GENERAL

THE FOLLOWING DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OUR OPERATIONS SHOULD BE READ IN CONJUNCTION WITH FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE IN THIS REPORT. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS REFLECTING OUR CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL RESULTS AND THE TIMING OF EVENTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN THESE FORWARD-LOOKING STATEMENTS DUE TO A NUMBER OF FACTORS, INCLUDING THOSE DISCUSSED UNDER BUSINESS- RISK FACTORS NOTED IN OUR FORM 10-K FOR THE FISCAL YEAR ENDED FEBRUARY 28, 2009 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.

OVERVIEW

We provide Internet-based products and services that are built upon patented content targeting and consumer centric content delivery technologies. Historically, we have packaged our technology within products and services that enable Internet television (IPTV), Internet radio broadcasting and advertising with the added ability to target, control and monetize interactive content, thus more effectively monetizing such content, enabling the delivery of intelligent relavant content direct to consumers on any Internet connected device.

With the appointment in April of Mark Severini as our new Chief Executive Officer and the Company's subsequent (July 14, 2009) acquisition of Augme Mobile, described below and in Note 3 ("Subsequent Events") to the Consolidated Financial Statements, we have begun deploying our technology within the mobile advertising marketplace. This is part of our overall strategy to expand our ability to commercialize and monetize our technological assets within the advertising and marketing industries.

Augme Mobile, based in New York City, offers a comprehensive Web-based marketing platform that provides marketers, brands and advertising agencies the ability to create, deliver, manage and track interactive marketing campaigns targeting mobile consumers (users of mobile phones and portable digital devices) through traditional print advertising channels. Augme Mobile's fully integrated AD LIFE mobile marketing platform is intended to fulfill the advertiser's need to offer interactive multimedia mobile content, while simultaneously satisfying the consumer's desire for easier and more robust mobile connectedness.

Mr. Severini, who has an extensive advertising and marketing background, joined the Company in April, from his position as Chief Marketing Officer at Augme Mobile, in anticipation of the closing of the Augme Mobile transaction and in order to accelerate integration of the Augme Mobile business in the Company's operations. We anticipate that Augme Mobile's AD LIFE platform, along with the brank and channel relationships, will enhance our ability to create, promote and distribute unique mobile destinations with patented targeting capability. This immediate presence in the mobile consumer market complements our current efforts with online targeting advertising, bringing together a comprehensive strategy that fully leverages our core technologies.

In July, 2009, three executives from Augme Mobile, as described in Note 3 ("Subsequent Events") to the Consolidated Financial Statements, also joined the Company. Our new management team is focused on making the Company an integral component for the targeting of advertising, both online and over mobile devices and platforms.

During the three months ended May 31, 2009, we provided our services through two operating divisions; Network Broadcasting division and the Interactive Products division. Commencing with our acquisition of the assets and business of Augme Mobile on July 14, 2009, we added a third operating division, Mobile Solutions.

The Network Broadcasting division is a pioneering initiative, and through it Modavox has become the recognized leader in producing and distributing Internet talk radio. Modavox has been producing global Internet Radio since 1997. BoomBox® Radio was the original Internet broadcasting offering that included targeted advertising and supported a 64 channel Internet Radio network. That was followed by a business operation shift from music to Internet Talk Radio that the Company began broadcasting in 2001 from www.voiceamerica.com. The Company's network operation has moved into video and our new BoomBox Video® platform has been combined with our BoomBox Radio® platform. This allows us to provide a turn-key solution for Modavox customers and Modavox powered destinations that are focused on delivering Internet Television and Internet Radio broadcasting solutions.

The Following Networks Are Currently Owned & Operated By Modavox:

MODAVOX O&O NETWORKS      INTERNET DESTINATION

VOICEAMERICA              http://www.modavox.com/voiceamerica/

VOICEAMERICA HEALTH &
WELLNESS                  http://www.health.voiceamerica.com/

VOICEAMERICA BUSINESS     http://www.modavox.com/VoiceAmericaBusiness/

VOICEAMERICA SPORTS       http://www.modavox.com/sports/

VOICEAMERICA GREEN
NETWORK                   http://www.voiceamerica.com/thegreentalknetwork/

SMALLCAP CONFIDENTIAL     http://www.modavox.com/smallcap/

BOOMBOX® COMEDY CHANNEL   http://www.wickedpissers.com

WORLD TALK RADIO          http://www.worldtalkradio.com

The 7th WAVE NETWORK      http://www.modavox.com/7thwavenetwork/

SAMPLE AFFILIATE NETWORKS INTERNET DESTINATION

UNITY FM - CHRISTIAN TALK
RADIO                     http://www.unity.fm

PRO BODY BUILDING WEEKLY  http://www.probodybuildingweekly.com/

POWERUP MOTORSPORTS
NETWORK                   http://va.radiopilot.net/voiceamerica/vchannel.aspx?cid=261

Each show produced by Modavox is one-hour in length, and broadcasts live commercial content between six to eight minutes allocated by each show. There is also visual real estate created by each new show with Modavox destination sites for banner, multimedia and interactive advertising sales. Every live show creates an archive that is available for On-Demand access and is indexed for contextual search and universally compatible playback. Each delivery of archived content is tracked and also distributes advertising inventory both audio, at the breaks in the Talk Radio content, and within the visual environment.

After the production costs have been recovered by a host, the Company typically receives 60% of the advertising revenue through host fees. Customers or third parties are provided incentives to develop advertising and sponsorship revenues and will work with the Company to maximize the yield.

Ecommerce host fee opportunities exist within shows marketing a product or service that is purchased over the Internet. Modavox receives a commission of the product or service's value upon conversion of a listener to an ecommerce customer.

