UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended October 31, 2010

Or

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to________________

Commission file number 000-53799

NEXAIRA WIRELESS INC.
(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (604) 682-5629

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value per share
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ]  No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [   ]  No [X]

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [   ]  No [X]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [   ]  No [   ]  (Not Applicable )

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Yes [   ]  No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [   ]  No [X]

The aggregate market value of the voting common stock held by non-affiliates of the registrant, based on the closing price of the registrant’s common stock on April 30, 2010 being the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $33,693,349, as reported by the OTC Bulletin Board Monthly Trade and Quote Summary Report. For the purposes of this calculation, shares owned by officers and directors (and their affiliates) have been excluded. This exclusion is not intended, nor shall it be deemed, to be an admission that such persons are affiliates of the registrant. The registrant does not have any non-voting stock issued or outstanding.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the issuer has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [   ]  No [   ]  (Not applicable)

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

72,268,522 shares of common stock as of January 28, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).

Not Applicable

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NEXAIRA WIRELESS INC.

ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED OCTOBER 31, 2010

TABLE OF CONTENTS

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PART I

FORWARD-LOOKING STATEMENTS.

This annual report contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “intend”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in Item 1A “Risk Factors” of this report, which may cause our or our industry's actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements. These risks and uncertainties include: a continued downturn in international economic conditions; the number of competitors with competitively priced products and services; our ability to secure patents for our proprietary technologies; our ability to bring new products to market; market demand for our products; shifts in industry capacity; product development or other initiatives by our competitors; fluctuations in the availability and cost of materials required to produce our products; delays in the implementation of our projects and disputes regarding the performance of our services; potential negative financial impact from claims, lawsuits and other legal proceedings or challenges; and other factors beyond our control.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity or performance. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this annual report, the terms “we”, “us”, our and “Nexaira” mean Nexaira Wireless Inc., a Nevada corporation, and our subsidiaries, Nexaira Wireless (BC) Ltd., a British Columbia corporation, and Nexaira, Inc., a California corporation.

All dollar amounts refer to United States dollars unless otherwise indicated and all references to “common stock” refer to the common shares in our capital stock. Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

ITEM 1. BUSINESS.

About Nexaira

We develop and deliver third and fourth generation (3G/4G) wireless routing solutions that offer speed, reliability and security to carriers, mobile operators, service providers, value added resellers (VARS) and enterprise customers. Recognizing the need for competitively priced, high quality wireless broadband devices in 2008, we designed and developed customizable branded 3G/4G routing platforms for the business market. We believe our routing solutions are simple to install, yet provide the advanced management and business class features demanded by the most sophisticated users. We believe our wireless devices are ideal for secure high availability wireless applications acting as the primary router on wireless, digital subscriber lines (DSL), or cable networks or can be used to provide complete device and network redundancy in wide area network-failover/fail back applications.

When our company was formed in 2005, the key focus was to build an organization focused on wireless data communications technology and to develop key supplier and customer relationships. This close involvement with suppliers and customers allowed us to develop an innovative plan for the development and delivery of new products and services to satisfy customer needs and to realize the benefits of being in the forefront of an industry poised to grow exponentially over the coming years.

In 2008, management initiated the development of a new wireless routing platform and for the first time in our history we began writing our own proprietary firmware and software. We continued to deliver approximately $12 million in distribution revenue in 2008 but retooled our operations and processes to provide compelling 3G/4G wireless routing solutions that we believe are highly competitive in both function and price. Management anticipated the effect of exiting the non strategic low margin distribution business in 2009 and knowing the impact on revenues made appropriate adjustments in our cost structure relating to the legacy distribution business.

In March 2009, we announced the availability of our NexWare® i3 GUI™ (patent pending) graphical user interface firmware (i3 GUI) for our small office/home office (SOHO) and business class routers. We believe our i3 GUI quickly and effortlessly displays a comprehensive real time view of router status including auto-configuration results of internet wide area network (WAN) connections, which reduces customer support requirements and maintenance costs for service providers, carriers and managed virtual network operators.

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During the current fiscal year we launched three new products: (i) our Business Class II high availability router (BCII); (ii) our High Availability network Adapter (HANA^TM); and (iii) our 3G/4G SOHO router. We believe that our patent pending i3 GUI makes routing platforms quick and easy to install providing the functionality, performance and ease of use expected in the market today. We believe our routing devices are ideal for high availability applications acting as the primary router to wireless, DSL, landline or cable networks, or can be used to provide complete device and network redundancy in wan-failover/ fail back applications. As a result, we believe that we have developed a highly robust and secure “adaptive wireless technology platform” that incorporates security functionality and management capability historically only found in wireline routing hardware which we believe is unique in the wireless industry.

We have what we believe to be, an exceptional team that has developed highly functional wireless firmware and software data technologies. The development staff has engineered a family of proprietary wireless 3G/4G routers that we believe will outperform the competition at a lower price while maintaining significant gross margins. In parallel with this product development we believe we have built an experienced management team and Board of Directors. Our sales and operations are headquartered in San Diego and our corporate office is in Vancouver, British Columbia.

Nexaira’s Business and Outlook

We believe our product line will enable our customers to expeditiously connect to and manage secure high speed data connections rivaling traditional landline connectivity, with unmatched functionality, speed and ease of use: at a lower cost. Our wireless broadband data solutions combine an intuitive user interface with advanced firmware and software which we believe will ensure users benefit from the industry’s most advanced features and functionality.

We believe our highly secure routing solutions are simple to install, yet provide the advanced business grade feature sets demanded by the most sophisticated users. Service providers have selected Nexaira’s broadband data solutions for their high availability WAN failover applications using the 3G cellular network to automatically “back up” or “stand in” when service from wireline networks is interrupted. As the marketplace continues to deploy our secure high availability wireless applications as primary access points, void of any wireline connection, we believe there is potential revenue and sales growth in this emerging market. Additionally, we believe that carriers and service providers can dramatically decrease their total cost of ownership (TCO), including management of their installed hardware base by using our advanced firmware which may extend the shelf life of their customer premise equipment while providing critical device updates through simple downloads. We enable our customers to bring customized wireless broadband solutions to market more quickly and cost effectively than traditional wireline offerings such as DSL, cable or T-1s.

Our hardware-agnostic broadband router firmware and intuitive user interface enables a non-technical user to quickly and effortlessly setup a network and establish a secure Internet connection.

In addition, the superior management tools and reliable operating design supports the needs of the largest customer networks that rival existing wireline deployments but have all the benefits of wireless.

Future Strategy. We intend to:

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Products and Services

Recognizing the need for competitively priced, high quality wireless broadband devices in 2008, we designed and developed customizable branded routing platforms to aggressively compete against both wireline and other wireless broadband data applications. By developing our own firmware and software, we have established our company as a progressive and innovative organization with the proven management capabilities to execute on an accelerated go-to-market strategy.

I3 GUI™ (patent pending)

In March 2009, we announced the availability of our i3 GUI for our SOHO and business class routers. Our i3 GUI displays a comprehensive real time view of router status including auto-configuration results of internet WAN connections, which reduces customer support requirements and maintenance costs for service providers, carriers and managed virtual network operators.

The i3 GUI gadgets on the desktop provide end-users with instant knowledge of their internet status and performance, which is aimed to improve the user experience while reducing service provider intervention and support costs. Some of the other valuable features we have identified include:

• Iconic images on the dashboard –to improves customer confidence, ease of use, retention and use of router tools.

• Intuitive structure with simple and logical menu flow to accelerate customer understanding of router functions and minimizes apprehension.

• Interactive and automated set-up wizard to display results of auto-configuration of 3G or 4G WAN connections and provides responsive functional tool tips, which minimizes user frustration and reduces product returns.

For managed service providers, the i3 GUI reduces customer support costs by eliminating the coordination with wireline technicians and shrinking installation time, thus enabling quicker service with less intrusion on business activity. Some of the other features of the i3 GUI we have identified include:

• The most advanced wireless features and performance in the industry such as auto-configuration and self- provisioning. Moreover, NexWare's proprietary tuning algorithm optimizes cellular bandwidth making it easy for end-users to take advantage of broadband speeds without delays, costs or complexities associated with wireline installs. Universal Plug in Play (UPnP) WAN automatically connects any 3G data card on any cellular network.

• Enterprise-grade networking management and security capabilities include auto-failover to a 3G wireless network to backup the primary wireline network. Virtual router redundancy protocol (VRRP) eliminates single point of failure by providing redundancy for the wireline network and router. Virtual private networks (VPN) with internet protocol security IPsec pass-through and termination protocols provide business class security. Wi-Fi scheduling and quality of service (QOS) provide the ability to segregate critical applications to ensure service quality.

• Revenue-generating carrier customization services such as special configuration, branding, quantities and fulfillment enable mobile virtual network operators, service providers and carriers to differentiate and extend their brands, increase sales and accelerate deployment of mobile and fixed data devices and applications.

We launched three new certified products during 2010: (i) the BCII; (ii) the HANA^TM , which we believe is one of the first of its kind in the industry; and (iii) the SOHO for small office/home office. We uniquely own and control all aspects of the processor, operating system and software and can consistently and rapidly develop features and functions required by our customers (speed to market).

BCII

The BCII includes security and network protocols for business customers who want to leverage the high availability aspects of the cellular networks for failover, primary access or remote/mobile locations but with the business class features traditionally found only on wireline products. The BCII extends enterprise or corporate networks over cellular broadband as well as supports traditional DSL, cable, T-1 or Ethernet, providing automatic failover with anti-flap and VRRP to ensure network stability. The BCII provides business class security supporting VPNs with IPSec termination allowing up to five simultaneous encrypted sessions.

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The addition of faster 3G/4G networks and NexWare^TM business class protocols enables customers with remote locations to use cellular data networks as their primary network connection, saving both time and money. The BCII connects seamlessly with HSPA, HSPA + networks for AT&T, Bell and Rogers, and EVDO revA networks for Sprint and Verizon. Our BCII with XtremeSpeed™ technology optimizes connections to the internet and corporate networks for maximum speed and performance, improving user experiences with business applications including email, interactive sessions and web access.

HANA™

Our HANA enables small and medium size business (SMB) access to the convenience and speed of cellular networks for both existing and new enterprise locations. It uniquely bundles all essential performance based cellular components including a directional antenna with-10dbi high gain (10x) for equipment rooms or noisy environments, a auto configurable cellular connection and management software - NexWare^SM, and optional 3G/4G or dual mode modem for EVDO RevA, HSPA, HSPA+, WiMAX or LTE networks. All HANA products come in a ruggedized enclosure and are also available with NEMA certification.

Our HANA provides immediate access to any cellular network for complete diversity to wired network infrastructure; industry standard VPN IPSec to ensure data security; IP address pass through to wireline router; router hardware redundancy via VRRP (Virtual Redundancy Routing Protocol); XtremeSpeed WAN optimization ensuring the fastest wireless connection; Wi-Fi 802.11n 2x2 MIMO; statefull packet firewall technology; QOS for business applications as well as support for General Routing Encapsulation (GRE).

HANA improves speed, coverage and offers advanced security, redundancy and management protocols for business applications in a unique tamper proof enclosure. It has the ability to increase cellular coverage from IT closets by being placed in an optimum position for signal strength anywhere on the local area network (LAN) using power over the Ethernet (POE). In addition, HANA provides a secure and robust wireless connection acting as a primary network connection for companies with rural locations where wireline access is either unavailable or cost prohibitive.

SOHO

Our new 3G/4G SOHO router is designed for the small office/home office market. It is fast, secure, and provides instant Wi-Fi service to a home or office without the need to run data cabling or subscribe to a wireline service.

Our SOHO router offers automated set-up with the i3 GUI and desktop gadget; multiple user access to the Internet; 300 mbps speeds with 802.11n 2x2 MIMO Wi-Fi service; and faster 3G/4G connection than using a data card on a laptop computer. The SOHO router connects to HSPA and HSPA + networks from AT&T, Bell, Rogers, Telus and T-Mobile and EVDO RevA networks from Sprint and Verizon, as well 4G WiMAX from Clear. As a result, we believe that users will no longer be subjected to the limitations of installation times, service area coverage or repair time related to traditional wireline networks. Nexaira’s SOHO router is easy to install and does not require technical support. We believe that the NexConnect® SOHO router is ideal for SMB (small to medium size businesses) and SOHO users that want ease of use and auto-connect capability without the difficulty typically associated with router installation.

The BCII and SOHO routers, powered by a WiMAX device, will allow businesses to leverage increased speeds of up to 200% - 500% faster over EVDO revA networks depending on location. The ability to interface to both 3G and 4G networks is beneficial for businesses who want to use and deliver applications such as video conferencing, video surveillance, voice over IP, with advanced security, speed and functionality. Additionally we believe that when combined with the speed to market advantage of wireless and the ability to reduce the total cost of ownership – more carrier, service providers and enterprises will be going wireless.

We have spent approximately $2,500,000 over the last two fiscal years on research and development activities of which $1,043,009 has been capitalized as software development costs in accordance with ASC 985-20, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed. Software development costs are capitalized when technological feasibility and marketability of the related product has been established. Capitalized software costs are amortized on a product-by-product basis, beginning when the product is available for general release to customers.

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Marketing and Sales Activities

We are seeing opportunities developing in multiple verticals across many market segments. The verticals listed below are where we are focusing our sales and marketing efforts and management is confident based on early adoption of our products that any one of these verticals could contribute significantly to our revenue plan, if not all. Sales activities are currently underway in each of the following, which we believe validates our strategy:

Business continuity – Existing wireline network customers of Tier One and Tier Two carriers want a 3G or 4G routing solution that ensures their services are not interrupted in the event of a device failure or failure of the wireline network which is a common occurrence today. In most cases alternative broadband services are not available and if so rarely in a diverse route. Wireless broadband provides a completely diverse route matching or exceeding wireline bandwidth throughput. Our software, NexWare, provides business class reliability based on industry standard protocols and processes used for years in sophisticated wireline networking equipment. NexWare’s use of these protocols allows it to work with existing wireline equipment to provide network availability previously only supported by routers many times its price. We are actively engaged with multiple managed service and value added service providers developing high availability and business continuity Services no longer able to be met with an antiquated dial backup solution.

Wire line device replacement or CPE (Customer Premise Equipment) - We believe we can compete with traditional landline routing products by offering higher function and lower cost than what managed service providers (MSPs) have available to choose from today by offering the unique capability of a seamless failover to wireless should the wire line connection or device become unavailable.

