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ATTRACT . TRANSACT . MEASURE

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iSIGN MEDIA SOLUTIONS INC.

(FORMERLY KNOWN AS CORBAL CAPITAL CORP.)

MANAGEMENT’S DISCUSSION and ANALYSIS

FOR THE THREE AND NINE MONTH PERIODS ENDED

JANUARY 31, 2011



MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED JANUARY 31, 2011

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The following Management’s Discussion and Analysis (“MD&A) for the three and nine months

ended January 31, 2011, as compared with the three and nine months ended January 31, 2010,

provides readers with an overview of the operations of iSIGN Media Solutions Inc. (“iSIGN” or the

“Company”) and a detailed explanation of the consolidated financial statements.

This MD&A provides information that the management of iSIGN believes is important to assess

and understand the results of operations and financial condition of the Company. Our objective

is to present readers with a view of iSIGN through the eyes of management by interpreting the

material trends and activities that affect the operating results, liquidity and financial position of

iSIGN. This discussion and analysis should be read in conjunction with iSIGN’s audited

consolidated financial statements and accompanying notes for the twelve month period ended

April 30, 2010, that have been prepared in accordance with generally accepted accounting

principles (“GAAP”) in Canada. All monetary amounts unless otherwise specified are expressed

in Canadian dollars.

Additional information relating to iSIGN is available on SEDAR, at www.sedar.com. The common

shares of the Company are listed for trading on the TSX Venture Exchange under the trading

symbol of ISD-V. For more information on the Company, please visit our website at

www.isignmedia.com.

This MD&A is current as of March 31, 2011.

Forward Looking Statements

This MD&A contains ―forward-looking statements‖ and ―forward-looking information‖ within the

meaning of the applicable Canadian securities legislation. Forward-looking statements are not

historical facts and include statements regarding the Company‘s planned development

activities, anticipated future profitability, losses, revenues, expected future expenditures, the

Company‘s intention to rise new financing, sufficiency of working capital for continued

operations and other statements regarding anticipated future events and Company‘s

anticipated future performance. Generally, these forward-looking statements can be identified

by the use of forward-looking terminology such as ―plans‖, ―expects‖ or ―does not expect‖, ―is

expected‖, ―budget‖, ―scheduled‖, ―estimates‖, ―forecasts‖, ―intends‖, ―continue‖,

―anticipates‖ or ―does not anticipate‖, or ―believes‖ or variation of such words and phrases or

state that certain actions, events or results ―may‖, ―could‖, ―would‖, ―might‖ or ―will be taken‖,

―occur‖ or ―be achieved‖. All forward-looking statements are based on our beliefs and

assumptions based on information available at the time the assumption was made. While iSIGN

considers its assumptions to be reasonable and appropriate based on the current information

available, there is a risk that they may not be accurate. Forward-looking statements are subject

to known and unknown risks, uncertainties and other factors that may cause the actual results,

level of activity, performance or achievement of iSIGN to be materially different from those

expressed or implied by such forward-looking statements, including but not limited to risks

related to the integration of acquisitions, as well as those factors discussed in the section entitle

―Risk Factors‖ in this MD&A. Before making any investment decisions and for a detailed

discussion of the risks, uncertainties and environment associated with our business, fully review

the section entitled ―Risk Factors‖ in this MD&A. Although management has attempted to

identify important factors that could cause actual results to differ materially from those

contained in forward-looking statements, there may be other factors that cause results not to be

http://www.sedar.com/

http://www.isignmedia.com/





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as anticipated, estimated or intended. There can be no assurance that such statements will

prove to be accurate, as actual results and future events could differ materially from those

anticipated in such statements. Accordingly, readers should not place undue reliance on

forward-looking statements. iSIGN does not undertake to update any forward-looking

statements that are incorporated by reference herein, except as required by law.

About iSIGN Media Solutions Inc.

Introduction

The Company was incorporated on May 15, 2007 under the Business Corporations Act (Ontario)

as Corbal Capital Corp (―Corbal‖). Prior to September 3, 2009, the Company was a capital pool

company created pursuant to the policies of the TSX Venture Exchange. The principal business

of the Company was the identification and evaluation of assets or businesses with a view to

completing a qualifying transaction (a ―Qualifying Transaction‖).

On September 3, 2009, the Company completed its Qualifying Transaction by acquiring all of

the issued and outstanding shares of iSIGN Media Corp. (―iSIGN Media‖) (the ―Transaction‖). On

November 18, 2009, the Company changed its name from Corbal Capital Corp. to iSIGN Media

Solutions Inc.

The acquisition of iSIGN Media by the Company has been accounted for as a reverse takeover

transaction. iSIGN Media is deemed to be the acquirer and is deemed to have purchased the

assets and liabilities of iSIGN as the former iSIGN Media shareholders, as a group, became

owners of more than 51% of the voting shares of iSIGN following the Transaction. The results of

operations of iSIGN are included in the consolidated financial statements from the date of the

completion of the Transaction, September 3, 2009. For accounting purposes, the Company is

considered to be a continuation of iSIGN Media, with the exception that the authorized and

issued share capital is that of the legal parent, iSIGN. The financial position of iSIGN and the

results of operations and cash flows for the periods prior to September 3, 2009 presented in the

consolidated financial statements are of iSIGN Media only.

iSIGN, through its wholly owned subsidiary, is in the business of developing location-based

interactive proximity advertising technology that delivers rich media, permission based

messages, free of charge to consumers‘ mobile phones using Bluetooth® connectivity while

capturing and quantifying consumer responses and provides clients with customized reporting

systems that allows for continuous measurement and analysis.

Our Product

Our customizable, scalable Interactive Marketing Solution (―IMS‖) software enables businesses to

offer promotional campaigns with timely, relevant content to consumers, at absolutely no cost

to the recipient of the messages. Our software platform offers various levels of reporting, making

location-based interactive proximity advertising to mobile devices measurable, accountable,

flexible and affordable, providing real-time captured consumer responses and information,

improved shopper insight and business intelligence.





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Businesses can utilize proximity marketing by simultaneously targeting shoppers already inside

their environments as well as potential shoppers within relative proximity of their stores. Our

software solutions can be operated independently, on a single digital engine/media player, or

in conjunction with other digital engines/media players to form a wireless marketing network

operated from a central location through a Web-based interface.

Following the recent agreements with our business partners, AOpen and Skipton, the Company‘s

is embedding its software into the products of our business partners.

The Company is confident that location-based interactive proximity advertising will become a

recognized and accepted communication vehicle. The Company believes that it is strongly

positioned to capitalize on the achievements it has made to date and upon the potential in the

field of proximity messaging and mobile advertising.

The Company‘s goal is to become a world leader in the location-based interactive proximity

advertising market utilizing Bluetooth® technology.

Overview and Achievements

In May 2010, iSIGN and AOpen America Inc, (―AOpen‖) reached an agreement (―OEM

agreement‖) to embed iSIGN‘s software technology into AOpen‘s digital media players, leading

to the creation of the world‘s first multi-function media player, capable of providing content

management, message broadcasting and data logging of consumer responses into a single

unit.

In July 2010, iSIGN signed a distribution agreement with BlueStar Inc. (―BlueStar‖), a leading

distributor of Point-of-Sale mobility and Radio-frequency Identification (―RFID‖) products with a

6,000 value added reseller client base.

