hosting facility in August 2009.

Research and Development: Research and development costs are charged to operations as incurred and consist primarily of personnel and related benefit costs. The costs for the year ended June 30, 2008 of $777,034 compared to $327,441. The primary increase of $329,168 was due to the non-cash compensation expense under SFAS 123R, Share-Based Payments. Another increase, $84,100, was attributable to the use of outside consultants to assist in the integration of various systems for new franchise operations with our business intelligence solution. The reallocation of personnel and their related costs approximating $28,200 represented the balance of the increase. The Company's research and development is part of its strategic plan to provide enhancements to its existing software and integration into new franchise operations in the hospitality market.

Marketing and Selling: The costs for the year ended June 30, 2008 were $478,954 compared to $273,362 in the prior year. The primary increase of $154,415 was due to the non-cash compensation expense under SFAS 123R, Share-Based Payments. Current year expenses included the addition of an outside sales consultant for the full year as against only 7 months of service in the prior year, Additional costs for marketing, travel, trade shows and commissions under an agreement with a consulting firm approximated $51,200. In 2009, the Company expects to continue to expand its customer base through trade shows, direct sales and referrals from its relationship with existing clients.

General and Administrative: The Company's general and administrative costs consist primarily of executive salaries and related benefits, professional fees for attorneys, independent auditor, rent, expenses related to being a public company and other operating costs. The costs for the year ended June 30, 2008 were $806,740 compared to $706,387 in the prior year. Part of the increase, $384,154, was due to the non-cash compensation expense under SFAS 123R, Share-Based Payments and increased occupancy costs of $19,600. These increases were offset by reduced patent litigation, other professional fees and insurance costs approximating $314,300. All other administrative costs remained stable or minimally decreased.

Interest Expense: Interest expense consists of the following:

Fiscal Year Ended June 30,                                     2008             2007
Accrued interest on convertible debentures            $        65,305  $        95,921
Amortization of the discount of the beneficial                 52,010          574,366
conversion feature in the convertible debentures
Accrued interest on loan payable                                7,000            4,667
Interest incurred from the deferred credits issued to           9,974            9,727
consortium members
Insurance finance costs                                          580             1,043
Interest income earned on cash and cash equivalents            (5,291)          (4,631)
Net interest expense                                  $      129,578   $       681,093

Actual cash paid for interest during the fiscal years ended June 30, 2008 and 2007 was $35,656 and $1,043, respectively.

Net Loss: The net loss from for the year ended June 30, 2008 was ($1,268,984) compared to ($1,436,456) in the prior year. The decrease was attributable to the increased revenues resulting from the delivery of our business intelligence software to a increased number of customer's stores, the licensing of our Business Scorecard, the additional revenue resulting from professional services and other fees and reduced operating and interest costs as discussed above offset by the non-cash compensation expense under SFAS 123R, Share-Based Payments of $915,191.

Operating Results Excluding Non-cash Share Based Compensation and Interest Charges Applicable to the Beneficial Conversion Feature in the Convertible Debentures

The net loss and earnings per share applicable to common stockholders for the years ended June 30, 2008 and 2007 excluding the share based payments and interest charges from the amortization of the beneficial conversion feature are reflected in the pro forma tables below as the Company believes that the presentation under SFAS No. 123 (revised 2004), "Share-Based Payment (SFAS No, 123R)," and Emerging Issues Task Force Consensus ("EITF") 98-5, "Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios" as amended by EITF 00-27, "Application of Issue No. 98-5 to Certain Convertible Instruments",, although presented under GAAP may be misleading to readers of the financial statements:

                                                                                     UNAUDITED
                                                                                                        Year Ended
                                                                                      June 30,
                                                             2008                                         2007
                                             $         (1,268,984)
Net loss under GAAP - per above                                                           $         (1,436,456)
Net loss per share - basic                   $             ($0.03)                        $            ($0.03)
Exclusion of share based compensation                     915,191                                   -
Net loss excluding share based               $           (353,793)                        $        (1,436,456)
compensation
Net loss per share - basic                   $             ($0.01)                        $            ($0.03)
Exclusion of amortization of the
discount of the beneficial conversion                     52,010                                      574,366
feature in the convertible debentures
Pro forma net loss                           $           (301,783)                        $          (862,090)
Net loss per share - basic                   $             ($0.01)                        $            ($0.02)
Weighted average number of shares -                    50,730,591                                   41,172,284
basic

Liquidity and Capital Resources

General

The Company has not achieved operating profits or positive cash flow from operations since it commenced operations. The main reason the Company did not achieve operating profitability or positive cash flow from operations this past year were the limitations imposed by lack of working capital necessary for additional personnel to enable new customer growth. As of June 30 2008, there was an accumulated deficit of $9,527,269 and the Company's cash position was $87,117. In fiscal 2007, the Company increased its customer base with its signing of a major corporate franchisor, Burger King Corporation that consumed the major development and technical resources of the Company in that year and the current year. The Company generated operating funds in fiscal 2008 through sale of its monthly hosted BI solutions and Balanced Scorecard solutions and other professional services provided and other fees, for a total of $1,457,884 in revenue. In fiscal 2009, the Company has begun to deploy its business intelligence software to another major franchisor and continues developing a significant pipeline of business opportunities that include a multi-unit full service restaurant operator and companies outside of the hospitality industry. While there can be no assurances that the increases in revenue will generate operating profitability and positive cash flow, the Company's management believes the opportunities identified in its pipeline are achievable in the near future.

In August 2008, the Company has agreed in principle with its patent counsel to issue one million shares of XFMY's common stock, cash payments that extend over 48 months and additional debt reduction payments upon the Company achieving certain revenue targets. This approximates a maximum payout value of $900,000 in full settlement of the Company's obligation of approximately $1,575,000

The Company anticipates that a final Settlement Agreement will be executed by the end of the calendar year.

The Company may need additional financing and there is no assurance that such financing will be available, if at all, at terms acceptable to the Company. If additional funds are raised by the issuance of equity securities, existing stockholders may experience dilution of their ownership interests and these securities may have rights senior to those of holders of the common stock. If adequate funds are not available or not available on acceptable terms, it could have a material adverse effect on the Company's financial condition and results of operations.

Legal Issues

There are no material legal proceedings that management is aware of that affect the Company.

Convertible Debentures

Under the revised term sheet, the Company may still issue an additional $186,865 of its 9% convertible debentures to accredited investors to be used as working capital. See the provisions of these debentures in Item 8 of the Consolidated Financial Statement.

Finance

The Company has been reviewing capitalization alternatives, including various debt and equity instruments. The Company may need to raise between $1,000,000 and $5,000,000 in new capital over the next 12 months. The use of funds includes operating capital for general corporate purposes, expansion of the sales, marketing and software development staff, and a strengthened balance sheet. If additional funds are raised by the issuance of debt or equity securities, stockholders may experience dilution of their ownership interest and these securities may have rights senior to those of holders of the common stock. As of the date of this Report, there are no agreements, commitments or arrangements for any future financing, and no assurance can be given that future financing can be achieved.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.