Small Medium Sized Enterprises (SMBs) – With over 27 million SMBs in the US alone, this vertical is made up of quick service retail (QSR) and small businesses needing quick and simple installations and reliability offered by the combination of Nexaira routing solutions and high speed wireless networks. Small business owners have neither the time nor the patience to wait for scheduled installation, which traditionally could take several weeks. In addition the reduced cost and improved performance of HSPA and HSPA+ WiMAX and LTE networks we believe we will offer this segment an alternative to wireline.

Last Mile Solution Due to Lack of Existing Facilities - There are many areas in the United States and around the world, where copper, DSL or cable has not been installed. We believe the opportunity exists to supply wireless broadband services in this niche market. With the advent of LTE from companies like Verizon we have realistically seen download speeds up to 22mbps with upload speeds up to 10 mbps, up to ten times faster than existing DSL services. How long will wireline even last with these ultra-high speed wireless networks?

Emerging and Developing Markets – Emerging markets in Brazil, Russia, India, and China, Latin America, Mid Eastern and African countries are growing faster than in developed countries and have taken the approach that wireline solutions are no longer the optimal cost effective or timely choice. Management believes many countries will, if they have not already, stop building copper or even fibre networks in metropolitan areas, instead electing to use wireless networks for their Internet and data access needs.

Competition

Current industry research indicates that wireless data service providers have reached a cost of service inflection point with wireline data service providers.

The competition is divided into two distinct categories:

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Technology

Through the investment in research and development activities, our company has developed a line of routing solutions under the NexWare® trademark which have two targeted markets:

Business Market

Provides business-grade network reliability and security for wireless routers, including:

Provides business-grade networking speeds with cellular WAN algorithms and high gain antennas and wireless routers, including:

Consumer Market

NexWare’s ease of use connection manager:

NexWare i3Graphical User Interface and Desktop Gadgets:

Intellectual Property

We have filed trademark applications and secured trademark registrations in Canada and the United States for various aspects of our product portfolio, including:

NexWare^TM for use in association with our computer firmware that provides auto-configuration for cellular wireless devices including routers, modules and modems;

NexWave^TM for use in association with our high gain cellular antenna product;

NexConnect® for use in association with our family of computer networking hardware products;

NexRFID™ for use in association with our Radio Frequency Identification (RFID) credentialing devices and related services;

XtremeSpeed® for use in association with communication software and NexWare^TM wireless algorithm optimization;

i3 GUI^TM our NexWare^TM Iconic Graphical User Interface, for use in association with communication software for providing Internet access;

HANA^TM for use in association with our family of high availability network adapters;

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Nexaira ®; and
Nexaira Wireless™.

We have patents pending related to our i3 GUI™ technology, and are in the process of evaluating the efficacy of filing for patent protection on other intellectual property.

Employees

Our operations are headquartered in San Diego, California and our corporate office is in Vancouver, British Columbia. We have twenty-three employees, including consultants.

Corporate History

We were incorporated in the State of Nevada on March 19, 2007. On June 1, 2007, we entered into a share purchase agreement whereby we acquired all of the issued and outstanding shares of Westside Publishing Ltd. We divested Westside Publishing Ltd. effective October 28, 2009 as consideration for the cancellation of 40.8 million shares of our restricted common stock. Also on October 30, 2009, 20 million restricted common shares held by a former officer and director were surrendered for cancellation under a return to treasury order.

On September 29, 2009, we completed the acquisition of Nexaira Wireless (BC) Ltd., its California subsidiary and its security holders, whereby we agreed to acquire all of the issued and outstanding common shares in the capital of Nexaira in consideration for the issuance of 15,489,262 restricted common shares on the basis of 1.75 shares of our common stock for every one Nexaira share.

Effective October 26, 2009, we changed our name from “Technology Publishing, Inc.” to “Nexaira Wireless Inc.” The name change became effective with the Over-the-Counter Bulletin Board at the opening for trading on November 2, 2009 under the new stock symbol “NXWI”.

ITEM 1A. RISK FACTORS.

In addition to other information in this annual report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition. As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward-looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition. If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Associated with our Business

If we are unable to obtain financing in the amounts and on terms and dates acceptable to us, we may not be able to expand or continue our operations and development and so may be forced to scale back or cease operations or discontinue our business. You could lose your entire investment.

We do not currently have any arrangements for financing and we can provide no assurance to investors we will be able to find such financing when such financing is required. Obtaining additional financing would be subject to a number of factors, including investor acceptance of our NexWare routing solutions and our business model. Furthermore, there is no assurance that we will not incur additional debt in the future, that we will have sufficient funds to repay our future indebtedness, or that we will not default on our debts, thereby jeopardizing our business viability. Finally, we may not be able to borrow or raise additional capital in the future to meet our needs or to otherwise provide the capital necessary to maintain our operations, which might result in the loss of some or all of your investment in our common stock.

We anticipate that the funds that were raised from private placements by way of subscription agreements and funds advanced by our management will not be sufficient to satisfy our cash requirements for the next twelve month period. Also, there is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that:

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The occurrence of any of the aforementioned events could prevent us from executing our business plan, expanding our business operations and ultimately achieving a profitable level of operations.

We depend almost exclusively on outside capital to pay for the continued development of our business and the marketing of our products. Such outside capital may include the sale of additional stock, stockholder and director advances and/or commercial borrowing.

There can be no assurance that capital will continue to be available if necessary to meet our continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us may result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may not be able to expand or continue our sales and marketing initiatives and so may be forced to scale back or cease operations or discontinue our business and you could lose your entire investment.

Because our directors and officers control a large percentage of our common stock, such insiders have the ability to influence matters affecting our stockholders.

Our directors and officers, in the aggregate, beneficially own 30.87% of the 72,268,522 issued and outstanding shares of our common stock as of the date of this Report. As a result, they have the ability to influence matters affecting our stockholders, including the election of our directors, the acquisition or disposition of our assets, and the future issuance of our shares. Because our officers and directors control such shares, investors will find it difficult to replace our management if they disagree with the way our business is being operated. Because the influence by these insiders could result in management making decisions that are in the best interest of those insiders and not in the best interest of the investors, you may lose some or all of the value of your investment in our common stock.

Our monthly, quarterly and annual financial results will be subject to fluctuations that could affect the market price of our common shares.

Our revenue, gross margin, operating earnings and net earnings may vary from month to month and quarter to quarter and could be significantly impacted by a number of factors, including:

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Because our operating expenses are determined based on anticipated sales, are generally fixed and are incurred throughout each fiscal month and quarter, any of the factors listed above could cause significant variations in our revenues, gross margin and earnings in any given month or quarter. Therefore, our monthly and quarterly results are not necessarily indicative of our overall business, results of operations and financial condition.

Monthly, quarterly and annual variations in operating results or any of the other factors listed above, changes in financial estimates by securities analysts, or other events or factors may result in wide fluctuations in the market price of our stock price. In addition, the financial markets have experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of many technology companies and that often have been unrelated to the operating performance of these companies or have resulted from the failure of the operating results of such companies to meet market expectations in a particular quarter. Broad market fluctuations or any failure of our operating results in a particular quarter to meet market expectations may adversely affect the market price of our common shares.

Competition from new or established wireless communication companies or from those with greater resources may prevent us from increasing or maintaining our market share and could result in price reductions and/or loss of business with resulting reduced revenues and gross margins.

The wireless communications industry is highly competitive and we expect competition to increase and intensify. More established and larger companies with greater financial, technical and marketing resources sell products that compete with ours and we expect this competition to intensify. We also may introduce new products that will put us in direct competition with major new competitors. Existing or future competitors may be able to respond more quickly to technological developments and changes and introduce new products before we do, or may independently develop and patent technologies and products that are superior to ours or achieve greater acceptance due to factors such as more favorable pricing, more desired or better quality features or more efficient sales channels. If we are unable to compete effectively with our competitors’ pricing strategies, technological advances and other initiatives, we may lose customer orders and market share and we may need to reduce the price of our products, resulting in reduced revenue and reduced gross margins.

Acquisitions of companies or technologies may result in disruptions to our business or may not achieve the anticipated benefits.

As part of our business strategy, we may acquire additional assets and businesses principally relating to or complementary to our current operations. Any acquisitions and/or mergers by us will be accompanied by the risks commonly encountered in acquisitions of companies.

These risks include, among other things:

As a result of the growth of our company, we may seek to raise additional capital through an offering of common shares, preference shares or debt, which may result in dilution and/or the issuance of securities. As a result, our share price may decline and there may be possible dilution to our shareholders if the purchase price is paid in common shares or securities convertible into common shares. 

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In addition, geographic distances may make integration of businesses more difficult. We may not be successful in overcoming these risks or any other problems encountered in connection with any acquisitions. If realized, these risks could reduce shareholder value.

The loss of any of our significant customers could adversely affect our revenue and profitability, and therefore shareholder value.

We sell our products through carriers, mobile operators, service providers, VARS and enterprise customers. We are dependent on a limited number of customers for a significant portion of our revenues. Most of these customers also sell products of our competitors. Accordingly, our business and future success depends on our ability to maintain and build on existing relationships and develop new relationships. If any of these customers, for any reason, discontinues their relationship with us or reduces or postpones current or expected purchase orders for products, or suffers from business failure, our revenues and profitability could decline, perhaps materially. We expect that a limited number of customers will account for a significant portion of our revenues for the foreseeable future. In addition, our current customers purchase our products under purchase orders. Our customers have no contractual obligation to continue to purchase our products following our fulfillment of current purchase orders and if they do not continue to make purchases, our revenue and our profitability could decline, perhaps materially.

We depend on single source suppliers for some components used in our products and if these suppliers are unable to meet our demand the availability of our products may be materially adversely affected.

From time to time, certain components used in our products have been, and may be, in short supply worldwide and shortages in allocation of components may result in delay in filling orders from our customers, which may adversely affect our business. In addition our suppliers may experience damage or interruption in their operations, become insolvent or bankrupt, or experience claims of infringement, all of which could delay or stop their shipment of components to us, which may adversely affect our business. Alternate sources of components may not be available. If there is a shortage of any such components and we cannot obtain an appropriate substitute, we may not be able to deliver sufficient quantities of our products, we may lose business or customers and our revenue may be materially adversely affected.

We depend on a limited number of third parties to manufacture our products. If they do not manufacture our products properly or cannot meet our needs in a timely manner, we may be unable to fulfill our product delivery obligations and our costs may increase, and our revenue and margins could decrease.

We outsource the manufacturing of our products to a limited number of third parties and depend heavily on the ability of these manufacturers to meet our needs in a timely and satisfactory manner at a reasonable cost. We currently rely on two manufacturers, either of whom may terminate the manufacturing contract with us at the end of any contract year. Our reliance on third party manufacturers subjects us to a number of risks, including the following:

If we are unable to successfully manage any of these risks or to locate alternative or additional manufacturers or suppliers in a timely and cost-effective manner, we may not be able to deliver products in a timely manner. In addition, our results of operations could be harmed by increased costs, reduced revenues and reduced margins. Under our manufacturing agreements, in many cases we are required to place binding purchase orders with our manufacturers well in advance of our receipt of binding purchase orders from our customers. In this situation, we consider our customers’ good faith, non-binding forecasts of demand for our products.

As a result, if the number of actual products ordered by our customers is materially different from the number of products we have instructed our manufacturer to build (and purchase components in respect of), then, if too many components have been purchased by our manufacturer, we may be required to purchase such excess component inventory, or, if an insufficient number of components have been purchased by our manufacturer, we may not be in a position to meet all of our customers’ requirements. If we are unable to successfully manage our inventory levels and respond to our customers’ purchase orders based on their forecasted quantities, our business could be adversely affected.

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We may have difficulty responding to changing technology, industry standards and customer requirements, which could cause us to be unable to recover our research and development expenses and our revenue could decline.

The wireless communications industry is subject to rapid technological change. Our business and future success will depend, in part, on our ability to accurately predict and anticipate evolving wireless technology standards and develop products that keep pace with the continuing changes in technology, evolving industry standards and changing customer and end-user preferences and requirements. Our products embody complex technology that may not meet those standards, preferences and requirements. Our ability to design, develop and commercially launch new products depends on a number of factors, including, but not limited to the following:

A failure by us, or our suppliers, in any of these areas, or a failure of new products to obtain commercial acceptance, could mean we receive less revenue than we anticipate and we are unable to recover our research and development expenses, and may result in a decrease in the market price for our shares.

We develop products to meet our customers’ requirements. If we are unable or choose not to meet our customers’ future needs, we may not win their future business and our revenue and profitability may decrease. In addition, wireless communications service providers require that wireless data systems deployed on their networks comply with their own standards, which may differ from the standards of other providers. We may be unable to successfully address these developments in a timely basis or at all. Our failure to respond quickly and cost-effectively to new developments through the development of new products or enhancements to existing products could cause us to be unable to recover significant research and development expenses and reduce our revenues.

We may infringe on the intellectual property rights of others.

The industry in which we operate has many participants that own, or claim to own, proprietary intellectual property. While to date we have not received assertions or claims from third parties alleging that our products violate or infringe on their intellectual property rights we may receive these assertions in the future. Rights to intellectual property can be difficult to verify and litigation may be necessary to establish whether or not we have infringed the intellectual property rights of others. In many cases, these third parties are companies with substantially greater resources than us, and they may be able to, and may choose to, pursue complex litigation to a greater degree than we could. Regardless of whether these infringement claims have merit or not, we may be subject to the following:

In the event of an unfavorable outcome in such a claim and our inability to develop a non-infringing alternative, then our business, operating results and financial condition may be materially adversely affected and we may have to restructure our business.

Misappropriation of our intellectual property could place us at a competitive disadvantage.

Our intellectual property is important to our success. We rely on a combination of patent protection, copyrights, trademarks, trade secrets, licenses, non-disclosure agreements and other contractual agreements to protect our intellectual property. Third parties may attempt to copy aspects of our products and technology or obtain information we regard as proprietary without our authorization. If we are unable to protect our intellectual property against unauthorized use by others it could have an adverse effect on our competitive position. Our strategies to deter misappropriation could be inadequate due to the following risks:

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In addition, we could be required to spend significant funds and our managerial resources could be diverted in order to defend our rights, which could disrupt our operations.

Fluctuations in exchange rates between the United States dollar and other currencies, including the Canadian dollar may affect our operating results.

We are exposed to fluctuations in the exchange rate between the United States dollar and the Canadian dollar through our operations in Canada. To reduce our risk because of currency fluctuations, we purchase inventory, other cost of sales items and many of our services in United States dollars, however, some of our operating costs are still incurred in Canadian dollars, primarily those relating to marketing, administration and sales support. Given the fluctuation in the Canadian dollar relative to the United States dollar, our operating results may be negatively impacted. To date, we have not entered into any foreign currency futures contracts as part of a hedging policy. We expect that as our business expands in Europe and the Asia-Pacific region, we will also be exposed to additional foreign currency transactions and to the associated currency risk.