In August 2010, iSIGN received its first order from AOpen under the OEM agreement. The order

was for 100 units of a total forecast of 1,000 IMS Deluxe Edition software licenses and

accompanying iSIGN Transceivers.

In September 2010, iSIGN received its first order from BlueStar for 100 units of a total forecast of

1,500 IMS Deluxe Edition software licenses and accompanying iSIGN Transceivers.

Under the Deluxe Edition, the revenue per unit is a one-time charge for the iSIGN Transceiver and

activation fee, and per unit monthly recurring revenue that varies based upon the term of the

agreement, which could be 12, 24 or 36 months. In the event that 2,500 software licenses are

fully activated, which is dependent on AOpen‘s and BlueStar‘s customers registering for the

monthly service, these orders could generate significant gross revenue over a thirty-six month

term.

In November 2010, iSIGN signed a reseller agreement with Dynasign Corporation to integrate its

Dynasign Digital Signage, Interactive Digital Signage and Kiosk application publisher and player

software with our Ultimate IMS package.





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In December 2010, iSIGN announced that AOpen had commenced the embedding of our IMS

3.0 software into their digital media players, thus creating the world‘s first multi-function media

player, capable of providing content management, Bluetooth® message broadcasting and

data logging of consumer responses into a single unit, allowing consumers to interact directly

with marketers‘ messages shown on iSIGN enhanced digital signs through their mobile phones.

In December 2010, iSIGN entered into an agreement with Pinpoint Media Group Inc. (―Pinpoint‖)

to have our IMS 3.0 software embedded into Pinpoint‘s digital signage network located in

Mac‘s/Couche-Tard convenience store chain, of approximately 5,600 digital signs/faces,

throughout Canada.

Financial Overview

In the current quarter, the Company cancelled its involvement in the development of the Asian

back-end reporting systems, because of continual delays with completion of the software

development and related local government grant funding. Consequently, the Company has

written-off the capitalized intangible asset and related accrued costs. The Company has

determined it has no further obligations with respect to this project. The write-off charge

reported in the statement of loss is approximately $37,000 in the quarter ending January 31, 2011.

The Company has made available its back-end platform developed for the North American

market that has been fully operational since July 2010. Originally the Company had contracted

with the Asian software developer to create a bank-end specifically for the Asian market in

January 2010.

As at January 31, 2011, the Company‘s allowance on the accounts receivable owed by the

Asian distributor was $244,925, leaving the carrying value of net accounts receivable

approximately $84,000. The Asian distributor has transferred Canadian marketable securities to a

third party, including power of attorney for authority to sell these securities and use the

proceeds against the unpaid accounts receivable. The current market value of those securities is

approximately $100,000.

Subsequent to January 31, 2011, the Company has received $43,496 in payments against these

receivables, from the sale of these securities.

For the three month period ended January 31, 2011, iSIGN‘s revenues were $24,416, as

compared to $25,789 during the same period of the prior year. For the nine month period

ended January 31, 2011, iSIGN‘s revenues were $76,613 as compared to $160,391 during the

same period of the prior year. The decrease in revenue for the nine month period is directly

attributable to absence of ongoing licensing revenue. The revenues in fiscal 2011 result mainly

from earned revenues transferred from the Company‘s deferred revenues balance.

During the three month period ended January 31, 2011, iSIGN generated a gross loss of $211, as

compared to $707 during the same period in the prior year. For the nine month period ended

January 31, 2011, gross profits were $578, as compared to $92,135 during the same period of the

prior year. The decrease in profitability for the nine month period is mainly due to the decreased

licensing revenue and to incurring costs of assembling iSIGN Transceivers.





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For the three month period ended January 31, 2011 net loss was $524,824, as compared to

$710,837 during the same period of the prior year. For the nine month period ended January 31,

2011, net loss was $1,315,648, as compared to $1,076,791during the same period of the prior

year.

The decreased loss for the three months ended January 31, 2010 is a combination of reduced

selling and administrative expenses, specifically for: promotional costs; stock-based

compensation; consultants fees; professional fees; research and development expenses; office

expenses, partially offset by higher administrative salaries and benefits, the write-off of the asset

carrying value for the Asian market back-end system net of the accounts payable , and offset

by the reduced bad debt allowance costs (see section ―Additional Disclosure for Venture Issuers

Without Significant Revenue‖).

The increased loss for the nine months ended January 31, 2011 is a combination of reduced

gross profit and increased administration expenses, specifically for: salaries and benefits for

additional staff; travel and entertainment; research and development and investor relations

costs partially offset by reduced consulting; professional fees; office expenses and currency

exchange losses, the write-off of the asset carrying value for the Asian market back-end system

net of the accounts payable, and offset by the reduced bad debt allowance combined with a

timing difference in the receipt of government rebates for Scientific Research and Experimental

Development funds (―SR&ED‖) (see section ―Additional Disclosure for Venture Issuers Without

Significant Revenue‖). In addition, during the nine months ended January 31, 2010, the

Company recorded a one-time debt forgiveness by its Chief Executive Officer of $122,173.

Total assets as at January 31, 2011 were $1,291,621, an increase of $389,852 from April 30, 2010.

This increase can be attributed to increases in cash of $320,954, other receivable of $23,587,

inventories of $64,506, prepaid expenses of $5,777, and intangible assets of $45,558, partially

offset by decreases in trade receivables of $45,540 and property and equipment of $24,990.

The increase in inventories is due to the 1,500 iSIGN Transceivers that are being assembled for

delivery to our distributor BlueStar for future sales and to Pinpoint for installation in their digital

signage network in Mac‘s Milk/Couche-Tard convenience stores.

The increase in intangible assets relates to the development costs of the back-end reporting

systems for the North America market and enhancements to our IMS software technology,

partially offset by the write-off of the asset carrying value for the Asian market back-end system

net of the accounts payable. The decrease in property and equipment is strictly due to the

amortization taken in the quarter.





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Selected Annual Information

For the nine month period ended

January 31,

2011 2010

Revenue $ 76,613 $ 160,391

Gross profit/(loss) 578 92,135

Expenses

Selling 113,577 216,309

General and administrative 1,123,000 1,027,621

Bad debt 33,945 50,000

Amortization 2,329 1,914

Asset write-off 36,835 -

Debt forgiveness - (122,173)

Interest 6,540 (4,745)

Net Loss from continuing operations (1,315,648) (1,076,791)

Loss per share $ (0.036) $ (0.038)

Total Assets $ 1,291,621 $ 1,474,063

Total long-term liabilities $ - $ 41,556

Results of Operations

Revenue

During the three month period ended January 31, 2011, iSIGN reported revenues of $24,416, as

compared to $25,789 in the same period of the prior year, a decrease of $1,373. During the nine

month period ended January 31, 2011, revenues were $76,613, as compared to $160,391 in the

same period of the prior year, a decrease of $83,778. The decrease in revenues for the nine

month period is the result of the absence of licensing revenue in the Asian market in fiscal 2011.

During the fiscal years of 2010 and 2009, the Company‘s revenue was generated by charging

an activation and programming fee for our Interactive Marketing Solution (―IMS‖) units and

licensing fees for these units. At the time of invoicing, activation and programming revenue was

deferred and taken into revenue evenly over the life of our sales agreements, typically 3 years.

