ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

This section of the Report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Overview

We are an early stage company and have generated nominal revenues from our organic food business operations since inception on November 26, 2003 through July 31, 2007 ($394,926). We only began having revenues from operations during the quarter ending July 31, 2006. Our net loss from inception until July 31, 2007 is $1,973,585 and to date, we have been dependent upon equity and debt financing. Since our inception through July 31, 2007, we have been funded through capital contributions of $68,803 from Michael Jordan Friedman, our President and Chief Executive Officer, from the sale of common stock between November 2005 through July 31, 2007 for gross proceeds of $123,969 to 11 investors, from convertible loans totaling $403,000 from 16 individuals, and one private loan of $7,500. $15,000 of those convertible loans was issued during the quarter ended July 31, 2007. In addition, Arthur Friedman, the father of the Company’s President and CEO, has made advances to Fresh Harvest of $514,311 since inception through the quarter ending July 31, 2007.  Illuminate, Inc., a principal shareholder, has made advances of $13,000 to Fresh Harvest. Such advances do not have written terms and are not convertible nor is the previously mentioned $7,500 private loan.   

We were formed in New Jersey as a blank check company on April 21, 2005, under the name Serino 1, Corp. with no operations, assets or purpose other than the purpose of seeking a privately held operating company as an acquisition or merger candidate. On December 16, 2005, we acquired Fresh Harvest Products, Inc., a New York corporation, a development stage company in the organic food business, and absorbed its operations into our business. As a result of the acquisition, we are no longer a blank check company, and the controlling shareholders of the acquired company became the controlling shareholders of our company. The acquisition was considered a reverse acquisition for accounting and financial reporting purposes. The unaudited consolidated financial statements that are a part of this quarterly report include the accounts of our company since the acquisition (December 16, 2005) and the historical accounts of Fresh Harvest Products, Inc. the New York corporation since the date of its inception, November 26, 2003. All significant intercompany balances and transfers have been eliminated in consolidation.

Fresh Harvest Health Bars have no sugar added, are cholesterol free, trans fat free, low in sodium and gluten free. Our goal is to bring healthy, great tasting organic food products at affordable prices to the mass markets.  We are now selling the product line to select supermarkets chains and distributors in the eastern part of the United States, under the trade name: Wings of Nature™, and we are selling products online throughout the United States.

After the acquisition, our business plan has been to market and distribute (both domestic and imported) a line of organic food   products.  We intend our focus to be on the finding quality organic and artisan food products  throughout the  world.   We plan  that our  Fresh Harvest  branded  organic food  products  will  be produced by artisan farms, co-ops and families who have historically grown organic products. We initially plan to offer products that include: olive oils from Spain; coffee from all over the world,

12

including Africa and South America.   As an early stage company, our primary efforts have been devoted to developing our line of organic food products and raising capital. Accordingly, we have limited capital resources and have experienced net losses and negative cash flows from operations since inception and expect these conditions to continue for the foreseeable future.  As of July 31, 2007, the Company had current assets of $470,925 that includes cash ($19,867), net accounts receivable ($125,476) and inventory ($325,582).  Management believes that the liquid cash and other liquid assets on hand as of July 31, 2007 are not sufficient to fund operations for the next 12 months.  Accordingly, we will be required to raise additional funds to meet our short and long-term planned goals. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to us. In this regard, we have obtained and will continue to attempt to obtain (short and long term) loans for inventory purchases, new product development, expansion, advertising and marketing as well as seeking to enter into factoring arrangements using our receivables to finance our operations. In addition, we will attempt to raise funds through the sale of equity. We cannot assure you that we will be successful in obtaining the aforementioned financings (either debt or equity) on terms acceptable to us, or otherwise.

Our unaudited financial statements contained in this quarterly report have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business. Our financial statements indicate that we incurred net losses for the period from inception of November 26, 2003 to July 31, 2007 of $1,973,585.

In the audited financial statements contained in our Annual Report on Form 10KSB for the year ended October 31, 2006, our auditors had provided an explanatory note that indicated that we are a development stage company and our ability to continue as a going concern is dependent on raising additional capital to fund future operations and ultimately to attain profitable operations. We believe that although we are growing, we have not realized significant growth and that nothing has happened in our business operation since then that would change our auditor’s opinion about this.

During the next 12 months, we have no material commitments for capital.

Plan of Operation for the Next Twelve Months

Our plan of operation for the twelve months following the date of this quarterly report is to continue to develop and expand our business operations to have sustainable cash flow. We will be delayed in initiating our business plan if and until we have at least an additional approximate $1,000,000 of capital. If we are not successful in raising this capital, we will have to reassess our plan or our chances of being profitable. The plan of operation over the next 12 months may include, but not exclusively, activities such as:

·

·

Capitalization, including obtaining financing through equity and/or debt financing.  Currently, we do not have sufficient financial resources to implement or complete our business plan.  We anticipate that we will need a minimum of an additional approximate $1,000,000 to satisfy our cash requirements over the next 12 months. We cannot be assured that revenue from operations, if any, will be sufficient to fund our activities during the next 12 months. Accordingly, we will have to seek alternates sources of capital including private placements, a future public offering, and/or loans from officers and/or third party lenders. We are not experienced in selling equity. We can offer no assurance  that  we  will be  able to  raise additional  funds if  needed, on  acceptable  terms  to  us  or otherwise. If we are unsuccessful in our attempts to raise sufficient capital, we may have to cease operations or postpone our plans to initiate or complete our business plan. In that case, you may lose your entire investment in our company.

13

·

Completion of our website, www.freshharvestproducts.com which is currently under construction. Estimated cost: $15,000.