We depend on wireless network carriers to offer acceptable wireless data and voice communications services for our products to operate.

Our products can operate on wireline networks but because of our 3G/4G Business Class focus we are dependent on wireless data and voice networks operated by third parties. Our business and future growth depends, in part, on the successful deployment by network carriers of next generation wireless data and voice networks and the network carriers’ ability to co-market our products. If these network carriers delay the deployment or expansion of next generation networks or fail to offer our products in conjunction with their data plans, or fail to price and market their services effectively, sales of our products will decline and our revenues will decrease.

We do not have fixed-term employment agreements with our key personnel and the loss of any key personnel may harm our ability to compete effectively.

None of our executive officers or other key employees has entered into a fixed-term employment agreement. Our success depends in large part on the abilities and experience of our executive officers and other key employees. Competition for highly skilled management, technical, research and development and other key employees is intense in the wireless communications industry. We may not be able to retain our current executive officers or key employees and may not be able to hire and transition in a timely manner experienced and highly qualified additional executive officers and key employees as needed to achieve our business objectives. The loss of executive officers and key employees could disrupt our operations and our ability to compete effectively could be adversely affected.

As our business expands internationally, we will be exposed to additional risks relating to international operations.

If we are unable to further develop distribution channels in Europe and the Asia-Pacific region we may not be able to grow our international operations and our ability to increase our revenue will be negatively impacted.

Government regulation could result in increased costs and inability to sell our products.

Our products are subject to certain mandatory regulatory approvals in the United States, Canada, the European Union and other regions in which we operate. In the United States, the Federal Communications Commission regulates many aspects of communications devices. In Canada, similar regulations are administered by the Ministry of Industry, through Industry Canada. European Union directives provide comparable regulatory guidance in Europe. Although we have obtained all the necessary Federal Communications Commission, Industry Canada and other required approvals for the products we currently sell, we may not obtain approvals for future products on a timely basis, or at all. In addition, regulatory requirements may change or we may not be able to obtain regulatory approvals from countries other than the United States and Canada in which we may desire to sell products in the future.

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If our efforts to restore the business to sustained profitability are not successful, we may be required to restructure or take other actions and our share price may decline.

We have incurred losses from operations in 2010 and 2009 as a result of restructuring our business and selling off low margin end of life products associated with the distribution business and we believe that we will continue to incur losses throughout fiscal year ending October 31, 2011 until such time we have the necessary funds to attract and hire additional sales, marketing, and support personnel required to reach our monthly breakeven sales targets.

Our ability to achieve and maintain profitability in the future will depend on, among other things, the continued sales of our current products and the successful development and commercialization of new products. If we cannot sustain profitability, our total losses will increase and we may be required to restructure our operations or raise additional capital. Additional financing may not be available, and even if available, may not be on acceptable terms. We may seek to raise additional capital through an offering of common shares, preference shares or debt, which may result in dilution, and/or the issuance of securities with rights senior to the rights, of the holders of common shares. As a result, our share price may decline.

Risks Associated with Our Common Stock

We do not intend to pay dividends on any investment in our common stock.

We do not currently anticipate declaring and paying dividends to our stockholders in the near future. It is our current intention to apply net earnings, if any, in the foreseeable future to increasing our working capital. There can be no assurance that we will ever have sufficient earnings to declare and pay dividends to the holders of shares of our common stock, and in any event, a decision to declare and pay dividends is at the sole discretion of our board of directors, which currently do not intend to pay any dividends on shares of our common stock for the foreseeable future. To the extent that we require additional financing currently not provided for in our financing plan, our financing sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our common stock will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our common stock.

The price of our common stock is likely to be highly volatile and may decline. If this happens, our stockholders may have difficulty selling their shares and may not be able to sell their shares at all.

We cannot assure you that a trading market will continue to develop for our common stock, or if it does, it may not be sustained, or that any stockholder will be able to liquidate his or her investment without considerable delay, if at all. The market price of our common stock is likely to be highly volatile and may also fluctuate significantly in response to the following factors, most of which are beyond our control:

The equity markets have, on occasion, experienced significant price and volume fluctuations that have affected the market prices for many companies’ securities and that have often been unrelated to the operating performance of these companies. Any such fluctuations may adversely affect the market price of our common stock, regardless of our actual operating performance. As a result, stockholders may be unable to sell their shares, or may be forced to sell them at a loss.

Because we can issue additional shares of our common stock, our stockholders may incur immediate dilution and may experience further dilution.

We are authorized to issue up to 600,000,000 shares of common stock. As of January 28, 2011 there were 72,268,522 shares of our common stock issued and outstanding. Our board of directors has the authority to cause our company to issue additional shares of common stock without the consent of any of our stockholders. Consequently, our stockholders may experience dilution in their ownership of our company in the future.

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Because we can issue up to 100,000,000 shares of preferred stock, preferred shareholders will have preference over our common stockholder.

On October 5, 2010 we filed a Certificate of Amendment to our Articles with the Secretary of State of Nevada creating 100,000,000 preferred shares with a par value of $0.001 per share. Our board of directors is authorized to prescribe the series and the number of the shares of each series of preferred stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of the shares of each series of preferred stock. Consequently, preferred shareholders may be entitled to a higher claim on the assets and earnings than holder of our common stock. No preferred shares have been issued as of the date of this Report

Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority, which we refer to as FINRA, has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for shares of our common stock.

Not applicable.

Executive, Head Office and Operations

Our corporate office is located at 1404 510 West Hastings Street, Vancouver, B.C. Canada V6B 1L8. Our operations are located at 6650 Lusk Blvd Suite B20, San Diego California 92121. This facility functions as our main operating facility. We believe our current premises are adequate for our operations today but will limit our ability to grow. As a result we are looking to add incremental space as required without increasing our costs significantly.

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We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

None

PART II

Market for Securities

Our common shares are quoted on the OTC Bulletin Board under the trading symbol “NXWI.OB”. Our shares have been quoted on the OTC Bulletin Board since November 2, 2009. No trades in our common stock were affected on the OTC Bulletin Board until January 6, 2010*.

The following table sets forth, for the periods indicated, the high and low sales prices per share of our common stock was compiled from information obtained from the OTC Bulletin Board system. These prices are based on quotations between dealers, which do not reflect retail mark-up, markdown or commissions, and do not necessarily represent actual transactions.

Number of Stockholders of Record

Common Shares

Authorized: 600,000,000 at $0.001 par value. As of January 28, 2011, 72,268,522 shares of our common stock were issued and outstanding. As October 31, 2010 there were 39 registered shareholders of our common stock, holding a total of 59,308,785 shares. Because many of the shares of our common stock are held by CEDE & Co. on behalf of brokers and other institutions, we are unable to estimate the total number of stockholders represented by these record holders. As of October 31, 2010 CEDE & Co. was holding 25,278,700 shares of our common stock.

Preferred Shares

Authorized: 100,000,000 at $0.001 par value. As of January 28, 2011, no preferred shares have been issued.

Our transfer agent and registrar of our common stock (and preferred, if and when issued) is Empire Stock Transfer Inc., located at 1859 Whitney Mesa Dr., Henderson, NV 89014; telephone: 702 818-5898; fax: 702 974-1444.

Dividend Policy

We have not declared or paid any cash dividends since inception. There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

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Moreover, should any preferred stock be issued it may contain restrictions on our ability to declare and pay dividends on our common stock. We plan to retain all earnings, if any, for the foreseeable future for use in the operation of our business and to fund future growth

Annual Meeting of Stockholders

On June 22, 2010, we held our annual meeting of stockholders to elect the directors of our company. As disclosed in our Form 8-K filed with the Securities and Exchange Commission on June 24, 2010, our stockholders elected Mark Sampson, Ralph Proceviat, Brad Weinert, James Grey and Michael Donnell as the directors of our company and ratified the appointment of BDO USA LLP as our independent registered public accounting firm. Our stockholders also ratified our 2009 Stock Option Plan. Under the Plan, options to acquire common shares may be granted to directors, officers, consultants and employees of our company. A total of 15,000,000 common shares may be issued under the Plan. The purpose of our 2009 stock option plan is to retain the services of valued key employees, directors, officers and consultants of our company and such other persons as the Plan Administrator shall select, and to encourage such persons with an increased incentive to make contributions to our company.

Form S-8 - Registration Statement Under the Securities Act of 1933

On July 12, 2010 we filed a Registration Statement on Form S-8 with the Securities and Exchange Commission to register an aggregate of 15,000,000 shares of our common stock that are issued or issuable pursuant to stock options granted and to be granted under our 2009 stock option plan. Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, the Registration Statement also covers any additional shares of our common stock that become issuable under any of the listed plans by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without receipt of consideration that increases the number of our outstanding shares of common stock.

Recent Sales of Unregistered Securities

Other than as disclosed herein or in previous quarterly reports on Form 10-Q or current reports on Form 8-K, we have not issued any equity securities that were not registered under the Securities Act.

Purchases of Equity Securities by Our Company and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during our fiscal year ended October 31, 2010.

Not Applicable.

Management’s discussion and analysis of financial condition and results of operations (“MD&A”) is provided as a supplement to the accompanying condensed consolidated financial statements and footnotes to help provide an understanding of our financial condition, changes in our financial condition and results of our operations. The MD&A is organized as follows:

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CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

The MD&A should be read in conjunction with the consolidated financial statements and notes thereto included in this report. This discussion contains forward-looking statements. These forward-looking statements are made as of the date of this report. Any statement that refers to an expectation, projection or other characterization of future events or circumstances, including the underlying assumptions, is a forward-looking statement. We use certain words and their derivatives such as “anticipate”, “believe”, “plan”, “expect”, “estimate”, “predict”, “intend”, “may”, “will”, “should”, “could”, “future”, “potential”, and similar expressions in many of the forward-looking statements. The forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs, and other assumptions made by us. These statements and the expectations, estimates, projections, beliefs and other assumptions on which they are based are subject to many risks and uncertainties and are inherently subject to change. We describe many of the risks and uncertainties that we face in “Risk Factors” in Item 1A and elsewhere in this report. Our actual results and actual events could differ materially from those anticipated in any forward-looking statement. Readers should not place undue reliance on any forward-looking statement.

Our audited consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

Company Overview

We were incorporated in the State of Nevada on March 19, 2007 under the name of Technology Publishing, Inc. On October 26, 2009, we completed a merger with our subsidiary, Nexaira Wireless Inc., a Nevada corporation which was incorporated solely to effect a change in our name to better reflect the nature of our business. As a result, we have changed our name from “Technology Publishing, Inc.” to “Nexaira Wireless Inc.” The name change became effective with the Over-the-Counter Bulletin Board at the opening for trading on November 2, 2009 under the new stock symbol “NXWI”.

We develop and deliver 3G/4G) wireless routing solutions that offer speed, reliability and security to carriers, mobile operators, service providers, VARS and enterprise customers. Recognizing the need for competitively priced, high quality wireless broadband devices in 2008, we designed and developed customizable branded 3G/4G routing platforms for the business market. Our routing solutions are simple to install, yet provide the advanced management and business class features demanded by the most sophisticated users. We believe our wireless devices are ideal for secure high availability wireless applications acting as the primary router on wireless, DSL, or cable networks or can be used to provide complete device and network redundancy in wide area network-failover/fail back applications.

Management’s Plan of Operations

2010 was a year of change for us. Shifting from being a reseller of data cards for the wireless industry we launched our first proprietary wireless routers in May of 2010 that interface easily with the 4G LTE wireless networks of Verizon, Sprint and AT&T as well as HSPA+ networks of Bell, Rogers and Telus. We re-aligned our operations as we exited from marginally profitable product lines and focused on developing our procurement and supply systems to support rapid sales growth of our new products. During this time we were successful in raising enough working capital from investors to sustain operations and position us for growth in our emerging business. With a focus on designing, developing and distributing our own products –specifically 3G/ 4G wireless routing solutions which include firmware and software developed in house, we began selling our products to VARs, carriers and disribution partners in June of 2010. After 18 months of testing, field trials, customer driven enhancements and modifications, we not only understand the customer requirements and the market verticals but have better control on the business and the challenges facing it. Being less dependent on the commodity based distribution business, we have now commercialized our proprietary routing solutions in an attempt to increase and broaden our revenue streams and gross margins. Our planned revenue growth and return to profitability is expected to come as a result of the introduction of our (1) innovative proprietary technology, (2) the launch of our new suite of products catering to the growing 3G/4G wireless business segment and (3) an experienced sales and operations team focused on the wireless marketplace. This, of course, is dependent on our ability to raise new capital.

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With our base of current customers and a diversified expanding market, we believe our new suite of products will create onetime and recurring revenue, potentially yielding higher gross profit margins as compared to the legacy distribution business.

Notwithstanding the historical operating results management believes that the true value of our Company rests in the changes and progress made to enter the wireless routing segment with our own products. With the introductions of our new routing solutions, management intends to leverage our existing loyal customer base, enhance our fulfillment expertise to provide unique packaging and delivery of our user friendly graphical user interface, the i3 GUI. We intend to develop new markets, add new customers, strengthen our business relationships with strategic vendors and continue to be innovative in developing software and firmware to meet our customers’ needs. We also intend to continue to strengthen our management and board of directors by attracting seasoned executives with sales, marketing, finance and technical expertise from the wireless and wireline industries.

Looking forward for the next 12 months, we believe that we have established a strong foundation of IP, industry relationships, quality assurance methodologies and proprietary enabling technology, NexWareSM, which can be readily adapted to meet the needs of specific partners and markets. Our objectives over the next 12 months are to continue to build value inside the business and move our company to a more profitable stage of growth. To support this growth, we are seeking an investment of $3-5 million to drive our new business model, launch our new products, meet our customers’ needs and increase shareholder value. We have signed an agreement with Reedland Capital to assist us in raising the necessary capital.

This planned capital raise in US Dollars will add to the $7.2 million of equity invested to date and the $1.7 million of short term borrowings, which has allowed us to successfully restructure, re-focus our company and establish ourselves as a software company. The proceeds will be used to launch the sales and marketing campaign and allow management to achieve profitability from operations and which we believe will increase shareholder value. The funds will also be used for general working capital.