Licensing revenue was generated when the majority of the advertising slots in our IMS units were

filled and the unit starts to generate revenue for our clients. The global economic downturn and

tightened credit policies, resulted in reduced advertising spending, which negatively impacted

the number of advertisers utilizing our IMS units. Customers in Asia signed short-term contracts for

advertising, with their advertising clients, particularly in Singapore. As a result, the advertising

revenues generated by the IMS units during the first quarter of fiscal 2010, dropped below the

minimum levels for charging licensing fees to customers. Consequently, the Company has been

unable to charge for licensing fees from June 2009 onward. The Company is unable to state

when it will be able to recommence billing for Asian licensing fees.





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It was also determined that our back-end reporting system needed upgrades to reporting and

information analysis. The delay in building the Asian back-end is partly attributable to the

procedures and processes to access the funds from the grant the Asian distributor acquired from

the Singapore government towards the cost of the project. Due to these delays the Company

has offered the Asian distributor the back-end developed by the Company for the North

American market.

The Company has invested both staff time and expenses in undertaking a training program with

the sales staff, distributors and Value Added Resellers (―VARs‖) of AOpen and BlueStar, both

during the quarter and subsequent to the quarter-end to familiarize them with our software

platform and its features and benefits. The purpose of the training program being to enable

them to properly understand, promote and sell our product to end clients.

Gross Profit/(Loss)

During the three month period ended January 31, 2011, iSIGN reported a gross loss of $211, as

compared to $707 during the same period of the prior year. For the nine month period ended

January 31, 2011, iSIGN reported a gross profit of $578, as compared to $92,135 during the same

period of the prior year, a decrease of $91,557.

Total direct costs in the three months ended January 31, 2011 were $24,627, compared to

$26,496 in the same period of the prior year, a decrease of $1,869. Total direct costs in the nine

months ended January 31, 2011 were $76,035, compared to $68,256 during the same period of

the prior year, an increase of $7,779. The increase for the year to date is mainly the result of

incurring costs to build and stock iSIGN Transceivers combined with increased server hosting

costs and packaging and shipping costs, partially offset by having previously eliminated the

outsourced software loading and monitoring services during the quarter ended April 30, 2010,

and reduced amortization of IMS units.

Sales, General and Administrative Expenses

Selling expenses for the three months ended January 31, 2011 were $55,982, a decrease of

$55,730 from the $111,712 recorded in the same period of the prior year. For the nine month

period ended January 31, 2011, sales expenses were $113,577, a decrease of $102,732, from the

$216,309 recorded in the same period of the prior year.

The major variances for selling expenses are as follows (See ―Additional Disclosure for Venture

Issuers Without Significant Revenue‖):

1) promotional, advertising and sales material costs, which were $30,350 and $55,909 for the

three and nine months ended January 31, 2011 respectfully, decreases of $64,208 and

$107,108 from the $94,558 and $163,017 recorded in both the three and nine month

period of the prior year. The decrease is due to having eliminated promotional expenses

in Asia, partially offset by our sponsorship costs for Ashleigh McIvor, which started in the

third quarter of fiscal 2010, combined with attending various trade shows with our

business partners, AOpen and BlueStar.





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2) training costs were $5,982 in both periods, an increase of $5,982 from the $Nil recorded

last year. Training costs involves our need to train the sales staff of our distributor and

their various VARs, as well as the sales staff of AOpen.

3) travel and entertainment costs were $3,626 and $3,672 respectively in the three and nine

month periods ended January 31, 2010, increases of $3,626 and $1,346 from the $Nil and

$2,326 recorded in the same periods last year.

General and administrative expenses for the three months ended January 31, 2011 were

$426,568, a decrease of $128,155 from the $554,723 recorded during the same period of the prior

year. For the nine month period ended January 31, 2011, general and administrative expenses

were $1,123,000, an increase of $95,379 from the $1,027,621 recorded during the same period of

the prior year.

The major variances for general and administrative costs are as follows (See ―Additional

Disclosure for Venture Issuers Without Significant Revenue‖):

1) salaries and benefit costs were $297,130 for the three months ended January 31, 2011,

a decrease of $13,072 from the $310,202 recorded in the same period of the prior year.

For the nine month period ended January 31, 2011, these costs were $708,508, an

increase of $179,973 from the $528,535 recorded in the same period of the prior year.

The decrease in the three month period is due to reduced stock-based compensation

during the period, partially offset by increased salaries due to having increased our

staffing late in the third quarter of fiscal 2010. The increase in costs for the nine month

period is due to increased salaries due to increased staffing levels, commencing late in

the third quarter of fiscal 2010.

2) consulting fees were $7,723 for the three months ended January 31, 2011 a decrease

of $55,972 from the $63,695 reported in the same period of the prior year. For the nine

month period ended January 31, 2011 costs were $103,223, a decrease of $53,023 from

the $156,246 reported in the same period of the prior year.

3) professional fees were $21,547 for the three months ended January 31, 2011, a

decrease of $29,254 from the $50,801 recorded during the same period of the prior

year. For the nine month period ended January 31, 2011, costs were $90,721, a

decrease of $38,989 from the $129,710 recorded during the same period of the prior

year. The decrease for the quarter is due to last year‘s redesign and build of our

website, combined with reduced legal and transfer agent costs, partially offset by

higher audit costs. For the nine month period ended January 31, 2011, the decrease is

due to last year‘s redesign and build of our website combined with reduced legal and

transfer agent costs insurance and TSX/Sedar filing fees, partially offset by increased

audit fees and insurance costs.

4) office expenses were $16,267 for the three months ended January 31, 2011, a decrease

of $7,983 from the $24,250 recorded during the same period of the prior year. For the

nine month period ended January 31, 2011, costs were $36,508, a decrease of $14,606

from the $51,114 recorded during the same period of the prior year. The decrease for

the quarter is mainly due to reduced costs for press releases, couriers and late payment

fees. The decrease for the year to date is mainly a result of reduced costs for press

releases, printing costs and late payment fees, partially offset by the relocation costs of

our Ontario office from Markham to Richmond Hill and maintenance and hosting fees

for our website.





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5) research and development costs were $7,395 for the three months ended January 31,

2011, a decrease of $3,915 from the $11,310 recorded in the same period of the prior

year. For the nine month period ended January 31, 2011, costs were $33,187, an

increase of $16,155 from the $17,032 recorded in the same period of the prior year.

6) Investor relations costs were $34,302 for both the three and nine months ended January

31, 2011, an increase of $10,699 from the $23,603 recorded in the same periods of the

prior year. The increase in costs recognizes our having hired an IR firm to handle

investor/shareholder relations in December 2010 combined with costs incurred for an

email blast sent to various brokers, compared with as compared to the costs in the

prior year for BNN promotional clips.

7) travel and entertainment costs were $1,994 for the three months ended January 31,

2011, a decrease of $7,547 from the $9,541 recorded during the same period of the

prior year. For the nine month period ended January 31, 2011, costs were $20,148, an

increase of $2,083 from the $18,065 recorded in the same period of the prior year. The

decrease in the three month period is partially due to our CEO‘s travel and

entertainment costs being allocated between selling and administration costs,

whereas in prior periods the selling costs were not segregated from administration.

8) telephone costs were $8,065 for the three months ended January 31, 2011, an increase

of $3,370 from the $4,695 recorded during the same period of the prior year. For the

nine month period ended January 31, 2011, costs were $19,034, an increase of $599

from the $18,435 recorded during the same period of the prior year. The increase in

costs for the three month period relates to increased cell phone usage in the quarter.