·

Establishing a distribution network for our products including supermarkets, independent grocers, food brokers and snack distributors.  Estimated cost: $75,000.

·

Commence and establish marketing, advertising and promotion programs to increase brand equity and awareness. Estimated cost:  $275,000.

·

Salaries, including for present employees and possible new hiring of additional management personnel and appropriate operating and sales staff. Estimated cost: $150,000.

·

Partial repayment of convertible loans. Estimated cost: $53,000.

·

Repayment of the Note payable incurred in connection with the reverse merger, which is due approximately December 16, 2007.  Estimated cost: $432,000.

These are only estimates and no assurance can be given regarding either statement as to timing or actual eventuality. If we can raise more than the minimum amounts indicated above, we anticipate spending increased amounts on establishing and expanding our distribution network, marketing, advertising and promotions.

We commenced operations and first had revenues from operations during our third quarter ended July 31, 2006. It is our plan that our business operations will generate sufficient revenues to sustain our operations and cash flow by January 1, 2008.  We have been purchasing a minimum number of products (coffee, health and coffee and salsa), and anticipates sales that will provide revenues for operations. The revenue generated from these sales will be used to make additional product purchases and minimally fund our operations.

 We estimate that our cash and other current assets as of July 31, 2007, of approximately $470,925 will only be sufficient to meet our short term needs for approximately three months.  If we are unable to raise the required financing, we will be delayed in commencing our business plan.  Currently, because we are considered a new business with limited credit history with vendors, suppliers, manufacturers, packagers and food producers, we must pay for our purchases “up front” and are not granted credit terms. This will continue until we have established a satisfactory credit history. We cannot estimate, with any certainty, how long this may take, or if it will occur at all. Our inability to obtain credit from such providers has a significant impact upon our liquidity and our ability to utilize funds for other purposes. Similarly, if and when we hire salesmen and /or additional personnel, including management and sales personnel, the cost related to such hirings will have a significant impact on our liquidity and deployment of funds.

Results of Operations for Three and Six Month Periods Ending July 31, 2007 and July 31, 2006.

Financial Information from Comparative Quarters

We first began to have revenues during the quarter ending July 31, 2006. Prior to that we did not have revenues and only had losses. Accordingly, a comparison of the results of accounting periods prior to the quarter ending July 31, 2006 may not be meaningful in making investment evaluations regarding our

14

company. We are presently in the early stage of our business.  In that regard, we can provide no assurance that we will ever be profitable in our operations.

For the three months ended July 31, 2007, we recorded revenues of $128,411 versus revenues of $48,526 in the same period of 2006. For the nine months ended July 31, 2007, we recorded revenues of $217,359 versus revenues of $48,526 in the same period of 2006.

Gross profit, defined as revenues less cost of goods sold, was $33,788 for the three months ended July 31, 2007, compared to $16,134 for the three months ended July 31, 2006. Gross profit was $40,802 for the nine months ended July 31, 2007, compared to $16,134 for the nine months ended July 31, 2006.

Cost of goods sold was $94,623 for the three months ended July 31, 2007 compared to $32,392 for the three months ended July 31, 2006. Cost of goods sold was $176,557 for the nine months ended July 31, 2007 compared to $32,392 for the nine months ended July 31, 2006.

We incurred operating expenses in the amount of $372,896 for the three months ended July 31, 2007, and $110,018 for the three months ended July 31, 2006. We incurred operating expenses in the amount of $738,690 for the nine months ended July 31, 2007, and $953,537 for the nine months ended July 31, 2006.

Our net loss increased from $93,884 for three months ended July 31, 2006 to $339,108 for the three months ended July 31, 2007. The increase was primarily as a result of increased sales and marketing expenses.

Our net loss decreased from $937,404 for nine months ended July 31, 2006 to $697,710 for the nine months ended July 31, 2007. The decrease was primarily due to the fact that the fact that Fresh Harvest is generating revenues.

Financial Condition and Liquidity

At July 31, 2007, we had current assets of $470,925 including cash in the amount of $19,867, inventory of $325,582 and accounts receivable of $125,476.  We had net fixed assets of $33,744.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.

Significant Accounting Policies

Our discussion and analysis of the Company’s financial condition and results of operations are based upon

our  consolidated financial statements which have been prepared in conformity with U.S. generally accepted accounting principles. The application of our critical accounting policies is particularly important to the portrayal of our financial position and results of operations. These critical accounting policies require us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe the following critical accounting policies reflect the more significant judgments and estimates used in the preparation of the consolidated financial statements.

15

Accounting Basis

The basis is United States generally accepted accounting principles.  Effective December 16, 2005, the Company declared a 1 for 30 reverse split of its common shares.  Such split has been retroactively affected in all periods presented.  

Earnings per Share

The basic earnings (loss) per share are calculated by dividing the Company’s net income (loss) available to common shareholders by the weighted average number of common shares during the year. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted during the period for any potentially dilutive debt or equity.

The Company has not issued any options or warrants or similar securities since inception.  Potentially dilutive common shares of approximately 775,000 related to convertible loans were not included in the calculation for any periods presented as they are anti-dilutive.

Common shares and common share equivalents of 15,840,173, issued by the Company at prices below the offering price during the twelve-month period prior to the proposed offering date have been included in the calculation of common share and common share equivalents as if they were outstanding for all periods presented

Dividends

The Company has not yet adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.

Income Taxes

The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements.

Advertising

Advertising is expensed when incurred.

General and Administrative Expenses

General and administrative expenses include costs associated with developing the Company’s line of products, such as designs, packaging and selling, as well as other administrative expenses such as telephone, legal fees, travel and the like.

16

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.