Year Ended October 31, 2010 Compared to Year Ended October 31, 2009

Total revenues for the year ended October 31, 2010 amounted to $1,744,796 compared to $5,643,840 for the same period in 2009. The decrease in revenues for the twelve months compared to the twelve month period in 2009 was primarily attributable to our strategy of exiting the low margin distribution business and focusing our resources on completing the development, certification (in May and June 2010), packaging and commercialization of our initial suite of routing products and solutions. From a business environment perspective, the capital markets continue to lag making it challenging to secure the required capital to aggressively launch and market our products. With 2010 being another year of one of the worst economic downturns in recent history, the tightening of supplier credit, eroding product gross margins from the sale of end of life products, increased competition from other distributors added by manufacturers, a decrease in product demand for the data card and modem part of the distribution business and the disruption in the supply of data cards from one of our suppliers, has led to lower revenues for the year. Gross profit for the year ended October 31, 2010 amounted to $221,456 or 13% of total revenues. This compares to gross profit of $1,035,738 or 18% of total revenues for the twelve months ended October 31, 2009. The decrease in gross margin for the twelve months ended October 31, 2010 is primarily due to our sell off of “end of life” inventory at reduced sales price. In addition, the Company provided for an additional $125,993 for obsolescence provision related to slow moving inventory identified as of October 31, 2010.

Total operating expenses amounted to $4,525,323 for the twelve months ended October 31, 2010 compared to $4,079,224 for the same period in 2009. This $446,099 increase primarily relates to increase in research and development expense in connection with the Company’s proprietary router technology that did not meet the criteria for capitalization under ASC 985-20.

Interest and other expense increased $28,179 to $358,950 for the twelve months ending October 31, 2010 compared to $330,771 as of October 31, 2009 as a result in increased cost of borrowings, primarily in connection with the Convertible Note Payable agreement entered into on August 20, 2010, for which it was determined to contain an embedded derivative. Using the Monte Carlo Valuation Model, the fair value of the embedded derivative was determined to be $121,249. The Company’s stock price on August 20, 2010 was $0.33, risk-free discount rate of 3.38% and volatility of 140% was used to obtain fair value as of August 20, 2010.

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The Company also issued freestanding detachable warrants in connection with the issuance of the debt instrument that are not considered to be derivative instruments. Under the Black-Scholes model, the Company determined the fair value of the warrants is $49,458, which is recorded as debt discount and to be accreted to interest expense over twelve months to July 31, 2011. Total accretion of debt discount in connection with the embedded derivative and warrants as of October 31, 2010 was $58,732. See Note 10 – Convertible Note Payable in the attached audited consolidated financial statements.

The increase in other interest expense from the Convertible Note Payable was offset by reduced costs of borrowings related to the convertible debenture with related parties. On November 10, 2009, $1,600,000 in convertible debt held by various lenders was converted into 19,250,000 restricted shares of the Company’s common stock at a conversion price of $0.083117 per share in connection with the Share Exchange Agreement effective September 29, 2009. On February 23, 2010, the lender converted the remaining $350,000 of convertible debt into 700,000 units at $0.50 per unit.

The loss from operations amounted to $4,303,867 for the year ended October 31, 2010 compared to a loss of $3,043,486 for same period in 2009. The increase is due to lower sales and increased costs as noted above. Net loss after interest and income taxes amounted to $4,664,762 for the year ended October 31, 2010, an increase of $1,291,127 from $3,373,635 over the same period in 2009. With the sales of our new line of routers expected to gain traction in fiscal 2011 and a continued demand and supply of broadband data cards, it is anticipated that our company’s losses will decrease year over year, commencing the second quarter of FY 2011.

Outstanding Share Data

Common Shares

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On November 10, 2009, $1,600,000 in debt held by various lenders was converted into 19,250,000 restricted shares of our common stock at a conversion price of $0.083117 per share in connection with the Share Exchange Agreement effective September 29, 2009. The Conversion price was determined based on the average conversion price of the Amendment 4 revision price of every $0.20 for the Pre-March advances and $0.10 conversion price for the March advance, or $0.15, and 11,000,000 shares based on total debt of $1,600,000 converted. See Note 7 – Bridge Credit Facility and Convertible Debenture. We issued the units to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

On January 6, 2010, we closed a non-brokered private placement of 1,754,524 units at US$0.50 per unit for cash proceeds of US$375,000 and in settlement of debt totaling US$502,262 which we assumed from our wholly-owned subsidiary, Nexaira, Inc., effective January 6, 2010. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of our company at a price of $1.00 per share until January 6, 2012. The units were issued pursuant to private placement subscription agreements and debt conversion agreements, as applicable, each dated January 6, 2010. We issued the units to 10 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

On February 23, 2010, we closed a non-brokered private placement of 1,400,000 units at US$0.50 per unit for cash proceeds of US$350,000 and in settlement of debt totaling US$350,000 which we assumed from our wholly-owned subsidiary, Nexaira Inc., effective February 23, 2010. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of our company at a price of $1.00 per share until February 23, 2012. The units were issued pursuant to private placement subscription agreements and a debt conversion agreements as applicable, each dated February 23, 2010. We issued the units to 3 non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

On April 29, 2010, we closed a 575,000 unit non-brokered private placement at a price of US $1.00 per unit for gross proceeds of US$575,000. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of our company at a price of $1.50 per share for two years from closing. We issued the units to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”)) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act.

On May 17, 2010, we entered into debt conversion subscription agreements whereby $21,487 included in accrued expense and other current liabilities as of April 30, 2010 was converted into 94,001 common shares. Pursuant to board approval, on May 26, 2010, we issued the shares to 3 U.S. accredited investors (as that term is defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”)) relying on Regulation S and/or Section 4(2) of the Securities Act.

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On March 17, 2010, we entered into a fixed fee consulting agreement with a consultant to assist us in our private placement efforts. The agreement calls for payment of fixed fee totaling $85,000 over four months to be paid by the issuance of 200,000 restricted shares of our common stock as total consideration. The agreement is cancelable with 30 days notice. For the year ended October 31, 2010, we expensed $50,000 in connection with the fair value of the services performed, which is included in selling, general and administrative expense for the twelve months ended October 31, 2010. We expect to expense the fair value of the services at the end of each milestone service period performed based on the total agreed upon contract price under the agreement through July 17, 2010. On May 26, 2010, we issued 100,000 shares for the first two installments in connection with services performed for the period March 18, 2010 through May 18, 2010. Effective May 31, 2010 the agreement was cancelled.

On March 22, 2010, we also entered into a fixed fee consulting agreement with a consultant to provide investor relations services and assist in our private placement efforts. Effective, April 1, 2010, the agreement calls for payment of a fixed fee totaling $61,200 over 12-month period to be paid by the issuance of 200,000 restricted shares of our common stock as total consideration. The agreement is cancelable with 30 days notice. As of October 31, 2010, we expensed $36,000 in connection with the fair value of the services performed as of that date, which is included in selling, general and administrative expense for the year ended October 31, 2010. We expect to expense the fair value of the services at the end of each milestone service period performed based on the total agreed upon contract price under the agreement. The shares are to be issued in increments of 16,666 shares every 30 days following the effective date. We have issued 83,330 shares in connection with services performed from April 1 through October 31, 2010.

On May 17, 2010, Mr. Michael Donnell was appointed a director of our company and was granted 437,500 stock options, with each option exercisable into one share of our common stock at a price of $0.425 per share for a period of five years from the date of grant, on terms and conditions as set out in our 2009 Stock Option Plan and a stock option agreement entered between our company and Mr. Donnell. The options will vest equally over each of 6, 12 and 18 months from May 17, 2010.

On August 12, 2010, we issued a total of 65,000 common shares to two US employees in connection with the exercise of stock options at an exercise price of $0.15 per share.

As disclosed in our Report on Form 8-K (as filed with the Securities and Exchange Commission on August 26, 2010), we entered into a securities purchase agreement, effective August 20, 2010, pursuant to which we agreed to sell to a lender a 10% Convertible Note (the “Note”) due July 30, 2011 with an aggregate original principal amount equal to $400,000, and a 3 year warrant (the “Warrant”) to purchase 333,333 warrant shares (the “Warrant Shares”) at an exercise price equal to $0.50 per Warrant Share for a period of three years. The Note entitles the lender to convert, at anytime subsequent to February 20, 2011 through maturity, all or any part of the outstanding principal, plus accrued but unpaid interest thereon, into shares of our common stock (the “Note Shares”) at a conversion price equal to the lesser of (i) $0.50 and (ii) 80% of the average of the three lowest daily VWAPs (as defined in the Note) during the twenty (20) consecutive Trading Days (as defined in the Note) immediately preceding the applicable Conversion Date (as defined in the Note) on which the lender elects to convert all or part of the Note. The issuance of the Note, the Note Shares, the Warrant and the Warrant Shares were and/or will be made pursuant to Section 4(2) and/or Rule 506 of Regulation D of the Securities Act and the lender has represented to us that it is an “accredited investor” as such term is defined in Rule 501 of Regulation D of the Securities Act.

On September 27, 2010, we issued a total of 160,000 common shares to a US employee in connection with the exercise of stock options at an exercise price of $0.15 per share.

On December 17, 2010, we closed a private placement of 8,600,000 shares of common stock at a purchase price of $0.10 per share for aggregate proceeds to our company of $860,000. We issued 3,000,000 shares to two non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and 5,600,000 shares to nine U.S. persons pursuant to Rule 506 of Regulation D and/or Section 4(2). Additionally, 1,400,000 warrants were issued as a placement fee and for ongoing investment banking and other financial advisory services to three U.S. persons pursuant to Rule 506 of Regulation D and/or Section 4(2). The warrants are exercisable at a strike price equal to US$0.28 per share until November 18, 2013.

On November 7, 2010, 1,129,034 stock options granted to a lender expired. On January 15, 2011, in consideration and acknowledgement of the Lender’s continued support, specifically in (a) not calling the loan; (b) agreeing to convert the principal amount of $1,950,000 debt into shares of our company; (c) agreeing to defer interest payments on said demand loans as well as the amount remaining after the debt conversions; and (d) providing additional funding by way of current outstanding promissory note loans, which at October 31, 2010 aggregate to $412,000, we granted 1,129,034 warrants at an exercise price of US $0.20 per share exercisable at any time until January 15, 2013.

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On January 13, 2011, we entered into a Debt Settlement and Subscription Agreement with Novatel Wireless, Inc. whereby we issued 1,500,000 common shares at a deemed price of $0.10 per share in settlement of $150,000 in outstanding account payable and 2,357,406 common shares at a deemed price of $0.20 per share in settlement of $471,481 for the remainder of the outstanding account payable.

On January 14, 2011, we agreed to extend the expiry date from January 15, 2011 to January 15, 2013 on 700,000 warrants exercisable at $0.20 per share granted to two lenders on October 26, 2009.

Preferred Shares

After receiving shareholder approval in connection with its proxy statement filed September 14, 2010 with the Securities Exchange Commission, on October 5, 2010 we filed a Certificate of Amendment with the Secretary of State of Nevada creating 100,000,000 preferred shares with a par value of $0.001 per share. Our board of directors is authorized to prescribe the series and the number of the shares of each series of preferred stock and the voting powers, designations, preferences, limitations, restrictions and relative rights of the shares of each series of preferred stock. No preferred shares have been issued as of the date of this Report.

Liquidity and Financial Condition

Working Capital

Our cash on hand as at October 31, 2010 was $107,727. As at October 31, 2010, we had working capital deficiency of $4,161,583. Included in current liabilities at October 31, 2009 is a convertible debenture in the amount of $1,950,000 of which $1,600,000 and $350,000 was converted into equity on November 10, 2009 and February 23, 2010, respectively. At October 31, 2010, current liabilities include short-term promissory notes payable to unrelated and related parties of $950,000 and $412,000, respectively. On January 6, 2010, promissory notes payable and accrued interest thereon, issued to unrelated and related parties totaling $289,844 and $211,413, respectively were converted to equity. On August 20, 2010, we entered into a Convertible Note Payable agreement for net proceeds received totaling $391,500. We have incurred monthly operating losses since 2008, and this is likely to continue for the first 2-3 quarters of the year ending October 31, 2011. As disclosed in Note 18 of the Consolidated Financial Statements contained in this annual report, we were successful in closing a private placement on December 17, 2010 in the amount of $860,000 and settling a vendor account payable on January 13, 2011 in the amount of $621,481 by issuing shares of our common stock.

We anticipate that our cash on hand and the revenue we anticipate generating from product sales will not be sufficient to satisfy all of our cash requirements for the next twelve month period. We plan to raise additional capital primarily through the equity financing and further borrowings from our current shareholders and directors if this type of funding continues to be available. We will continue to seek additional funds from our current shareholders and directors to fund our day to day operations until equity financing can be pursued but we have no guarantee that our current shareholders and directors will continue to fund our day to day operations.

We have been focused on changing our business model to include the development and sale of our own line of wireless routers and software to compliment the distribution side of our business. During this period we have experienced a decline in revenues resulting in negative cash flow from operations. We have a total shareholders’ deficit of $2,937,951. As discussed in Note 1 of the Notes to the Consolidated Financial Statements, we have incurred losses from operations and have negative cash flow from operations, a working capital and a net capital deficit that raise substantial doubt about our ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1 of the Notes to the Consolidated Financial Statements. The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Our ability to continue as a going concern depends on our success in generating increased revenues and earnings in the immediate and foreseeable future with the introduction of our new line of hardware and software router products and solutions. Furthermore, the continuation of our company as a going concern is dependent upon the continued financial support from our shareholders and lenders and our ability to obtain necessary equity financing to continue operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

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Future Fundraising

Fundraising will be one of our primary objectives over the next 12 months. We anticipate our cash requirements for the next 12 months to carry out our business plan will be $3 million. We do not anticipate generating positive internal operating cash flow until we can generate substantial revenues from the commercial sale of our new line of hardware and software router products and solutions. We intend to raise $3 to $5 million of our cash requirements through bridge and equity financings by March 2011.

As noted above, the financial requirements of our company for the next twelve months will depend on our ability to raise the money we require through debt financing and private placements associated with the issuance of additional equity securities of our company to our current stockholders and/or new stockholders. The issuance of additional equity securities by us may result in a significant dilution in the equity interests of our current stockholders. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Application of Critical Accounting Policies

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses in the reporting period. We regularly evaluate our estimates and assumptions related to inventory valuation and warranty liabilities, which affect our cost of sales and gross margin; the valuation of intangibles, including software development costs, and patents and trademarks, which could in the future affect our impairment charges to write down the carrying value of intangibles and the amount of related periodic amortization expense recorded for definite-lived intangibles; the fair value of derivative liability, which could affect our interest and other income should we determine there is a change in fair value; and the valuation of deferred income taxes, which affects our income tax expense (benefit). We also have other key accounting policies, such as our policies for stock-based compensation and revenue recognition, including the deferral of a portion of revenues on sales to distributors. The methods, estimates and judgments we use in applying these critical accounting policies have a significant impact on the results we report in our financial statements. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from management’s estimates. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements.