9) currency exchange losses for the three months ended January 31, 2011 were $7,133,

an increase of $1,983 from the $5,150 realized during the same period of the prior year.

For the nine month period ended January 31, 2011, losses were $8,814, a decrease of

$31,064 from the loss of $39,878 realized during the same period of the prior year. As

our billings to international clients are in US dollars, we are at risk with fluctuations in the

US/Canadian exchange rates. These losses are directly attributable to the extended

payment terms given to our Asian distributor.

10) directors‘ fees were $5,000 for the three month ended January 31, 2011, no change

from what was recorded in the same period of the prior year. For the nine month

period ended January 31, 2011, costs were $15,000, an increase of $5,000 from the

$10,000 recorded in the same period of the prior year. The Company pays its directors

a quarterly fee for their services. As the Company was a private company up until

September 3, 2009, no payments were made to its directors for the three months

ended July 31, 2009.

11) Scientific Research and Experimental Development funds (―SR&ED‖) refunds were $Nil

for both the three and nine months ended January 31, 2011, a decrease of $43,754

from the $43,754 recovered during the nine month period ended January 31, 2010. The

Company has filed claims for refunds, and anticipates $25,000 net of commissions, for

the May 1, 2008 to September 3, 2009 period, which are currently under review by the

Canada Revenue Agency. In accordance with Company policy, a refund is booked

only when the receipt of the refund is reasonably assured.

Net Loss

Net loss of $524,824 in the three month period ended January 31, 2011 decreased by $186,013

from the $710,837 reported during the same period of the prior year. Net loss of $1,315,648 in the





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nine month period ended January 31, 2011 increased by $238,857 from the $1,076,791 reported

during the same period of the prior year.

The decreased loss for the three months ended January 31, 2011 is a combination of reduced

selling and administrative expenses, specifically for: promotional costs; stock-based

compensation; consultants fees; professional fees; research and development costs and office

expenses, partially offset by higher administrative salaries and benefit costs, the write-off of the

asset carrying value for the Asian market back-end system net of the accounts payable, and

offset by the reduced bad debt allowance loss (see section ―Additional Disclosure for Venture

Issuers Without Significant Revenue‖).

The increased loss for the nine months ended January 31, 2011 is a combination of reduced

licensing revenues, increased direct costs and increased administration expenses, specifically

for: salaries and benefits for additional staff; travel and entertainment costs; research and

development expenditures, investor relations costs and the write-off of the asset carrying value

for the Asian market back-end system net of the accounts payable,, partially offset by reduced

consulting fees; professional fees; office expenses and currency exchange losses and bad debt

allowance loss combined with a timing difference in the receipt of government rebates for

SR&ED claims (see section ―Additional Disclosure for Venture Issuers Without Significant

Revenue‖). In addition, during the nine months ended January 31, 2010, the Company

recorded a one-time debt forgiveness by its Chief Executive Officer of $122,173.

Summary of Fiscal 2011, 2010 and 2009 Quarterly Results

Fiscal 2011 Q1 Q2 Q3

(unaudited)

Revenue $ 25,894 $ 26,303 $ 24,416

Cost of sales 17,018 34,390 24,627

Gross profit/(loss) 8,876 (8,087) (211)

Expenses

Selling 25,374 32,221 55,982

General and administrative 324,375 372,057 426,568

Accounts receivable allowance 20,813 13,132 -

Amortization 740 760 829

Asset write-off - - 36,835

Interest expense (income) 605 1,536 4,399

371,907 419,706 524,613

Net Loss (363,031) (427,793) (524,824)

Loss per share $ (0.010) $ (0.012) $ (0.013)

Weighted average number of

common shares outstanding 36,007,472 36,354,863 40,861,811





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Fiscal 2010 Q1 Q2 Q3 Q4

(unaudited)

Revenue $ 109,743 $ 24,859 $ 25,789 $ 23,373

Cost of sales 22,178 19,583 26,496 11,215

Gross profit/(loss) 87,565 5,276 (707) 12,158

Expenses

Selling 18,138 86,459 111,712 57,317

General and administrative 232,867 240,031 554,723 507,832

Accounts receivable allowance - - 50,000 160,979

Amortization 317 985 612 909

Debt forgiveness - (122,173) - (1,146)

Interest expense (income) 11,382 (9,210) (6,917) 1,202

262,704 196,092 710,130 727,093

Net Loss (175,139) (190,816) (710,837) (714,935)

Loss per share $ (0.009) $ (0.007) $ (0.022) $ (0.020)


common share outstanding 20,000,000 29,100,753 31,620,929 35,935,110

Fiscal 2009 Q4

(unaudited)

Revenue $ 202,049

Cost of sales 23,943

Gross profit/(loss) 178,106

Expenses

Selling 40,143

General and administrative 257,946

Amortization 262

Interest expense (income) 8,577

306,928

Net Loss from continuing operations (128,822)

Loss on disposal of discontinued

Operations -

Net Loss from discontinued

Operations 277

Net Income/(Loss) $ (128,545)

Loss per share

Continuing operations $ (0.007)

Discontinued operations $ -

Net Income/(Loss) $ (0.007)


common share outstanding 20,000,000





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Liquidity

iSIGN‘s primary sources of liquidity have historically been equity and debt financings and a

revolving line of credit to a maximum of $25,000. As at January 31, 2011, the net cash position

was $728,276, compared to $407,322 at April 30, 2010.

The Company‘s liquidity issues are due to:

recurring operating losses in its past fiscal years, including losses of $1,278,813 during the

nine months ended January 31, 2011,

extended payment terms to our Asian distributor in recognition that our technology, as

well as the concept of location-based interactive proximity advertising was new and

untested in the marketplace, and,

The Asian distributor‘s inability to pay accounts receivable that are overdue and owed

to the Company of approximately $90,000, at January 31, 2011.

The Company‘s working capital at January 31, 2011 was $514,960, as compared to working

capital of $244,695 at April 30, 2010. The increase in working capital reflects the cash from the

private placements in the Company during October, November and December 2010, offset by

the Company‘s ongoing losses.

The Company will continue to require additional financing to fund working capital until revenues

from its operations provide sufficient cash flow to meet ongoing requirements.

The Company anticipates that improvements to the cash flow from operations will eventually be

realized. Based on the feedback from tradeshows, prospects and other independent sources,

the Company believes that:

1. There is an overwhelming trend of the swift advent of ―mobile culture‖ – consumers

increasingly leverage mobile phones as a de facto portal, a primary interface, available

anywhere at any time, through which they conduct research, connect and share with

others and in many cases, make purchasing decisions; and,

2. A second trend is digital signage — a dynamic opportunity for retailers to promote their

brands, their products, and their services via the full power of a true multimedia

experience. By integrating with our proximity marketing, content on digital signs can

become far more skillfully matched with shopper interests.

The Company has been successful in attracting business partners, a distributor and clients on a

test basis, as well as in generating significant interest from a variety of potential clients and

business partners.

With the OEM and distribution agreements now in place as of the date of this MD&A our

revenue opportunities have improved and might be realized in future through partnering with

these large multi-national companies. Our business partners recognize that embedding our

software solutions into their products will potentially allow them to increase their own sales and

expand their client base.