The Network Products division has consistently accounted for a majority of the Company's revenues.

The Interactive Products division contains all of the non-network based broadcasting business and consists of two products; Modavox Enterprise™ Platform and Stream Syndicate™ Advertising Platform. The Modavox Enterprise™ Platform has been developed for Fortune 1,000 clientele in a series of packaged services and technology products created by the Company. Through the utilization of our BoomBox® Radio and BoomBox® Video products, the user may create and manage complete targeted Internet TV & Radio Networks, "Box Office" Pay-Per-View, and advanced E-Learning applications. The Modavox Enterprise™ Platform features exclusive targeting and customization technologies based upon our proprietary technology.

The proprietary targeted advertising platform developed for the BoomBox® Radio, BoomBox® Video, and Enterprise™ Platform Internet destinations has become a powerful stand-alone product when coupled with highly trafficked websites. Stream Syndicate™ is currently deployed and delivering targeted advertising on ABC O&O, NBC, CBS, Gannett, and several other leading Internet destination sites.

The discussion of the results of operations compares the quarter ended May 31, 2009 with the quarter ended May 31, 2008, and is not necessarily indicative of the result which may be expected for any subsequent period. Our prospects should be considered in light of the risks, expenses and difficulties encountered by companies in similar positions. We may not be successful in addressing these risks and difficulties.

Three Months Ended May 31, 2009 vs. 2008

For the quarter ended May 31, 2009, revenues were $521,325 compared to $860,635 for the quarter ended May 31, 2008, a decrease of 39%. The decrease in overall revenues is partially due to the current economic environment and the refocusing of our products within the Interactive Products division. Revenues for the quarter ended May 31, 2009 included $45,385 from the Interactive Products Division compared to $168,360 for the quarter ended May 31, 2008, and $475,940 from the Network Broadcasting Division compared to 692,275 for the quarter ending May 31, 2008. Hosting fees related to our Interactive Products Division were $13,075 for the quarter ended May 31, 2009 compared to $81,938 for the quarter ending May 1, 2008. The decrease in revenue is related to the volume of contracts associated with our Interactive Agency, related hosting fees, as well as the decrease in contracts associated with the Network Broadcasting Division.

Production and service delivery costs were $186,028 for the May 31, 2009 quarter compared to $252,145 in the quarter ended May 31, 2008 reflecting expense decreases related to the continued decreasing costs related to telecommunications and the cost of hosting our content.

Selling, general, and administrative expenses were $1,357,105 for the quarter ended May 31, 2009 compared with $753,350 for the quarter ended May 31, 2008, an increase of 80%. The increased expenses primarily consisted of; approximately $174,500 of increased noncash stock option expense, approximately $97,000 due to increased staffing and employee benefits, approximately $95,000 related to an advertising initiative, and approximately $157,000 of increased professional fees related to investor relations, accounting, and other consulting fees. Approximately $513,000 of the total selling, general, and administrative expenses for the quarter ended May 31, 2009, were noncash in nature and consisted of the fair value accounting for stock options and certain expenses that were paid with shares of common stock of the Company.

Depreciation and amortization expense was $237,126 in the 2009 quarter compared with $186,207 in the 2008 quarter. Amortization expense increased to $153,312 for the quarter ending May 31, 2009 compared to $128,130 for the quarter ending May 31, 2008. Depreciation expense for the quarter ending May 31, 2009 increased to $83,814 compared to $58,077 for the quarter ending May 31, 2008. The increase in depreciation and amortization relates to the increased capitalization of internal software and for the accounting related to the WorldTalk Radio and Kino Interactive acquisitions.

During the quarter ended May 31, 2009, the Company incurred a net loss of $1,258,750 compared to a net loss of $327,142 in the prior year quarter. The $931,608 increase in the net loss is a result of decreased revenues and the increased expenses as described above.

During quarter ending May 31, 2009, we raised $889,227 of capital through the sale of unregistered shares of common stock and the issuance of common stock in connection with the exercise of options and warrants by the holders of those securities.

As of May 31, 2009, we had a cash balance of $371,980 and we used cash of $838,487 to fund our operating activities during the quarter. We do not believe that our current liquidity is adequate to fund our current operations and we will need to raise additional funds from the sale of shares of our common stock. Due to the sustained and substantial progress in the procurement of the necessary funding required to meet our operating and overall corporate expenditures, and the resolution of multiple cost intensive legacy legal related matters, we believe that we will have enough cash flow from operations and financing activities to support our business for the next twelve months. We have had substantive discussions with existing warrant holders and/or prospective financing sources, which leads us to believe that we will have the capital necessary to not only maintain current operations, but also to develop and implement a growth strategy in our core businesses and ensure a vigorous effort in protecting our intellectual property. That said, current market conditions for raising capital are difficult and volatile, and no assurances can be made that we will be successful in raising additional financing on terms that are acceptable to the Company or at all.

Forward Looking Statements

This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates and projections about our industry, management's beliefs, and certain assumptions made by management. Words such as "anticipate," "expect," "intend", "plans," "believe," "seek," "estimate" and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and actual actions or results may differ materially. These statements are subject to certain risks, uncertainties and assumptions that are difficult to predict, including those noted in the documents incorporated herein by reference. Particular attention should also be paid to the cautionary language appearing elsewhere in this report. We undertake no obligation to update publicly any forward-looking statements as a result of new information, future events or otherwise, unless required by law. Readers should, however, carefully review the risk factors included in other reports or documents we file from time to time with the Securities and Exchange Commission, including in our Annual Report Form 10-K for our fiscal year ended February 28, 2009.