Fair Value of Financial Instruments

We have adopted and follow ASC 820-10, “Fair Value Measurements and Disclosures” for measurement and disclosures about fair value of our financial instruments. ASC 820-10 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820-10 are:

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Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

As defined by ASC 820-10, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of October 31, 2010 or that will be recognized in the future and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaids and other current assets, and other assets, accounts payable, accrued expenses, accrued interest, taxes payable, and other current liabilities, approximate their fair values because of the short maturity of these instruments. The Company’s notes payable to shareholders, long-term debt, and convertible debenture approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at October 31, 2010 and 2009. The Company’s derivative liability measured at fair value on a recurring basis was determined using the following inputs:

On August 20, 2010, we entered into a convertible note agreement for which it was determined to contain an embedded derivative. Using the Monte Carlo Valuation Model, the fair value of the embedded derivative was determined to be $121,249. Our stock price on August 20, 2010 was $0.33, risk-free discount rate of 3.38% and volatility of 140% was used to obtain fair value as of August 20, 2010.

As of October 31, 2010, our stock price was $0.14, risk-free discount rate of 3.64% and volatility of 140% was used to obtain fair value of $154,615, resulting in the change in fair value of $33,366 recorded as other expense in our Consolidated Statements of Operations as of October 31, 2010.

A reconciliation of our liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:

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Inventories

Our inventories consist of 3G/4G mobile broadband routers, PC cards, modems and other accessories, and are carried at the lower of average cost, determined on a first-in-first-out (FIFO) basis, or market. We review inventory for significant average cost variances over market on a quarterly basis. We also write down inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.

Warranty Reserves

Our wireless router products typically carry a one year warranty. We establish reserves for estimated product warranty costs at the time revenue is recognized. Although we engage in extensive product quality programs and processes, our warranty obligation is affected by product failure rates, use of materials and service delivery costs incurred in correcting any product failure. We calculate a warranty provision using historical data to estimate the percentage of our wireless router products that will require repairs or replacements during the warranty period. Management reviews and updates its estimates as actual warranty expenditures change over the product’s life cycle. Should actual product failure rates, use of materials or service delivery costs differ from management’s estimates, additional warranty reserves could be required, which could reduce gross margin.

Impairment of Long-Lived Assets

We review the carrying value of our long-lived assets, which include property and equipment, and intangible assets (other than goodwill) annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate in accordance with Statement of ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement. We assess recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors. Estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to the business model or changes in operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, an impairment loss will be recognized, measured as the amount by which the carrying value exceeds the fair value of the asset. Fair value is determined using available market data, comparable asset quotes and/or discounted cash flow models. Management conducted an evaluation of long-lived assets and determined no impairments currently exist.

Software Development Costs

We capitalize software development costs in accordance with ASC 985-20, Accounting for the Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. Software development costs consist of labor and overhead costs related to development of our suite of NexWare™ firmware for our suite of wireless routers. Software development costs are capitalized when technological feasibility and marketability of the related product has been established. On June 1, 2008, we established technological feasibility upon successful completion and testing of our company’s first working router product pilot firmware program. Capitalized software costs are amortized on a product-by-product basis over five years beginning when the product is available for general release to customers. As of October 31, 2010 and 2009, we capitalized $3,350 and $1,043,009, respectively, in connection with software development costs. Interest in the amount of $10,852 was capitalized and included in software development costs for the year ended October 31, 2009. No interest was included in software development costs for the year ended October 31, 2010. Software development costs totaling $109,374 included in the balance sheet as of October 31, 2010 relate to the development of NexWare™ Enterprise Pro products expected to be released in the first quarter 2011. Accordingly, amortization has not begun on this product to date.

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Intangible Assets

Our intangible assets, consist principally of patents and trademarks, are accounted for in accordance with ASC 350.30, Goodwill and Other Intangibles. Intangible assets that have finite lives are amortized using the straight-line method over their estimated useful lives of fifteen years.

Valuation of Deferred Income Taxes

We record valuation allowances to reduce our deferred tax assets to an amount that we believe is more likely than not to be realized. We consider estimated future taxable income and ongoing prudent and feasible tax planning strategies, including reversals of deferred tax liabilities, in assessing the need for a valuation allowance. If we were to determine that we will not realize all or part of our deferred tax assets in the future, we would make an adjustment to the carrying value of the deferred tax asset, which would be reflected as income tax expense. Conversely, if we were to determine that we will realize a deferred tax asset, which currently has a valuation allowance, we would reverse the valuation allowance which would be reflected as an income tax benefit or as an adjustment to shareholders’ equity. For financial statement reporting purposes, we must make certain estimates and judgments. These estimates and judgments are applied in the calculation of certain tax liabilities and in the determination of the recoverability of deferred tax assets, which arise from temporary differences between the recognition of assets and liabilities for tax and financial statement reporting purposes.

Revenue Recognition

We recognize revenue, net of sales tax, when all four basic criteria are met: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. In addition, we do not recognize revenue until all of the customers’ acceptance criteria have been met. The criteria are usually met at the time of product shipment, except for shipments to distributors with rights of return. We defer the portion of revenue from shipments to distributors subject to rights of return until the agreed upon percentage of return or cancellation privileges lapse. Revenue recognition related to customization services and provisioning is recognized when services are performed.

Stock-Based Compensation Expense

We account for stock-based compensation in accordance with the provisions of ASC 718, Stock Compensation which requires all share-based payments to be recognized in our financial statements based on their respective grant date fair values. Under this standard, the fair value of each employee stock option is estimated on the date of grant using an option pricing model that meets certain requirements. Consistent with the provisions of ASC 718, we estimate the fair value of stock options and shares issued under its employee stock purchase plan using the Black-Scholes option-pricing model. Fair value is estimated on the date of grant and is then recognized (net of estimated forfeitures) as expense in our Consolidated Statement of Operations over the requisite service period (generally the vesting period). ASC 718 requires that we estimate the fair value of stock-based compensation on the date of grant using an option-pricing model. Our company uses the Black-Scholes model to value stock-based compensation. The Black-Scholes model determines the fair value of stock-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to our expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options granted by us is determined in accordance with ASC 718 and Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, (“SAB 107”) as amended by SAB No. 110, using an option-pricing model, this value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

Recent Accounting Pronouncements

In July 2010, the FASB issued ASU No. 2010-20, Receivables - Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This standard requires companies to improve their disclosures about the credit quality of their financing receivables and the credit reserves held against them. The guidance covers trade accounts receivables, financing receivables, loans, loan syndications, factoring arrangements, and standby letters of credit. The Company will adopt the provisions of this update in fiscal year 2011. Management is currently assessing the potential impact that the adoption of this new authoritative guidance could have on the Company’s financial statements.

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In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends ASC 820, Fair Value Measurements to require a number of additional disclosures regarding fair value measurements. This guidance requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance became effective for the Company with the reporting period beginning April 1, 2010, except for the Level 3 reconciliation disclosures that are effective for interim and annual periods beginning after December 15, 2010. Adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-14, Software (Topic 985) Certain Arrangements That Contain Software Elements – a consensus of the FASB Emerging Issues Task Force (“ASU 2009-14”). ASU 2009-14 amends the scope of software revenue guidance in FASB ASC Subtopic 985-605, Software-Revenue Recognition, to exclude tangible products containing software and non-software components that function together to deliver the product’s essential functionality and ASU No. 2009-13, Revenue Recognition (Topic 605) Multiple-Deliverable Revenue Arrangements — a consensus of the FASB EITF (“ASU 2009-13”). ASU 2009-13 eliminates the residual method of allocation and requires the relative selling price method when allocating deliverables of a multiple-deliverable revenue arrangement. ASU 2009-13 specifies the best estimate of a selling price is consistent with that used to determine the price to sell the deliverable on a standalone basis. ASU 2009-14 and ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, and must be adopted in the same period using the same transition method. If adoption is elected in a period other than the beginning of a fiscal year, the amendments in these standards must be applied retrospectively to the beginning of the fiscal year. Full retrospective application of these amendments to prior fiscal years is optional. Companies may elect early adoption of these standards. The Company does not believe the adoption of ASU 2009-14 and ASU 2009-13 will have a material impact on its consolidated results of operations and financial condition.

Not applicable.

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NEXAIRA WIRELESS INC.

Index

F-1

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
Nexaira Wireless Inc. and Subsidiaries
Vancouver, BC

We have audited the accompanying consolidated balance sheets of Nexaira Wireless Inc. and Subsidiaries as of October 31, 2010 and 2009 and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity (deficit), and cash flows for each of the years in the period ended October 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Nexaira Wireless Inc. and Subsidiaries at October 31, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the period ended October 31, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred losses from operations and has negative cash flow from operations, a working capital and a net capital deficit that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BDO USA, LLP

San Diego, California
January 28, 2011

F-2

NEXAIRA WIRELESS INC. AND SUBSIDIARIES
Consolidated Balance Sheets

LIABILITIES AND SHAREHOLDERS’ DEFICIT

See Accompanying Notes to Consolidated Financial Statements

F-3

NEXAIRA WIRELESS INC. AND SUBSIDIARIES
Consolidated Statements of Operations

See Accompanying Notes to Consolidated Financial Statements

F-4

NEXAIRA WIRELESS INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows

See Accompanying Notes to Consolidated Financial Statements

F-5

NEXAIRA WIRELESS INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’ Deficit and Comprehensive Loss

See Accompanying Notes to Consolidated Financial Statements

F-6

NEXAIRA WIRELESS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements
For the Years Ended October 31, 2010 and 2009

Nexaira Wireless, Inc. (“the Company”), formerly known as Technology Publishing, Inc. (“TPI”) was incorporated in the State of Nevada on March 19, 2007. The Company is headquartered in Vancouver, British Columbia Canada and its principal operations are located in San Diego, California. The Company develops and distributes 3G/4G wireless broadband routing solutions, as well as communications software to wireless and wireline carriers, Managed Service Providers (MSPs), Value Added Resellers (VARs) and distributors. The Company also provides customization services, marketing tools, provisioning and airtime activations based on individual customer needs. The Company is publicly traded on the Over-the-Counter Bulletin Board (OTCBB) under the symbol “NXWI” and can be found on the worldwide web at www.nexaira.com.

Effective February 19, 2010, the Registrar of Companies of the Province of British Columbia approved the continuation of Nexaira Inc. into British Columbia from the jurisdiction of Alberta. British Columbia law required that Nexaira Inc. change its name to a more descriptive one and, effective February 19, 2010 Nexaira Inc. changed its name to Nexaira Wireless (BC) Ltd. Nexaira Wireless (BC) Ltd. is a wholly owned subsidiary of the Company and its offices are located at Suite #1404, 510 West Hastings Street in Vancouver, B.C., Canada.

Nexaira Wireless (BC) Ltd. (“Nexaira”) incorporated as M2M Wireless Ltd on November 11, 2004 under the Alberta, Canada Business Corporations Act. On June 8, 2005 Nexaira incorporated its wholly-owned subsidiary in the State of California under the name Nexaira, Inc., and effected a name change of its Canadian parent corporation to Nexaira Wireless (BC) Ltd. effective December 12, 2005 to better reflect its business and marketing opportunities. On September 28, 2009, the shareholders of Nexaira entered into a Share Exchange Agreement with TPI and its wholly-owned subsidiary, Westside Publishing Ltd, a private Canadian based company under common control, whereby Nexaira merged with and into TPI, with Nexaira remaining as the surviving corporation. For financial statement reporting purposes, the merger was treated as a reverse acquisition with Nexaira deemed the accounting acquirer and TPI deemed the accounting acquiree under the purchase method of accounting in accordance with ASC 805-10-40, Business Combinations – Reverse Acquisitions. The reverse merger is deemed a recapitalization and the consolidated financial statements represent the continuation of the financial statements of Nexaira (the accounting acquirer/legal subsidiary) except for is capital structure, and the consolidated financial statements reflect the assets and liabilities of Nexaira recognized and measured at their carrying value before the combination and the assets and liabilities of TPI (the legal acquiree/legal parent). The equity structure reflects the equity structure of TPI, the legal parent, and the equity structure of Nexaira, the accounting acquirer, as restated using the exchange ratios established in the Share Exchange Agreement to reflect the numbers of shares of the legal parent. .

Effective October 26, 2009 the merger was completed with TPI, a Nevada Corporation which was incorporated solely to effect a change in TPI’s name from “Technology Publishing, Inc.” to “Nexaira Wireless, Inc.”. The name change became effective with the OTCBB at the opening for trading on November 2, 2009 under the new stock symbol “NXWI”. In connection with the closing of the share exchange agreement, the officers of TPI resigned, with Nexaira’s officers and directors duly appointed.

Effective October 29, 2009, the Company entered into a Share Purchase Agreement with TPI’s former officer and director, whereby the Company divested Westside Publishing Ltd. as consideration for the cancellation of 40.8 million shares of the Company’s restricted common stock. In addition, on October 29, 2009, the Company entered into a return to treasury agreement with a former shareholder, whereby the former shareholder agreed to return 20,000,000 restricted common shares to the company for cancellation effective October 30, 2009.

See Note 3 – Share Exchange Agreement.

F-7

Going Concern

The accompanying consolidated financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying consolidated financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company has experienced a decline in revenues, and has negative cash flows from operations, negative working capital and capital deficits, which raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion.

Ongoing unfavorable economic conditions worldwide have led to a low level of liquidity in many financial markets and extreme volatility in the credit and equity markets available to the Company. The Company has obtained funds from both related and unrelated parties since its inception. Management believes this funding will continue, and is also actively seeking new investors. Management believes the existing shareholders and prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core business. The Company has plans to raise up to $5 million by the second quarter of fiscal 2011 through equity and favorable debt financing. Management entered into a share exchange agreement, as described in Note 3, on September 28, 2009 to provide access to the equity markets to raise cash. On November 10, 2009, $1,600,000 of debt was converted into 19,250,000 restricted shares of the Company’s common stock at a conversion price of $0.083117 per share in connection with the Share Exchange Agreement effective September 29, 2009. On February 23, 2010, the remaining $350,000 of the convertible debt was converted into 700,000 shares of common stock at a conversion price of $0.50 per share.

From November 1, 2009 to October 31, 2010, the Company has raised $1,300,000, of which $200,000 was in settlement of short term borrowings advanced in October 2009, through private equity financing. On August 20, 2010, the Company entered into a Convertible Note Agreement with an investor for total proceeds of $400,000. The Company has also converted a promissory note for $211,837 from a related party and $290,425 in promissory notes from third party lenders into equity. Also, the Company borrowed additional $1,512,000 through short term demand loan financing from both related and unrelated parties. The Company entered into debt conversion subscription agreements whereby $21,487 included in accrued expenses and other current liabilities as of April 30, 2010 was converted into 94,001 common shares on May 26, 2010. Finally, subsequent to year end on December 17, 2010, the Company closed a private placement of 8,600,000 shares of common stock at a purchase price of $0.10 per share for aggregate proceeds of $860,000. See Note 18 – Subsequent Events.