14

Contractual Obligations and Guarantees

The Company currently has lease agreements for the rental of its Richmond Hill, Ontario and

Vancouver, British Columbia, Canada offices, as well as for hosting our IMS 3.0 back-end

reporting system for clients. In addition, in October 2009, the Company entered into a

sponsorship agreement with Ashleigh McIvor, Canada‘s gold medal winning female athlete at

the Vancouver 2010 Winter Games. On November 9, 2010, the Company outsourced its public

relations to a third party, for a period of six months from December 1, 2010. On December 8,

2010, the Company outsourced its investor relations to a third party for a period of six months

from December 1, 2010. In February 2011, the Company signed a two year lease extension for

its Vancouver office space.

Future minimum contractual payments are as follows:

Year ending Total 2011 2012 2013 2014 on

Operating Lease Obligations $ 106,179 $ 16,396 $ 45,714 $ 41,011 $ 3,058

Consulting Agreements 47,300 35,475 11,825 - -

Sponsorship Agreement 38,523 3,556 14,224 14,224 6,519

Total $ 192,002 $ 55,427 $ 71,763 $ 55,235 $ 9,577

During the quarter ended July 31, 2010, the Company entered into two agreements with

client/business partners whereby the Company has agreed to indemnify the counterparties for

liabilities that may arise during the terms of the agreements. The maximum amount of any

potential future payment cannot be reasonably estimated at this time.

Capital Resources

With the Company‘s change in strategy to licensing and or embedding our software into our

business partners‘ products, as opposed to buying and leasing IMS units, it is anticipated that our

requirements to purchase IMS units will be decreased. Our main capital requirement will be for

further enhancements to our software.

Off-Balance Sheet Arrangements

The Company has not entered into any off-balance sheet arrangements.

Transactions with Related Parties

In the normal course of operations, the Company:

pays the monthly fees of our Chief Executive Officer to a company owned by him.

The amount of fees expensed during the three months ended January 31, 2011 is

$47,550 (2010 - $47,550) and for the nine months ended January 31, 2011 is $142,650

(2010 - $142,650). The amount outstanding in trade accounts payable at January

31, 2011 is $Nil (2010 - $82,772). In the event of termination of this agreement for any

reason other than just cause, a penalty of $190,200 would be owed.





15

pays the monthly fees of our Chief Financial Officer to a company owned by him.

The amount of fees expensed during the three months ended January 31, 2011 is

$6,000 (2010 - $6,000) and for the nine months ended January 31, 2011 is $18,000

(2010 - $8,000). The amount outstanding in Trade accounts payable at January 31,

2011 is $2,260 (2010 - $Nil).

engaged a law firm to provide legal services to the Company. One of the partners

in the law firm is a director and secretary of the Company. During the three months

ended January 31, 2011, $10,692 in legal fees and disbursements were Incurred with

this law firm (2010 - $31,940) and for the nine months ended January 31, 2011 is

$10,692 (2009 - $52,986). The amount outstanding in trade accounts payable at

January 31, 2011 is $4,540 (2010 - $Nil).

Consolidated Financial Position

Total assets increased to $1,291,621 at January 31, 2011 from $901,769 at April 30, 2010. Total

Shareholders‘ Equity increased to $832,967 at January 31, 2011 from $520,274 at April 30, 2010.

Critical Accounting Policies and Changes in Accounting Policies

The Company‘s significant accounting policies and accounting policy changes are described in

Note 2 to the annual audited financial statements. The preparation of the Company‘s financial

statements, in conformity with Canadian GAAP, requires management to make estimates and

assumptions that affect amounts reported in the financial statements and accompanying notes.

Significant management estimates include revenue recognition, allowance for doubtful

accounts, useful lives of capital and intangible assets, fair value for stock-based compensation

and the fair value of warrants.

Recent pronouncements by the Canadian Institute of Chartered Accountants (―CICA‖) or the

Canadian Accounting Standards Board (―AcSB‖) that may result in future changes to our

accounting policies, are described in Note 3 to the annual audited financial statements.

The Canadian Accounting Standards Board confirmed the requirement for Canadian public

companies to adopt International Financial Reporting Standards (―IFRS‖) for fiscal years

beginning on or after January 1, 2011. The Company has contracted with an on-line service

that will enable the Company plan and execute its conversion to IFRS based GAAP. The

implementation timeline for the conversion to IFRS from Canadian financial reporting standards

is expected to be completed with an implementation date of May 1, 2011.





16

The Company has performed an initial review of IFRS and the potential impact on its financial

statements that has not been finalized as at the date of preparation of this MD&A. Preliminary

comments are tabled below:

IAS / IFRS

Description of change –

under IFRS

Impact on financial

statements

Considerations

IAS 18 –

Revenue

Less detailed guidance

could result in different

determination of multiple

element arrangements

Changes may

accelerate or

decelerate recognition

of revenues, gross

margin, net income,

accounts receivable and

deferred revenues

Review ongoing sales

contracts to determine

different components

IAS 36 -

Impairment

Different

methodology on

impairment test (one

step approach);

Reversals of some

impairment losses

Impairment may more

likely but smaller

incremental amounts

Consider which items

susceptible in the

business: intangibles,

development costs and

improve appropriate

monitoring

Stock

compensation

– IFRS 2

Vesting installments

Non employees

Compulsory estimate

forfeiture rates

Impact valuation of

compensation.

Understanding the

entity‘s compensation

practices and how these

will be impacted

Financial Instruments

Fair Value

The carrying amounts of cash, accounts receivable, other receivables, accounts payable and

accrued liabilities and notes payable approximate fair value due to the short-term nature of

these instruments.

Credit Risk

Credit risk is the risk of financial loss associated with the counterparty‘s inability to fulfill its

payment obligations in accordance with the terms and conditions of its contract with the

Company. Credit risk arises from cash and deposits with banks as well as credit exposure to

outstanding receivables.





17

The aging of accounts receivables at January 31, 2011 was as follows:

1 to 30 days $ 793

31 to 60 days 732

61 to 90 days -

Over 91 days 83,859

$ 85,384

The Company‘s credit risk arises primarily from the Company‘s trade receivable. The carrying

amount of financial assets represents the maximum credit exposure to the Company. The

Company‘s credit risk is a result of its trade receivable being concentrated with our two largest

clients accounting for 98.3% of total trade receivables. The Company manages its credit risk by

regular credit assessments of its customers and provides allowances for potentially uncollectible

accounts receivable, when, based upon management‘s evaluation, the collection of an

account receivable is not reasonably certain. The Company‘s exposure to credit risk as at

January 31, 2011 includes $85,384 of accounts receivable, net of allowances of $244,925 (2010 -

$50,000l) and $55,401 of other receivables. Our key customer, which includes 98.3% of accounts

receivable, will be liquidating marketable securities to cover their indebtedness to the

Company. Based upon the realized share price, there may be an additional requirement for an

adjustment to our provision for doubtful accounts. The Company received an additional

$43,496 from the sale of these securities subsequent to January 31, 2011.

Liquidity Risk

Liquidity risk is the risk that the Company will experience difficulty in meeting its obligations that

are associated with financial liabilities. The Company‘s approach to managing liquidity risk is to

ensure that it will have sufficient liquidity to meet financial obligations when they fall due, from its

funding sources, such as equity and debt issuances, accounts receivable and line of credit. The

Company is raising funds through the issuance of stock from treasury to ensure that it will have

funds available to meet liabilities when they fall due.

