News Release

Form 10QSB for NOVORI INC.

16-Jan-2007

Quarterly Report

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

We are a development stage corporation. Although we have generated revenues we have incurred significant operating losses from operations. We will need additional financing to sustain operations. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an ongoing business for the next twelve months. We anticipate that we will continue to sustain losses for the next 12 months. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company.

Forward Looking Statements

This report on Form 10-QSB contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.

Overview

We are an online retailer of loose diamonds and fine jewelry. We provide our customers with a unique and safe online shopping experience that provides extensive product and purchasing information along with a no risk purchase, meaning that customers can return products within 30 days for an exchange or refund. Through our jewelers, we have the ability to custom make any piece of jewelry. Our website showcases thousands of loose diamonds and hundreds of pieces of handcrafted jewelry.

To achieve our objectives, we must be able to maintain the quality of our website, selection of our products and a high level of customer support available through telephone and email. Longer term, we aim to develop a strong base of diamond and jewelry suppliers to allow us to expand the product line and knowledge base content on our website. If we are successful in continuing to increase our sales volume, we must also build the infrastructure to accommodate increased order fulfillment.

In order to improve our liquidity, in the fall of 2006 we began negotiations to acquire additional equity financing through discussions with investment bankers and private investors. We are currently in final negotiations regarding a convertible note and a standby equity distribution agreement. If we are unable to raise equity or obtain alternative financing, we may not be able to continue operations with respect to the continued operation of our website.

Following the initial development stage, the organizational objective is to be "lean and mean". Because our business is web based and the majority of our customer interface is electronic, we anticipate a slower growth plan for the organization.

If operations and cash flow improve through future financing efforts, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations.

Since inception, we have issued:

º 10,500,000 shares of common stock to our directors for $1,050 in 2004 and cancelled 750,000 shares in 2005;
º 252,000 shares of common stock pursuant to a Search Engine Optimization Agreement, in consideration for 18 months of services; and
º 2,876,625 shares to approximately 52 investors and one officer for gross proceeds of $116,640.

On July 18, 2006, we registered 3,123,625 shares of common stock for selling shareholders under a Registration Statement on Form SB-2. On November 13, 2006, the common stock of the Company became eligible for trading on the NASDAQ-operated Over-the-Counter Bulletin Board ("OTCBB"). The shares of the Company trade under the ticker symbol "NOVO.OB".

Results of Operations for the three months ended November 30, 2006 compared to three months ended November 30, 2005

During three months ended November 30, 2006, we realized total revenue of $287,727 compared to $18,008 in revenue for the three months ended November 30, 2005 and we incurred a net loss for the three months ended November 30, 2006 of $74,987, compared to a net loss of $98,470 for the same period in 2005. The increase in revenues and resultant decrease in net loss for 2006 was as a result of increased sales during the three months ended November 30, 2006. The increased sales were mainly due to our marketing strategy for our website. We are planning a more aggressive strategy in marketing our website and products. Gross profit for the three months ended November 30, 2006 was $42,787 compared to a gross loss of $1,781 for the same period in 2005. From July 26, 2004 (date of inception) to August 31, 2006, we realized total revenue of $1,290,309 and gross profit of $139,776. From July 26, 2004 (date of inception) to August 31, 2006, we incurred a net loss of $607,531.

Our general and administrative costs for the three months ended November 30, 2006 were $69,794 compared to $69,598 for the three months ended November 30, 2005. From July 26, 2004 (date of inception) to November 30, 2006, our general and administrative costs were $484,183. These costs consisted primarily of personnel costs, office rent, and general office costs.

Our professional fees for the three months ended November 30, 2006 were $26,927, compared to $6,038 for the three months ended November 30, 2005. From July 26, 2004 (date of inception) to November 30, 2006, our professional fees were $103,172. This increase is due to additional legal services provided and an increased cost in accounting services.

Our consulting fees for the three months ended November 30, 2006 were $21,000 for our directors' services (which were donated) and the same as the three months ended

November 30, 2005. From July 26, 2004 (date of inception) to November 30, 2006, our consulting fees were $159,544.

We anticipate that we will incur increased sales and marketing costs, including hiring marketing consultants, broker fees and tradeshow attendance fees, as we implement our business growth strategies.

Liquidity and Capital Resources for the three months ended November 30, 2006, compared to November 30, 2005

We believe that our sales will not provide sufficient capital resources to sustain our operations and fund product development throughout the fiscal year ended May 31, 2007. Management has been able to finance the operations through a series of equity and debt financings. While we have received a "going concern" opinion from our auditors, management plans to continue to seek other sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all. Management believes it has implemented significant cost reductions and expects to keep our operating costs to a minimum until cash is available through financing or operating activities. There is no assurance that we will be successful in achieving these goals. We continually evaluate opportunities to sell additional equity or debt securities, or obtain credit facilities from lenders to strengthen our financial position. The sale of additional equity or convertible debt securities could result in additional dilution to our stockholders.

We have financed our operations partly through revenues from operations and promissory notes, and partly through the issuance of equity shares and a convertible note. We have not been able to reach the break-even point for the last two fiscal years and have had to rely on us for capital resources. We believe that increased sales from our product will add new capital resources over the coming year, but may not be sufficient to sustain operations and fund new product launches throughout the fiscal year ended May 31, 2007.

During the three months ended November 30, 2006, our total assets decreased $62,463 from $130,459 on May 31, 2006 to $68,320 on November 30, 2006. Our inventory increased $694 from $28,417 on May 31, 2006 to $29,111 on November 30, 2006 and our cash decreased $857 from $29,213 on May 31, 2006 to $28,356 on November 30, 2006. Prepaid expenses of 10,633 as at November 30, 2006 consisted of $10,000 for prepaid advertising and $633 of prepaid rent.

Total liabilities increased $62,834 from $189,254 on August 31, 2006 to $252,088 on November 30, 2006. We are planning a more aggressive strategy in marketing our website and products to improve our financial position.

As of November 30, 2006, our total current assets were $68,320 and our total current liabilities were $252,088. As of November 30, 2006 we had a working capital deficit of $183,768. This compares to May 31, 2006, at which time we had $130,459 in total current assets and $99,254 in total current liabilities, and a working capital surplus of $31,205.

As of November 30, 2006, we owe $10,000 to a company controlled by two directors. This amount is non interest bearing, unsecured and due on demand. We expect to incur substantial losses over the next two years.

Limited Operating History; Need for Additional Capital

There is limited historical financial information about us upon which to base an evaluation of our performance. We are in the development stage of our operations. We have incurred significant operating losses from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to price and cost increases in services and products.

To become profitable and competitive, we have to sell diamonds and diamond jewelry. We are currently using search engine optimization marketing techniques. We anticipate that in the future we will purchase printed ads to enhance our marketing effort. We are seeking equity financing to provide for the capital required to market our products.

We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

Known Material Trends and Uncertainties

As of November 30, 2006, we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

We believe that the above discussion contains a number of forward-looking statements. Our actual results and our actual plan of operations may differ materially from what is stated above. Factors which may cause our actual results or our actual plan of operations to vary include, among other things, decision of the Board of Directors not to pursue a specific course of action based on a re-assessment of the facts or new facts, or changes in general economic conditions.

Legal Proceedings

No officer, director, or persons nominated for these positions, and no promoter or significant employee of our corporation has been involved in legal proceedings that would be material to an evaluation of our management.

We are not aware of any pending or threatened legal proceedings which involve us.

Related Party Transactions

We have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded $60,000.