In addition, if signs of improvement in the global economy do not progress as expected and the economic slowdown continues or worsens, the Company’s business, financial condition, cash flows and results of operations will be adversely affected. If that happens, the Company’s ability to access the capital or credit markets may worsen and it may not be able to obtain sufficient capital to satisfy or refinance all of its outstanding debt obligations as the obligations are required to be paid. The Company is dependent on the continued financial support of its principal shareholder and convertible debenture investor. If the Company is unable to achieve projected operating results and/or obtain the additional contemplated financing, management will be required to curtail growth plans and reduce development activities. Should the Company not be able to obtain new capital it would have to renegotiate the terms of its existing loan agreements with a vendor and related parties. Subsequent to October 31, 2010, on January 13, 2011 the Company entered into a Debt Settlement and Subscription Agreement with a vendor. Under the terms of the agreement, the Company issued to the vendor 1,500,000 and 2,357,406 shares of common stock of the Company at a deemed price of $0.10 and $0.20 per share, respectively, as full settlement of $150,000 and $471,481, respectively, of the outstanding debt and accrued interest thereon as of January 13, 2011. Effective the closing date of the transaction the Company will record a gain on the early extinguishment of the debt totaling $231,016. The Company will be required to consider strategic and other alternatives, including, among other things, the sale of assets to generate funds, the negotiation of revised terms of its indebtedness, additional exchanges of its existing indebtedness obligations for new securities and additional equity offerings. The Company has retained financial advisors to assist it in considering these strategic, restructuring or other alternatives. There is no assurance that the Company will be successful in completing any of these alternatives. The Company’s failure to satisfy or refinance any of its indebtedness obligations as they come due, including through additional exchanges of new securities for existing indebtedness obligations or additional equity offerings, including through additional exchanges of new securities for existing indebtedness obligations or additional equity offerings, will result in a default and potential acceleration of its remaining indebtedness obligations and will have a material adverse effect on its business and continuance as a going concern.

F-8

Principles of Consolidation

The Company’s consolidated financial statements are prepared using accounting principles generally accepted in the United States of America and include the accounts of the Company, and its wholly-owned subsidiary, Nexaira, Inc., a California Corporation. All significant intercompany accounts and transactions have been eliminated.

Foreign Currency

The functional currency of the Company’s Canadian operations is the Canadian dollar. Assets and liabilities of the Company’s Canadian operations are translated into U.S. dollars at end-of-period exchange rates. Revenues and expenses are translated at average exchange rates in effect for the period. Net currency exchange gains or losses resulting from such translations are excluded from net income and are accumulated in a separate component of shareholders’ deficit as accumulated other comprehensive loss. Gains and losses resulting from foreign currency, which are not significant, are included in the consolidated statements of operations.

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 also requires disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates made by management include revenue recognition estimates, the valuation of deferred income tax assets, the valuation of equity instruments, allowance for doubtful accounts, inventory obsolescence, the fair value of derivative liability, and warrants issued in connection with debt.

Revenue Recognition

The Company’s revenues comprise of the following:

• distribution of third party mobile wireless broadband, modules and router solution, as well as related accessories;

• the Company’s proprietary wireless router solutions that are integrated with the Company’s internally developed software that is essential to the functionality of the equipment; and

• customization services, marketing tools, provisioning and airtime activations based on individual customer needs.

The Company recognizes revenue, net of sales tax, in accordance with Staff Accounting Bulletin No. 104 (“SAB 104”), when all four basic criteria are met: 1) there is evidence that an arrangement exists; 2) delivery has occurred; 3) the fee is fixed or determinable; and 4) collectability is reasonably assured. In addition, the Company does not recognize revenue until all customers’ acceptance criteria have been met. The criteria are usually met at the time of product shipment, except for shipments to distributors with rights of return. The portion of revenue from shipments to distributors subject to rights of return is deferred until the agreed upon percentage of return or cancellation privileges lapse. The Company currently does not resell its internally developed software separately from its proprietary router solution. The Company considered ASC 985-605, Software Revenue Recognition, applied to the revenue recognition of the Company’s newly developed products sold during the year ended October 31, 2010 and 2009. The Company does not currently sell its proprietary router product and internally developed software separately, and no services are provided after the product is shipped. Therefore, normal SAB 104 revenue recognition guidance applies as noted above.

Computation of Income and Loss per Share

The Company computes income and loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the statements of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.

F-9

Fair Value of Financial Instruments

The Company has adopted and follows ASC 820-10, Fair Value Measurements and Disclosures, for measurement and disclosures about fair value of its financial instruments. ASC 820-10 establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, ASC 820-10 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by ASC 820-10 are:

         Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

         Level 2 — Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.

         Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Valuation of instruments includes unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

As defined by ASC 820-10, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale, which was further clarified as the price that would be received to sell an asset or paid to transfer a liability (“an exit price”) in an orderly transaction between market participants at the measurement date.

The reported fair values for financial instruments that use Level 2 and Level 3 inputs to determine fair value are based on a variety of factors and assumptions. Accordingly, certain fair values may not represent actual values of the Company’s financial instruments that could have been realized as of October 31, 2010 or that will be recognized in the future and do not include expenses that could be incurred in an actual settlement. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, prepaids and other current assets, and other assets, accounts payable, accrued expenses, accrued interest, taxes payable, and other current liabilities, approximate their fair values because of the short maturity of these instruments. The Company’s notes payable to shareholders, long-term debt, and convertible debenture approximates the fair value of such instrument based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at October 31, 2010 and 2009. The Company’s derivative liability measured at fair value on a recurring basis was determined using the following inputs:

On August 20, 2010, the Company entered into a convertible note agreement for which it was determined to contain an embedded derivative. See Note 10 – Convertible Note Payable. Using the Monte Carlo Valuation Model, the fair value of the embedded derivative was determined to be $121,249. The Company’s stock price on August 20, 2010 was $0.33, risk-free discount rate of 3.38% and volatility of 140% was used to obtain fair value as of August 20, 2010.

F-10

As of October 31, 2010, the Company’s stock price was $0.14, risk-free discount rate of 3.64% and volatility of 140% was used to obtain fair value of $154,615, resulting in the change in fair value of $33,366 recorded as other expense in the Company’s Consolidated Statements of Operations for the year-ended October 31, 2010.

A reconciliation of the Company’s liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) is as follows:

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, trade accounts receivable, revenue and suppliers.

The Company’s cash and cash equivalents are placed at financial institutions, which at times, may exceed federally insured limits. Generally, these deposits may be redeemed upon demand and, therefore, bear minimal risk. Effective October 3, 2008, the Emergency Economic Stabilization Act of 2008 raised the Federal Deposit Insurance Corporation deposit coverage limits to $250,000 per owner from $100,000 per owner. This program is currently available through December 31, 2013. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risk on cash and cash equivalents.

The Company provides products and services to a variety of customers worldwide. Concentration of credit risk with respect to revenues and trade receivables is limited due to the geographic and industry dispersion of the Company’s customer base. The Company has not experienced significant credit losses on its customer accounts. A small number of customers has typically accounted for a large percentage of the Company’s annual revenues and trade accounts receivable. Two customers accounted for 28% and 10%, respectively, of the Company’s revenues for the year ended October 31, 2010. Three customers accounted for 23%, 17% and 16%, respectively, of the Company’s revenues for the year ended October 31, 2009. Three customers accounted for 55%, 17% and 12%, respectively, of trade accounts receivable as of October 31, 2010. As of October 31, 2009, two customers accounted for 26% and 17% of outstanding trade accounts receivable

The Company relied on three supplies to provide 42%, 22% and 12% of total inventory purchases for the year ended October 31, 2010. For the year ended October 31, 2009, two suppliers provided 76% and 90% of total inventory purchases.

Cash and Cash Equivalent

The Company considers all highly liquid investments with an original maturity from the date of purchase of 90 days or less to be cash equivalents. Cash and cash equivalents consist of cash on hand and in banks, and credit card receivables.

Accounts Receivable

Accounts receivable are recorded at the invoice amount at the time of sale. The Company continually monitors the collectability of its trade receivables based on a combination of factors. The Company records specific allowances for bad debts in selling, general and administrative expense when the Company becomes aware of a specific customer’s inability to meet its financial obligation, and all collection efforts are exhausted. As of October 31, 2010 and 2009, the allowance for doubtful accounts was $665 and $19,000, respectively.

F-11

Inventories

Inventories consist of 3G/4G mobile broadband routers, PC cards, modems and other accessories, and are carried at the lower of average cost, determined on a first-in-first-out (FIFO) basis, or market. The Company reviews inventory for significant average cost variances over market on a quarterly basis. The Company also writes down inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required. As of October 31, 2010 and 2009, inventory obsolescence reserve totaled $179,753 and $306,586, respectively.

Property and Equipment

Property and equipment are stated at cost and depreciated using the straight-line method, generally over the following periods:

Improvements to leased property are amortized using the straight-line method over the lesser of the remaining term of the lease or the estimated useful lives of the improvements. Direct external and internal costs of developing software for the Company’s website, as well as accounting software for internal use, are capitalized, and depreciated when placed into service. Expenditures for ordinary repairs and maintenance are expensed as incurred.

Impairment of Long-Lived Assets

In accordance with Statement of ASC 360-10-35, Property, Plant and Equipment – Subsequent Measurement, the Company reviews the carrying value of its long-lived assets, which includes property and equipment, and intangible assets (other than goodwill) annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of the asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. The estimate of cash flows is based upon, among other things, certain assumptions about expected future operating performance, growth rates and other factors. Estimates of undiscounted cash flows may differ from actual cash flows due to, among other things, technological changes, economic conditions, changes to the business model or changes in operating performance. If the sum of the undiscounted cash flows (excluding interest) is less than the carrying value, an impairment loss will be recognized, measured as the amount by which the carrying value exceeds the fair value of the asset. Fair value is determined using available market data, comparable asset quotes and/or discounted cash flow models. Management conducted an evaluation of long-lived assets and determined no impairments currently exist.

Research and Development Costs

Internal costs relating to research and development costs incurred for new software products and enhancements to existing products, other than certain software development costs that qualify for capitalization, are expensed as incurred.

Software Development Costs

The Company capitalizes software development costs in accordance with ASC 985-20, Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed. Software development costs consist of labor and overhead costs related to development of the Company’s suite of NexWare™ firmware for the Company’s suite of wireless routers. Software development costs are capitalized when technological feasibility and marketability of the related product has been established. On June 1, 2008, the Company established technological feasibility upon successful completion and testing of the Company’s first working router product pilot firmware program. Capitalized software costs are amortized on a product-by-product basis over five years, beginning when the product is available for general release to customers. During As of October 31, 2010 and 2009, the Company capitalized $3,350 and $1,043,009, respectively, in connection with software development costs. Interest in the amount of $10,852 was capitalized and included in software development costs for the year ended October 31, 2009. No interest was included in software development costs for the year ended October 31, 2010. During the year ended October 31, 2010, the Company introduced its initial and second generation versions of its Consumer and Business Class brand of wireless routing solutions for retail sale, and began amortization of these two product classes over 5 years. Total amortization expense included in cost of sales was $128,942 for the year ended October 31, 2010. As of October 31, 2010, software development costs in the amount of $917,417 are capitalized, which includes $109,374 related to the development of NexWare™ Enterprise Pro products expected to be released in the first quarter 2011. Accordingly, amortization has not begun on this product to date.

F-12

Intangible Assets

Intangible assets, consisting principally of patents and trademarks, are accounted for in accordance with ASC 350-30, Goodwill and Other Intangibles. Intangible assets that have finite lives are amortized using the straight-line method over their estimated useful lives of fifteen years. As of October 31, 2010 and 2009, intangible assets capitalized totaled $122,005 and $85,722, respectively. For the year-ended October 31, 2010 and 2009, amortization expense related to these intangible assets is $21,389 and $0, respectively.

Derivative Financial Instruments

The Company accounts for derivative instruments in accordance with the provisions of ASC 815-10, Derivatives Hedging, and its related literature. ASC 815-10 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities.

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivatives that are required under ASC 815-10 to be accounted for separated from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities is required to be revalued at each reporting date, with the corresponding changes in fair value recorded in current period operating results.

Warranty Reserves

The Company’s wireless router products typically carry a one year warranty. Reserves are established for estimated product warranty costs at the time revenue is recognized. Although the Company engages in extensive product quality programs and processes, its warranty obligation is affected by product failure rates, use of materials and service delivery costs incurred in correcting any product failure. The Company calculates a warranty provision using historical data to estimate the percentage of its wireless router products will require repairs or replacements during the warranty period. Management reviews and updates its estimates as actual warranty expenditures change over the product’s life cycle. Should actual product failure rates, use of materials or service delivery costs differ from the Company’s estimates, additional warranty reserves could be required, which could reduce gross margin.

The following table summarizes warranty reserve activity, which is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets, as of October 31, 2010 and 2009:

F-13

Advertising Expense

The Company expenses all advertising costs, which are included in selling, general and administrative in the Consolidated Statements of Operations, as they are incurred. Advertising expense for the years ended October 31, 2010 and 2009 totaled $72,077 and $48,637, respectively.

Income Taxes

The Company accounts for income taxes under ASC 740-10, Income Taxes. Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets, and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that includes the enactment date.

In fiscal year 2009, the Company adopted amendments under ASC 740-10-50, Accounting for Uncertain Tax Positions, formerly Financial Accounting Standards Board Interpretation No. 48 (“FIN 48”), which clarify the accounting for uncertainty in tax positions recognized in the financial statements. Under these provisions, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position would be measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The related amendments also provide guidance on measurement, classification, interest and penalties associated with tax positions, and income tax disclosures.

The Company is subject to taxation in the U.S., Canada, and various state jurisdictions. The Company’s calculation of its tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in various taxing jurisdictions. If, based on new facts that arise within a period, management ultimately determines that the payment of these liabilities will be unnecessary, the liability will be reversed and the Company will recognize a tax benefit during the period in which it is determined the liability no longer applies. Conversely, the Company records additional tax charges in a period in which it is determined that a recorded tax liability is less than the ultimate assessment is expected to be.

The application of tax laws and regulations is subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability for U.S., Canadian taxes, or the various state jurisdictions, may be materially different from management’s estimates, which could result in the need to record additional tax liabilities or potentially reverse previously recorded tax liabilities. Interest and penalties are included in tax expense.