The following table represents the Company‘s financial liabilities identified by type and future

contractual dates of payment:

Total Under 1 – 3 After

1 Year Years 3 Years

Accounts payable and accrued liabilities $ 245,187 $ 245,187 $ - $ -

Loan 150,000 150,000 - -

$ 395,187 $ 395,187 $ - $ -

Interest Rate Risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will

fluctuate because of changes in market interest rates. The Company is subject to interest rate





18

cash flow risk to the extent that its operating line of credit bears interest at bank prime plus 1.8%.

Based upon the Company‘s operating line limit of $25,000, a 1% increase (decrease) in the bank

prime rate would increase (decrease) interest expense by $250, based upon a 100% utilization of

the credit line.

Currency Risk

Currency risk is the risk that the fair value or future cash flows of a financial instrument will

fluctuate because of changes in foreign exchange rates. Financial instruments, which expose

the Company to financial risk arising from foreign exchange rates and the degree of volatility of

these rates, consist primarily of the US dollar denominated portion of accounts receivable and

accounts payable and accrued liabilities. Substantially all of the Company‘s accounts

receivable are denominated in US dollars. As at January 31, 2011, the Company has not

entered into any derivative instruments to mitigate this risk. The Company has reflected losses in

its Statement of Operations for both the three and nine month periods ended January 31, 2011

as a result of exposure to foreign currency exchange rate fluctuations of $7,133 (2010 –

exchange loss of $5,150) and $8,814 (2010 – exchange loss of $39,878) respectively.

Revenue or expenses arising from a foreign currency transaction are translated into Canadian

dollars at the transaction date using the exchange rate in effect at that date and are recorded

in general and administrative costs.

As at January 31, 2011, holding all other variables constant, a 5% strengthening or weakening of

the Canadian dollar against the United States dollar, would not materially affect net equity or

net loss for the year.

Additional Disclosure for Venture Issuers without Significant Revenue

Direct costs for the three and nine month periods ended January 31, 2011 and 2010 are as

follows:

Three months ended January 31, Nine months ended January 31,

2011 2010 2011 2010

Amortization of IMS units $ 9,363 $ 13,832 $ 28,089 $ 36,413

iSIGN Transceivers 6,532 - 27,926 -

Server costs 1,126 523 9,394 523

Shipping/packaging costs 7,606 257 7,799 566

Software Maintenance/Testing - - 2,500 -

Miscellaneous costs - 484 327 914

IMS System Modifications - 900 - 1,340

Software loading costs - 10,500 - 28,500

$ 24,627 $ 26,496 $ 76,035 $ 68,256

Selling costs for the three and nine month periods ended January 31, 2011 and 2010 are as

follows:





19


2011 2010 2011 2010

Promotional and sales material costs $ 30,350 $ 94,558 $ 55,909 $ 163,017

Salaries and benefits 12,967 13,746 40,157 41,708

Automobile expenses 2,400 3,019 7,200 7,819

Training expenses 5,982 - 5,982 -

Travel and entertainment 3,626 - 3,672 2,326

Memberships 657 - 657 -

Outside services - 389 - 1,439

$ 55,982 $ 111,712 $ 113,577 $ 216,309

General and administration expenses for the three and nine month periods ended January 31,

2011 and 2010 are as follows:


2011 2010 2011 2010

Salaries and benefits $ 297,130 $ 310,202 $ 708,508 $ 528,535

Consulting fees 7,723 63,695 103,223 156,246

Professional expenses 21,547 50,801 90,721 129,710

Office rents 13,785 12,984 40,933 39,307

Office expenses 16,267 24,250 36,508 51,114

Research & development 7,395 11,310 33,187 17,032

Investor relations expense 34,302 23,603 34,302 23,603

Travel and entertainment 1,994 9,541 20,148 18,065

Telephone expenses 8,065 4,695 19,034 18,435

Directors‘ fees 5,000 5,000 15,000 10,000

Automobile expenses 3,062 3,142 9,081 8,575

Currency exchange (gain)/ loss 7,133 5,150 8,814 39,878

Memberships and subscriptions 3,165 350 3,541 875

Financing fees - 30,000 - 30,000

Research refunds - - - (43,754)

$ 426,568 $ 554,723 $ 1,123,000 $ 1,027,621

Outstanding Share Data

Capital Stock

Authorized

Unlimited number of common shares, voting, with no par value

Issued

The following is a summary of shares issued for the nine months ended January 31,

2011:





20

Number Dollars

Balance at April 30, 2010 36,607,472 $ 2,792,384

Adjustment in valuation of warrants from year-end 6.b)(i) - 6,900

Exercise of options (i) 110,000 22,000

Issuance in a private placement (ii) 965,000 70,922

Issuance in a private placement (iii) 2,000,000 136,209

Issuance in a private placement (iv) 1,835,200 143,834

Issuance in a private placement (v) 3,184,900 238,762

Cost of share issuance (vi) - (197,604)

Balance at January 31, 2011 44,702,572 $ 3,213,407

(i) On August 12, 2010, 110,000 stock options were exercised at a price of $0.20,

for proceeds of $22,000.

(ii) ‗On October 6, 2010, the Company completed a private placement of

965,000 shares and 482,500 whole warrants, at a price of $0.20, for proceeds

of $193,000 (share value of $70,922 and warrant value of $99,877). In

addition, 107,250 warrants were issued to various brokers, with these warrants

valued at $22,201.

(iii) On November 26, 2010, the Company completed a private placement of

2,000,000 shares and 1,000,000 whole warrants, at a price of $0.20, for

proceeds of $400,000 (share value of $136,209 and warrant value of

$217,000). In addition, 215,625 warrants were issued to various brokers, with

these warrants valued at $46,791.

(iv) On November 30, 2010, the Company completed the first tranche of a

private placement by issuing 1,835,200 shares and 917,600 whole warrants, at

a price of $0.20, for proceeds of $367,040 (share value of $143,834 and

warrant value of $199,119). In addition, 111,000 warrants were issued to

various brokers, with these warrants valued at $24,087.

(v) On December 30, 2010, the Company completed the second tranche of a

private placement by issuing 3,184,900 shares and 1,592,450 whole warrants,

at a price of $0.20, for proceeds of $636,980 (share value of $238,762 and

warrant value of $391,743). In addition, 26,250 warrants were issued to

various brokers, with these warrants valued at $6,475.

(vi) Share issuance costs consist of commissions of $110,910, legal fees of $76,412

and TSX fees of $10,282.





21

Warrants

The following is a summary of share purchase warrants activity for the nine months ended

January 31, 2011:

Exercise

Number Valuation Price Expiry Date

Balance at April 30, 2010 11,705,332 $ 1,195,852

Adjustment to year-end 2010 6.b) i) (150,000) (6,900)

Issued 6. a)(ii) 482,500 99,877 0.30 October 6, 2012



Issued 6. a)(iii) 1,000,000 217,000 0.30 November 26, 2012

Issued 6. a)(iii) 143,750 31,194 0.20 November 26, 2012

Issued 6. a)(iii) 71,875 15,597 0.30 November 26, 2012

Issued 6. a)(iv) 917,600 199,119 0.30 November 30, 2012



Issued 6. a)(v) 1,592,450 391,743 0.30 December 30, 2012

Issued 6. a)(v) 17,500 4,323 0.20 December 30, 2012

Issued 6. a)(v) 8,750 2,152 0.30 December 30, 2012

Balance at January 31, 2011 16,008,007 $ 2,196,245

i) Finder warrants issued in September 3, 2009 were overstated at April 30, 2010.

For the warrants issued during the nine month period ended January 31, 2011,

reallocation of the warrant value from Share capital has been calculated utilizing the

Black-Scholes option pricing model with the following assumptions: risk free interest rate

range of 1.35% to 1.71%; dividend yield of 0%; weighted average expected life of 24

months and an expected volatility factor 349.3%.





22

The following table summarizes information about warrants outstanding:

Number of

Warrants

Outstanding

Weighted

Average

Exercise Price

Weighted

Average

Remaining Life

(in months)

132,636 0.40 1.0

480,000 0.40 1.5

3,214,996 0.40 7.0

1,800,000 0.25 7.0

50,000 0.35 8.0

38,850 0.50 12.5

38,850 0.25 12.5

518,250 0.30 20.0

71,500 0.20 20.0

2,026,475 0.30 22.0

217,750 0.20 22.0

1,601,200 0.30 23.0

17,500 0.20 23.0

800,000 0.50 24.5

5,000,000 0.45 47.5

16,008,007 $ 0.37 24.5

Subsequent to January 31, 2011, 132,636 options expired and 91,200 options were

exercised.

Stock Options

The shareholders of the Company on November 18, 2009 approved a Stock Option Plan

(the ―Plan‖) for the directors, officers, employees and consultants of the Company.

Options granted under the Plan are exercisable for a period up to five years, as

determined by the Board, from the date of the grant. The exercise price of the options

shall be determined by the Board at the time of the grant, but shall not be less than the

Discounted Market Price as set by the TSX Venture Exchange Policy 1.1 as amended from

time to time. The aggregate number of shares issuable upon the exercise of all options

granted under the Plan shall not exceed 10% of the issued and outstanding common

shares of the Company from time to time. The number of common shares reserved for

issuance to (a) any individual director or officer will not exceed 5% of the issued and

outstanding common shares, and (b) investor relations consultants will not exceed 2% of

the issued and outstanding common shares.

Stock Options

The following is a summary of stock option activity for the nine months ended January 31,

2011:





23

# of

Options

Average

Exercise

Price

Expiry Date

Outstanding at April 30, 2010 2,982,400 $ 0.27

Issued 900,000 0.25 September 27, 2015

Issued 300,000 0.25 December 1, 2015

Issued 300,000 0.25 January 10, 2016

Expired (312,400) 0.20

Expired (300,000) 0.25

Exercised (110,000) 0.20

Outstanding at January 31, 2011 3,760,000 $ 0.27

The following table summarizes the stock options outstanding at January 31, 2011:

Total Options Outstanding Total Options Exercisable

Exercise

Price

# of Options Weighted Average

Remaining Contractual

Life

# of Options Weighted Average

Remaining Contractual

Life

$ 0.25 625,000 44 months 625,000 44 months

0.38 500,000 47.0 months 333,334 47.0 months

0.25 1,035,000 48.5 months 345,000 48.5 months

0.25 100,000 48.5 months 50,000 48.5 months

0.25 900,000 56 months 300,000 56 months

0.25 300,000 58 months 75,000 58 months

0.25 300,000 58.5 months 100,000 58.5 months

3,760,000 1,828,334

Stock-based Compensation

The fair value of employee stock options granted is recognized as compensation cost in

the consolidated statements of operations. The weighted average fair value of options

granted under the stock option plan in the 9 months ended January 31, 2011 was $0.25

(2010 - $0.31) and the stock-based compensation expense for options issued was

$206,925 (2010 - $206,525), recorded under general and administrative expenses. The

share-based compensation was calculated using the Black-Scholes pricing model, using

the following assumptions: risk free interest rate range of 2.09% to 2.46%; expected

dividend yield of 0%; expected volatility of 381.7% and an expected option life of 2.5

years.

Shares Held in Escrow

Pursuant to the Transaction, 2,015,000 iSIGN Shares (29.6%) are subject to escrow

continuing from part of the initial public offering of the Company (―CPC Escrow Shares‖).

Under the policies of the Exchange, 10% of the CPC Escrow Shares were released on the





24

date of issuance of the Final Exchange Bulletin and an additional 15% will be released

every six months from the date of the Final Exchange Bulletin.

The 10,747,516 iSIGN Shares that were issued to the principals of iSIGN Media have been

placed in surplus security escrow agreements (―Surplus Escrow Shares‖). Under the

policies of the Exchange, 5% of the Surplus Escrow Shares were released on the date of

the Final Exchange Bulletin, with additional releases as follows: 5% on the six month

anniversary of the Final Exchange Bulletin; 10% on each of the twelfth and eighteenth

month anniversaries of the Final Exchange Bulletin; 15% on each of the twenty-fourth and

thirtieth month anniversaries of the Final Exchange Bulletin; and the remaining 40% on the

thirty-sixth month anniversary of the Final Exchange Bulletin.

1,461,187 iSIGN Shares that were issued to non-principals of iSIGN Media have been

placed in value security escrow agreements (―Value Escrow Shares‖). Under the policies

of the Exchange, 10% of the Value Escrow Shares were released on the date of the Final

Exchange Bulletin and an additional 15% will be released every six months from the date

of the Final Exchange Bulletin.

The following table summarizes the shares held in escrow at January 31, 2011:

Outstanding at April 30, 2010 12,279,908

Released - principals of iSIGN Media (1,074,753)

Released – non-principals of iSIGN Media (521,428)

Outstanding at January 31, 2011 10,683,727

Nature of Operations

Location-based interactive proximity advertising is a relatively new field, with the result that our

revenues and purchases are concentrated among a limited number of companies. For the

three months ended January 31, 2011, two of our customers accounted for 80.7% of our

revenue. For the nine months ended January 31, 2011, two of our customers accounted for

77.1% of our revenue. For the three months ended January 31, 2011, one of our suppliers

accounted for 11.3% of our total purchases. For the nine months ended January 31, 2011, two of

our suppliers accounted for 23.9% of our total purchases.

Internal Controls

Disclosure controls and procedures (―DC&P‖) are intended to provide reasonable assurance

that information required are disclosed, processed, summarized and reported within the time

periods specified by securities regulations, and that information required to be disclosed is

accumulated and communicated to management. Internal controls over financial reporting

(―ICFR‖) are intended to provide assurance regarding the reliability of financial reporting and

the preparation of financial statements for external purposes in accordance with Canadian

GAAP.





25

TSX Venture listed companies are not required to provide representations in their annual and

interim filings related to the establishment and maintenance of DC&P and ICFR, as defined in

Multinational Instrument MI 52-109. In particular, the CEO and CFO certifying officers do not

make any representations relating to the establishment and maintenance of: (a) controls and

other procedures designed to provide reasonable assurance that information required to be

disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under

securities legislation is recorded, processed, summarized and reported within the time periods

specified in securities legislation, and (b) a process to provide reasonable assurance regarding

the reliability financial reporting and the preparation of financial statements for external

purposes in accordance with GAAP. The issuers‘ certifying officers are responsible for ensuring

that processes are in place to provide them with sufficient knowledge to support the

representations they are making in their certificate regarding absence of misrepresentations and

fair disclosure of financial information. Investors should be aware that inherent limitations on the

ability of certifying officers of a venture issuer to design and implement on a cost effective basis

DC&P and ICFR as defined in MI 52-109 may result in additional risks to the quality, reliability,

transparency and timeliness of interim and annual filings and other reports provided under

securities legislation.