Stock-based Compensation

The Company accounts for stock-based compensation in accordance with the provisions of ASC 718, Stock Compensation, which establishes the accounting for share-based awards and the inclusion of their fair value in net earnings in the respective periods the awards were earned. Consistent with the provisions of ASC 718, the Company estimates the fair value of stock options and shares issued under its employee stock purchase plan using the Black-Scholes option-pricing model. Fair value is estimated on the date of grant and is then recognized (net of estimated forfeitures) as expense in the Consolidated Statement of Operations over the requisite service period (generally the vesting period).

ASC 718 requires companies to estimate the fair value of stock-based compensation on the date of grant using an option-pricing model. The Company uses the Black-Scholes model to value stock-based compensation. The Black-Scholes model determines the fair value of stock-based payment awards based on the stock price on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. Option-pricing models were developed for use in estimating the value of traded options that have no vesting or hedging restrictions and are fully transferable. Although the fair value of stock options granted by the Company is determined in accordance with ASC 718 and Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, (“SAB 107”) as amended by SAB No. 110, using an option-pricing model, that value may not be indicative of the fair value observed in a willing buyer/willing seller market transaction.

F-14

The fair value of the options granted is estimated using the Black-Scholes option-pricing model assumptions as of the date of the grants are listed in the following table:

Compensation Amortization Period. All stock-based compensation is amortized over the requisite service period of the awards, which is generally the same as the vesting period of the awards. The Company amortizes the fair value on a straight-line basis over the expected service period, less estimated forfeitures.

Expected Life. The expected life of stock options granted represents the expected weighted average period of time from the date of grant to the estimated date that the stock option would be fully exercised.

Expected Volatility. Expected volatility is a measure of the amount by which the stock price is expected to fluctuate. Due to limited volatility history, the Company estimates the expected volatility of its stock options at their grant date by equally weighting the historical volatility of four similar public companies.

Risk-Free Interest Rate. The risk-free interest rate is the implied yield currently available on zero-coupon government issues with a remaining term equal to the expected life.

Expected Dividends. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. Consequently, the Company uses an expected dividend yield of zero percent in valuation models.

Expected Forfeitures. As stock-based compensation expense is based on awards that are ultimately expected to vest, it should be reduced for estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures rates were based upon the average of expected forfeitures data using the Company’s current demographics and standard probabilities of employee turnover and the annual forfeiture rate based on the Company’s historical forfeiture rates. The Company determined the change in estimated forfeitures based on activity during the year-ended October 31, 2010 is immaterial to the consolidated financial statements as of October 31, 2010.

The Company retained an independent valuation firm to analyze its valuation methodology of the fair market value used in determining compensation expense under ASC 718. The independent valuation firm supported management’s assumptions that the fair market value of the Company’s common stock was reasonable.

The amount of unearned stock-based compensation currently estimated to be expensed from now through fiscal 2012 related to unvested share-based payment awards at October 31, 2010 is $188,782. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is approximately 1.5 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. In March 2009, the Company modified the exercise price of outstanding options granted in 2007. The additional incremental expense related to the modification was expensed over the remaining term. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional equity awards or assumes unvested equity awards in connection with acquisitions.

Segments of a Business Enterprise

The Company currently operates in one reportable operating segment. ASC 250, Disclosures about Segments of an Enterprise and Related Information, establishes standards for the way public business enterprises report information about operating segments in annual consolidated financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. ASC 250 also establishes standards for related disclosures about products and services, geographic areas and major customers. Although the Company had two operating segments at October 31, 2010, under aggregation criteria set forth in ASC 250, the Company operates in only one reportable operating segment.

F-15

Under ASC 250, two or more operating segments may be aggregated into a single operating segment for financial reporting purposes if aggregation is consistent with the objective and basic principles of ASC 250, if the segments have similar economic characteristics, and if the segments are similar in each of the following areas:

Because the Company meets each of the criteria set forth in ASC 250 and the two operating segments as of October 31, 2010 and 2009 share similar economic characteristics, the Company aggregates its results of operations into one reportable operating segment. The Company’s revenues are derived from geographic locations primarily located in the United States and Canada.

Recent Accounting Pronouncements

In July 2010, the FASB issued ASU No. 2010-20, Receivables - Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. This standard requires companies to improve their disclosures about the credit quality of their financing receivables and the credit reserves held against them. The guidance covers trade accounts receivables, financing receivables, loans, loan syndications, factoring arrangements, and standby letters of credit. The Company will adopt the provisions of this update in fiscal year 2011. Management is currently assessing the potential impact that the adoption of this new authoritative guidance could have on the Company’s financial statements.

In January 2010, the FASB issued ASU No. 2010-06, Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends ASC 820, Fair Value Measurements to require a number of additional disclosures regarding fair value measurements. This guidance requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance became effective for the Company with the reporting period beginning April 1, 2010, except for the Level 3 reconciliation disclosures that are effective for interim and annual periods beginning after December 15, 2010. Adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In October 2009, the FASB issued ASU No. 2009-14, Software (Topic 985) Certain Arrangements That Contain Software Elements – a consensus of the FASB Emerging Issues Task Force (“ASU 2009-14”). ASU 2009-14 amends the scope of software revenue guidance in FASB ASC Subtopic 985-605, Software-Revenue Recognition, to exclude tangible products containing software and non-software components that function together to deliver the product’s essential functionality and ASU No. 2009-13, Revenue Recognition (Topic 605) Multiple-Deliverable Revenue Arrangements — a consensus of the FASB EITF (“ASU 2009-13”). ASU 2009-13 eliminates the residual method of allocation and requires the relative selling price method when allocating deliverables of a multiple-deliverable revenue arrangement. ASU 2009-13 specifies the best estimate of a selling price is consistent with that used to determine the price to sell the deliverable on a standalone basis. ASU 2009-14 and ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, and must be adopted in the same period using the same transition method. If adoption is elected in a period other than the beginning of a fiscal year, the amendments in these standards must be applied retrospectively to the beginning of the fiscal year. Full retrospective application of these amendments to prior fiscal years is optional. Companies may elect early adoption of these standards. The Company does not believe the adoption of ASU 2009-14 and ASU 2009-13 will have a material impact on its consolidated results of operations and financial condition.

F-16

On September 28, 2009, the shareholders of Nexaira entered into a Share Exchange Agreement with Technology Publishing, Inc. (“TPI”), a Company publicly traded on the Over-the-Counter Bulletin Board (OTCBB) and its wholly-owned subsidiary, Westside Publishing Ltd, a private Canadian based company under common control, whereby the Company merged with and into TPI, with the Company remaining as the surviving corporation. The merger transaction contained several elements that were contemplated to be completed within seven business days from September 29, 2009. The series of transactions included 1) the purchase of Westside Publishing Ltd. by the former president and a shareholder of TPI for the return of 40,800,000 shares of common stock; 2) the return of 20,000,000 shares of TPI stock in exchange for indemnification to a former director for his actions as an officer and director of TPI; and 3) the mandatory conversion of Nexaira’s $1,600,000 convertible debt, that was assumed by TPI, into 19,250,000 shares of common stock.. The Company determined there were no amounts to record as a liability for the indemnification provided to the former director because of the limited operations. Because the acquisition was predicated on these transactions it was accounted for as one combined event. For financial statement reporting purposes, the merger was treated as a recapitalization with the Company deemed the accounting acquirer and TPI deemed the accounting acquiree under the purchase method of accounting in accordance with ASC 805-10-40, Business Combinations – Reverse Acquisitions. The reverse merger is deemed a capital transaction and the net assets of the Company (the accounting acquirer) are carried forward to TPI (the legal acquirer and the reporting entity) at their carrying value before the combination. The acquisition process utilizes the capital structure of TPI and the assets and liabilities of the Company which are recorded at historical cost. The equity of TPI is the historical equity of the Company retroactively restated to reflect the number of shares issued by TPI in the transaction.

Effective September 29, 2009, the closing date of the transaction:

Effective October 26, 2009 the merger was completed with TPI, a Nevada corporation which was incorporated solely to effect a change in TPI’s name from “Technology Publishing, Inc. to “Nexaira Wireless, Inc.”. The name change became effective with the OTCBB at the opening for trading on November 2, 2009 under the new stock symbol “NXWI”.

In connection with the closing of the Share Exchange Agreement, the officers of TPI resigned, with the Company’s officers and directors duly appointed.

Effective October 29, 2009, the Company entered into a Share Purchase Agreement with TPI’s former officer and director, whereby the Company divested Westside Publishing Ltd. as consideration for the cancellation of 40.8 million shares of the Company’s restricted common stock. In addition, on October 29, 2009, the Company entered into a return to treasury agreement with a former shareholder, whereby the former shareholder agreed to return 20,000,000 restricted common shares to the company for cancellation effective October 30, 2009.

As of October 31, 2009, $32,192 was outstanding to a former shareholder and director of Technology Publishing Ltd. related to short-term advance to the Company. As of October 31, 2010, $41,801 outstanding to the former shareholder and director was settled as additional paid-in capital as all final liabilities were resolved in connection with the Share Exchange Agreement entered into by the Company in September 2009. See Note 13 – Shareholders’ Deficit.

F-17

Property and equipment

Property and equipment consist of the following:

Depreciation expense for the years ended October 31, 2010 and 2009 totaled $118,334 and $118,619, respectively.

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

F-18

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income or loss by the weight-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potentially dilutive securities, which currently comprise of options and convertible debenture, are excluded from the diluted EPS computation in loss periods and when their exercise price is greater than the market price as their effect would be anti-dilutive.

F-19

A reconciliation of weighted-average basic shares outstanding to weighted-average diluted shares outstanding follows:

As of October 31, 2010, shares reserved for conversion of the convertible debenture, and the exercise of warrants to purchase common stock totaled 0 and 6,950,356, respectively. 1,129,034 shares are reserved for issuance upon the exercise of stock options granted to a lender and 15,000,000 shares are reserved for issuance upon the exercise of options granted under the Company’s Stock Option Plan, of which 10,106,250 are outstanding. 116,670 shares are reserved in connection with a consulting agreement entered into on March 22, 2010, and 1,000,000 shares are reserved for the convertible note payable agreement entered into on August 20, 2010. These were excluded from the calculation of diluted earnings per share as their effect was anti-dilutive. On December 17, 2010, the Company closed a private placement of 8,600,000 shares of common stock and issued 1,400,000 warrants in connection a placement fee and for ongoing investment banking and other financial advisory services. On January 13, 2011, the Company entered into a Debt Settlement and Subscription Agreement with a vendor for issuance of 1,500,000 and 2,357,406 shares of common stock to the vendor. See Note 18 – Subsequent Events. The effect of the issuance of these transactions were not included in calculation of basic and diluted loss per share at October 31, 2010, which would be approximately ($0.07) per share. As of October 31, 2009, shares reserved for the convertible debenture, warrants and options to purchase common stock totaled approximately 21,254,034, 2,012,500 and 8,400,000, respectively, and were excluded.

On June 19, 2007, the Company entered into a Convertible Loan Agreement with 0793296 B.C. Ltd, a related party (the “Lender”), for total borrowings of up to $3,000,000, of which $1,000,000 was advanced under the terms of the agreement on June 19, 2007. The convertible loan bears interest at 12% per annum, and matured one year from the date of the initial advance, and any subsequent advances thereon. The Lender had the option to convert all or part of the principal amounts advanced into one share for every $0.80 of the outstanding principal, for total up to 2,187,500 shares of the Company’s common stock. The convertible loan is secured by principally all of the Company’s assets, including the Company’s 100% ownership interest in its U.S. subsidiary.

On February 28, 2008, the Company entered into Loan Amending Agreement (“Amendment 1”) revising the conversion price of the principal amounts advanced under the Convertible Loan Agreement into one share for every $0.31 of the outstanding principal, for total up to 5,645,162 shares. Under Amendment 1, the Lender also advanced an additional $500,000 on March 5, 2008. The additional advance is subject to 12% interest, and is convertible upon the election of the Lender into one share for every $0.50 of the outstanding principal balance and accrued interest thereon.

On March 19, 2008, the Lender converted the original $1,000,000 advanced into 5,645,162 shares of common stock of the Company.

On July 3, 2008, the Company entered into a second Loan Amending Agreement (“Amendment 2”) to provide for a Bridge Credit Facility (“Credit Facility”) for maximum amount available of $500,000. The credit facility bears interest of 12% per annum, and is secured by accounts receivable. The facility was utilized to purchase inventory. Amendment 2 also revised the conversion price of the additional principal advanced and any advances under the Credit Facility, and any accrued interest thereon, at the option of the Lender from one share for every $0.50, as revised in Amendment 1, to $0.45. The Lender advanced $250,000 on July 11, 2008 and September 8, 2008, respectively, for total borrowings outstanding under the Credit Facility of $500,000 as of October 31, 2008.

F-20

Under Amendment 2, the Company also granted the Lender an option to purchase up to 400,000 shares of common stock at the exercise price of $0.50 per share. The option expires in two years from the date of Amendment 2. The Company recognized the fair value of the options granted to the Lender under the Black-Scholes model totaling $28,000 as debt discount.

On November 7, 2008, the Company entered into a Loan Amending Agreement (“Agreement 3”) converting the Bridge Credit Facility totaling $500,000 into a subsequent advance under the terms of the Convertible Loan Agreement. The Lender is entitled to convert principal and accrued interest thereon into one share of common stock for every $0.31. In addition, under Amendment 3, the Company cancelled the stock option agreement issued under Amendment 2 on July 3, 2008. The Company issued a new stock option agreement to purchase up to 1,129,034 shares of common stock at the exercise price of $0.31. The options expired on November 7, 2010. The Company recognized the fair value of the cancelation and reissuance of the options granted to the Lender under the Black-Scholes model totaling $25,806 as debt discount. On December 17, 2010, the Company extended the expiration date of the option to December 17, 2012. See Note 18 – Subsequent Events.

On November 24, 2008 and January 26, 2009 the Company borrowed an additional $150,000 and $200,000 under the Convertible Debenture Agreement, for total borrowings of $1,350,000 (the “Pre-March Advances”). On March 27, 2009, the Company borrowed an additional $600,000 (the “March Advance”) under the Convertible Debenture agreement.

On June 29, 2009, the Company entered into a Loan Amending Agreement (“Agreement 4”) to revise the conversion price of the outstanding principal and accrued interest thereon into one share of common stock for every $0.20 for the Pre-March advances. Amendment 4 provides for conversion of the March advance into one share of common stock for every $0.10. Amendment 4 further revises the expiration date of the Lender’s right to convert outstanding principal into shares of the Company’s company stock conversion date to June 30, 2010.