Risk Factors

Any investment in the securities of the Company is speculative due to the nature of its business

and its general stage of development. These risk factors could materially affect the Company‘s

future operating results and could cause actual events to differ materially from those described

in forward-looking statements relating to the Company. In addition to the usual risks associated

with investment in a business, investors should carefully consider the following risk factors:

Location-based Interactive Proximity Advertising Medium

Although there is a large and growing amount of interest in this field from both the advertising

community and digital sign companies, it is still new and relatively untested. There can be no

assurances that advertisers will accept proximity messaging as an acceptable advertising

medium or that they will either increase their advertising spending to include this medium or

divert some of their existing advertising budget to this medium.

Competition

iSIGN‘s competition for advertising dollars, are the more traditional forms of advertising -

television, the print mediums (magazines and newspapers), radio and out-of-home advertising –

that advertisers immediately consider when they think of communicating with potential

consumers. The Company also has competition from other companies who are in the Proximity

Messaging field. However, these companies have positioned themselves in an entirely different

fashion than iSIGN‘s business model. They have generally positioned themselves as the

advertising medium, retaining all advertising revenues. Conversely, iSIGN has positioned itself as

a partner with the retail establishments and digital sign companies in order to allow them to

generate and retain advertising revenue.

Dependence on International Trade

iSIGN‘s current primary client is located in Asia. Most of our potential future clients are located in

the United States. Such trade is influenced by many factors, including economic and political

conditions, major work stoppages, wars, terrorist acts or security operations, currency fluctuations





26

and Canadian and foreign laws relating to duties and trade restrictions. There can be no

assurance that trade-related events beyond the control of iSIGN, such as an increase in trade

restrictions, will not have an adverse effect on iSIGN‘s business.

Dependence on Key/Qualified Personnel

The Company‘s success is dependent on the abilities, experience and efforts of its senior staff.

The experience of these individuals, as well as new employees that we attract to our

organization, will be an important factor contributing to iSIGN‘s continued success and growth.

While iSIGN has entered into employment agreements with its senior management and staff,

should these persons be unable or unwilling to continue their employment with the Company,

the loss of one or more of these individuals could have an adverse effect upon iSIGN‘s

operations and business prospects. There can be no assurance that iSIGN will not experience

employee turnover in the future, or that iSIGN‘s staffing costs will not increase. There is no

assurance that the Company will be able to continue to hire and retain a sufficient number of

qualified personnel, although our track record in this regard is positive. The Company does not

presently carry ―key man‖ insurance policies on any of its officers, directors or employees

Creating New Product Features

iSIGN‘s ability to grow its revenue and client base will be impacted to a degree, by its ability to

create and/or to react to the desire for additional features and functions for its technology.

Vulnerability to Economic Conditions

iSIGN is dependent upon the economic environments in which it operates. Demand for iSIGN‘s

product could be adversely affected by economic conditions in the countries in which iSIGN‘s

clients operate. iSIGN‘s business may be sensitive to external factors such as events which may

adversely affect the economy and consumer spending. There can be no assurance that such

factors may not have an adverse effect upon iSIGN‘s business. However, as stated earlier, it is

important to note that the Company‘s advertising model in the only one that the Company is

aware of that enables clients to generate revenue for themselves. In the current economic

recession, this gives us a distinct advantage in our dealings with clients who are looking to

communicate with prospective purchasers in their retail outlets.

Technology

iSIGN currently holds patent pending applications in Canada, United States, China, Singapore

and Malaysia. Despite precautions that iSIGN may take to protect its rights, third parties may

copy or obtain and use our intellectual property and other proprietary information without our

authorization or they may develop similar or superior technologies. iSIGN enters into

confidentiality agreements with its employees, clients, prospective clients and others. However,

these agreements may not provide meaningful protection of our technologies in the event of

unauthorized use or disclosure. Policing unauthorized use of intellectual property is difficult and

the cost of enforcing our rights by way of litigation may be prohibitive. iSIGN‘s success will

partially depend upon its ability to obtain, enforce and maintain patent protection for its

intellectual property worldwide.

Contingencies

In the normal course of operations, there may be claims or proceedings instituted against iSIGN.

Any losses sustained from any future proceedings will be recorded on the statement of





27

operations at such time as the loss is determined. At the present time, there are no actions

against the Company.

Limited Operating History

iSIGN has a limited operating history upon which its business can be evaluated. iSIGN‘s business

and prospects must be considered in light of the risk, expenses and difficulties encountered by

companies in the early stages of development, particularly companies in new and evolving

technology and its application to related markets.

No History of Profits

iSIGN has not earned profits to date and there is no assurance that iSIGN will earn profits in the

future, or that profitability, if achieved, will be sustained. The success of iSIGN ultimately depends

upon its abilities to generate significant revenues to finance operations as opposed to external

funding. There is no assurance that future revenues will be sufficient to generate the funds

required to continue operations without external funding. If the Company does not have

sufficient capital to fund its operations, it may be required to forego certain business

opportunities.

Future Capital Requirements

iSIGN will require additional financing in order to grow and expand its operations. Additional

financing could include the incurrence of debt and the issuance of additional equity securities,

which could result in substantial dilution to existing shareholders. It is possible that required future

financing will not be available, or if available, will not be available on favourable terms. If

adequate funds are not available, or are not available on acceptable terms, iSIGN may not be

able to take advantage of opportunities or otherwise respond to competitive pressures and

remain in business. There can be no assurances that iSIGN will be able to raise additional capital

if its capital resources are exhausted.

Management of Growth

Any expansion of iSIGN‘s business may place a significant strain on its financial, operational and

managerial resources. There can be no assurance that the Company will be able to implement

and subsequently improve its operations and financial systems successfully and in a timely

manner in order to manage any growth it experiences. There can be no assurances that iSIGN

will be able to manage growth successfully. Any inability of iSIGN to manage growth

successfully could have a material adverse effect on the Company‘s business, financial

condition and operational results.

Our sales efforts require significant time and effort and could hinder our ability to expand our

customer base and increase revenue

Attracting new customers requires substantial time and expense and we cannot assure that we

will be successful in establishing new relationships, or maintaining or advancing our current

relationships. For example, it may be difficult to identify, engage and market to customers who

do not currently perform mobile marketing or advertising or are unfamiliar with our current

services or platform. Further, many of our potential customers typically require input from one or

more internal levels of approval. As a result, during our sales effort, we must identify multiple

people involved in the purchasing decision and devote a sufficient amount of time to

presenting our products and services to those individuals. The newness and complexity of our





28

services, including our software as a service model, often requires us to spend substantial time

and effort assisting potential customers in evaluating our products and services including

providing demonstrations and benchmarking against other available technologies. This process

can be costly and time consuming. We expect that our sales process will become less

burdensome as our products and services become more widely known and used. However, if

this change does not occur, we will not be able to expand our sales effort as quickly as

anticipated and our sales will be adversely affected.

Approval

The Audit Committee and the Directors of iSIGN Media Solutions Inc. have approved the

disclosures in this MD&A and the accompanying unaudited Financial Statements.

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