In consideration of the Lender entering into Amendment 4, the Company granted the Lender warrants to purchase up to 875,000 shares of the Company’s common stock at a purchase price of $0.10 per share for period of two years from the issuance date of the warrants. The Company determined debt discount in connection with the warrants granted to the Lender was immaterial under the Black-Scholes model.

Management performed an analysis of the convertible debt and the significant transaction dates above in connection with the stock options, and determined the convertible debt did not contain a beneficial conversion feature, as originally issued or amended, and that the fair value of the stock options granted are not material to the consolidated financial statements.

On November 10, 2009, $1,600,000 in convertible debt held by various lenders was converted into 19,250,000 restricted shares of the Company’s common stock at a conversion price of $0.083117 per share in connection with the Share Exchange Agreement effective September 29, 2009. The Conversion price was determined based on the average conversion price of the Amendment 4 revision price of every $0.20 for the Pre-March advances and $0.10 conversion price for the March advance, or $0.15, and 11,000,000 shares based on total debt of $1,600,000 converted.

On February 23, 2010, a lender converted the remaining $350,000 of convertible debt into 700,000 units at $0.50 per unit. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of the Company at a price of $1.00 per share until February 23, 2012. The units were issued pursuant to a debt conversion agreement dated February 23, 2010.

As of October 31, 2010, accrued interest payable outstanding in connection with the convertible debentures totals $98,861 and included in accrued expenses and other current liabilities as interest payable.

The Company entered into short-term promissory note agreements with unrelated parties for total of $1,150,000 during the year ended October 31, 2010 for working capital purposes. The promissory note agreements are due on demand and bear interest at 12% per annum. On May 2, 2010, the Company repaid $200,000, plus accrued interest of $6,181, to two lenders in connection with short-term promissory note agreements entered into with unrelated parties for working capital purposes. As of October 31, 2010, total amount outstanding under the short-term promissory note agreements is$950,000. Accrued interest payable outstanding in connection with the promissory note agreements total $36,790 and is included in accrued expenses and other current liabilities as interest payable.

F-21

On March 10, 2009 the Company entered into a Memorandum of Workout Agreement and Secured Promissory Note Agreement (the “Note Agreement”) with a key supplier (the “Supplier”). Under the terms of the Note Agreement the Company converted $938,296 of accounts payable due to the Supplier into a short-term note payable. The Secured Promissory Note Agreement (the “Note Agreement”) called for four consecutive monthly payments of $200,000 payable beginning March 31, 2009, with final payment of $138,296 payable on July 31, 2009. The Note Agreement bears interest of 10% per annum, payable monthly in arrears. The interest increases to 12% per annum in event of default. The Memorandum of Workout Agreement also established new credit line terms for inventory purchases for up to $500,000. The Note Agreement is secured by the Company’s entire inventory acquired from the Supplier prior to and after the date of the Note Agreement. The Note Agreement was subordinated to the Convertible Debenture due 0793296 B.C. Ltd. Payments under the Note Agreement totaled $300,000 through September 30, 2009, with $638,296 outstanding under the Note Agreement. The Convertible Debenture was converted on September 29, 2009 and February 23, 2010 into 19,250,000 and 700,000 restricted shares of the Company’s common stock, respectively. See Note 7 –Bridge Credit Facility and Convertible Debenture. As of September 30, 2009, $357,000 was outstanding under the credit line.

On September 30, 2009, the Company entered into an Amended and Restated Workout Agreement and Amended and Restated Secured Promissory Note Agreement (the “Amended Note Agreement”) with the Supplier for total principal due of $935,296, which comprises of $638,296 outstanding under the original Note Agreement and $357,000 due under the credit line, less the first payment due of $60,000. Payments of $60,000 are due at the end of each month until the Amended Note Agreement matures on March 31, 2011, or the Company prepays the balance due, whichever occurs first.

In connection with the Amended Note Agreement the Company issued warrants to purchase up to 1,312,500 shares of the Company’s common stock at exercise price of $0.20 per share. The warrants expire September 30, 2011 and provide for rights in event of change in ownership. The Company recorded the fair value of the warrants as determined by the Black-Scholes model of $39,375 as debt discount. As of October 31, 2010 total outstanding under the Note Agreement is $576,449, net of debt discount of $9,936. Accrued interest payable outstanding in connection with the Note Agreement totals $25,383 and is included in accrued expenses and other current liabilities as interest payable.

On January 13, 2011 the Company entered into a Debt Settlement and Subscription Agreement with the Vendor. Under the terms of the agreement, the Company issued to the Vendor 1,500,000 and 2,357,406 shares of common stock of the Company at a deemed price of $0.10 and $0.20 per share, respectively, as full settlement of $150,000 and $471,481, respectively, of the outstanding debt and accrued interest thereon as of January 13, 2010. See Note 18 – Subsequent Events.

On August 20, 2010 the Company entered into a 10% Convertible Note Agreement with an investor for total proceeds of $400,000, less $8,500 debt issuance fees which is amortized over twelve months to July 31, 2011. The Convertible Note Agreement bears interest at 10% per annum, in which $8,000 is included in interest and other expense in the Company’s Consolidated Financial Statements at October 31, 2010. The convertible note agreement matures July 31, 2011. The note holder has the option after six months following the issuance date to convert the outstanding principal amount under the Convertible Note Agreement, together with unpaid interest thereon, into the Company’s common stock at a conversion price equal to the lesser of (i) $0.50 and (ii) 80% of the average of the three lowest daily dollar volume-weighted average sale price (“VWAPS”) for the Company’s common stock on any particular trading day during the twenty (20) consecutive trading days immediately preceding the applicable conversion date on which the Holder elects to convert all or part of the note. Total amortization expense in connection with the debt issuance costs at October 31, 2010 is $1,795 and is included in interest and other expense in the Company’s Consolidated Statements of Operations.

The Company determined that the VWAP contained certain price protection features and constituted an embedded derivative. Using the Monte Carlo Valuation Model, the fair value of the embedded derivative was determined to be $121,249. The Company’s stock price on August 20, 2010 was $0.33, risk-free discount rate of 3.38% and volatility of 140% was used to obtain fair value as of August 20, 2010. Accretion of the debt discount associated with the embedded derivative totaled $48,298 as of October 31, 2010 and is included in interest and other expense in the Company’s Consolidated Statements of Operations.

F-22

As of October 31, 2010, the Company’s stock price was $0.14, risk-free discount rate of 3.64% and volatility of 140% was used to obtain fair value of $154,615, resulting in the change in fair value of $33,366 recorded as other expense in the Company’s Consolidated Statements of Operations as of October 31, 2010.

Under the scope of ASC 815-10, the freestanding detachable warrants issued in connection with the issuance of the debt instrument are not considered to be derivative instruments. Under the Black-Scholes model, the Company determined the fair value of the warrants is $49,458, which is recorded as debt discount and to be accreted to interest expense over twelve months to July 31, 2011. Accretion of the debt discount associated with the warrants totaled $10,435 as of October 31, 2010 and is included in interest and other expense in the Company’s Consolidated Statements of Operations.

In March 2006, the Company entered into a term loan agreement with Business Development Bank of Canada (“BDC”) for total borrowings of $245,375 ($250,000 Canadian dollars). The loan matures in July 2012, calls for monthly principal payments of $2,729 ($2,780 Canadian dollars) and bears interest at the Bank’s Floating Base Rate plus 3% per annum (7.25% and 9% at October 31, 2010 and 2009, respectively). Two former officers of the Company provided a personal guarantee of the outstanding loan amount. This personal guarantee was lowered to 25% of the total loan amount effective May 7, 2007. The term loan agreement contains various covenants including requirements for the Company to meet certain financial ratios, of which the Company is not in compliance with as of October 31, 2010. Therefore, the entire balance outstanding of $56,666 as of October 31, 2010 is shown as current liability in the consolidated financial statements.

Annual future minimum payments under the Company’s long-term debt agreement with BDC as of October 31, 2010 (U.S. dollars) are as follows:

During the year ended October 31, 2010, 0793296 B.C. Ltd, a related party of the Company, advanced $362,000 under working capital loan agreements. The loans bear interest at the rate of 12% per annum. As of October 31, 2010 $362,000 is outstanding under the working capital loan agreements. Accrued interest payable outstanding in connection with the working capital loan agreements total $26,566 and is included in accrued expenses and other current liabilities as interest payable.

As of October 31, 2009, $681,349, which is net of debt discount of $6,046, was outstanding under the working capital loans from related parties, for total proceeds in the amount of $687,395 which is comprised of the following:

The Company issued warrants to the Factoring Co. to purchase up to 700,000 shares of the Company’s common stock for eighteen months from the date of investment at $0.20 per share. The Company recorded the fair value of the warrants under the Black-Scholes model as debt discount totaling $12,000. Accretion of the debt discount totaled $6,045 and $5,955 as of October 31, 2010 and 2009, respectively. On January 14, 2011, the Board of Directors extended the expiration dates of the warrants from January 15, 2011 to January 15, 2013. See Note 18 – Subsequent Events.

On January 6, 2010, the Company also converted a promissory note payable agreement and interest payable thereon, from a related party totaling $211,837 into 423,674 units at $0.50 per unit pursuant to a debt conversion agreement

These shares were issued in connection with a non-brokered private placement of 1,404,523 units, at $0.50 per unit. Each unit consists of one common share and one non-transferable common share purchase warrant that entitles the holder to purchase one additional share of common stock at a price of $1.00 per share until January 6, 2012. See Note 13 – Shareholders’ Deficit.

As of October 31, 2009, $32,192 was outstanding to a former shareholder and director of Technology Publishing Ltd. related to short-term advance to the Company. As of October 31, 2010, $41,801 outstanding to the former shareholder and director was settled as additional paid-in capital as all final liabilities were resolved in connection with the Share Exchange Agreement entered into by the Company in September 2009. See Note 3 – Share Exchange Agreement.

The following table is a summary of the Company’s non-brokered private placement subscriptions, debt conversions, and issuance of common stock in connection with settlement of accounts payable and consulting agreements as of October 31, 2010:

(1) On January 6, 2010 the Company settled a $200,000 short-term note in connection with a subscription agreement received from a third party in October 2009.

Private Placements

From November 1, 2009 to October 31, 2010, pursuant to private placement subscription agreements, the Company closed non-brokered private placements for total cash proceeds of $1,300,000. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of the Company at a price of $1.00 and $1.50 per share, expiring January 6, 2012 to April 29, 2012. The Company issued the units to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

F-24

Conversion of Debt

On November 10, 2009, $1,600,000 in debt held by various lenders was converted into 19,250,000 restricted shares of the Company’s common stock at a conversion price of $0.083117 per share in connection with the Share Exchange Agreement effective September 29, 2009. The Conversion price was determined based on the average conversion price of the Amendment 4 revision price of every $0.20 for the Pre-March advances and $0.10 conversion price for the March advance, or $0.15, and 11,000,000 shares based on total debt of $1,600,000 converted. See Note 7 –Convertible Debenture. The Company issued the units to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

On January 6, 2010, the Company also converted a promissory note payable agreement and interest payable thereon, from a related party totaling $211,837 into 423,674 units at $0.50 per unit pursuant to a debt conversion agreement. In addition, the Company also converted promissory notes payable agreements and interest payable thereon, from two lenders totaling $290,425 into 580,849 units at $0.50 per unit pursuant to debt conversion agreements. See Note 12 –Working Capital Loans. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of the Company at a price of $1.00 per share, expiring January 6, 2012. The Company issued the units to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

On February 23, 2010, a lender converted the remaining $350,000 of convertible debt into 700,000 units at $0.50 per unit. Each unit is comprised of one common share and one common share purchase warrant. Each non-transferable warrant entitles the holder to purchase one additional share of common stock of the Company at a price of $1.00 per share until February 23, 2012. The units were issued pursuant to a debt conversion agreement dated February 23, 2010. The Company issued the units to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”).

For the years ended October 31, 2010 and 2009, interest expense incurred in connection with the convertible debenture totaled $35,231 and $203,149, respectively. Interest paid to the Lender was $80,000 and $83,722 for the years ended October 31, 2010 and 2009, respectively.

Settlement of Accounts Payable

On May 17, 2010, the Company entered into debt conversion subscription agreements whereby $21,485 included in accounts payable as of April 30, 2010 was converted into 94,001 common shares. On May 26, 2010, pursuant to board approval, the Company issued the shares to 3 U.S. accredited investors (as that term is defined in Regulation S of the Securities Act of 1933, as amended (the “Securities Act”)) relying on Regulation S and/or Section 4(2) of the Securities Act.

Consulting Agreements

On March 17, 2010, the Company entered into a consulting agreement with a consultant to assist the Company in its private placement efforts. The fixed fee consulting agreement calls for payment of $85,000 over the four month service period to be paid by the issuance of 200,000 restricted shares of the Company’s common stock as total consideration. . The Company expensed $50,000 in connection with the fair value of the services performed as of that date, which is included in selling, general and administrative expense for the year ended October 31, 2010. On May 26, 2010, the Company issued 100,000 restricted shares in connection with this agreement. The agreement was cancelled effective May 31, 2010.

F-25

On March 22, 2010, the Company also entered into a consulting agreement with a consultant to provide investor relation services to the Company and assist in its private placement efforts. The fixed fee consulting agreement is effective as of April 1, 2010, and calls for payment of $61,200 over a 12-month period to be paid by the issuance of 200,000 restricted shares of the Company’s common stock as total consideration. The agreement is cancelable with 30 days notice. As of October 31, 2010, the Company expensed $36,000 in connection with the fair value of the services performed as of that date, which is included in selling, general and administrative expense for the year ended October 31, 2010. The Company expects to expense the fair value of the services at the end of each milestone service period performed based on the total agreed upon contract price of $61,200 under the agreement through March 31, 2011. As of October 31, 2010, 83,330 restricted shares have been issued by the Company in connection with this agreement. Accrued liabilities include $12,000 for 33,337 restricted shares are due to the consultant as of October 31, 2010, but not issued.

Preferred Stock

On October 5, 2010 the shareholders of the Company approved to amend and restate the articles of incorporation to authorize 100,000,000 shares of preferred stock of the Company with a par value of $0.001 per share and provided that the board of directors be authorized to prescribe the series and the number of the shares of each series of preferred stock and the voting powers, designations, preferences, limitations, restrictions and relative right of the shares of each series of preferred stock.

Shares Reserved for Future Issuance

The Company is required to reserve and keep available of its authorized, but unissued shares of common stock an amount sufficient to effect the conversion of the outstanding Convertible Note Payable, warrants, plus shares granted and available for grant under the Company’s stock option plans, and shares due in connection with consulting agreement. As of October 31, 2010, shares reserved for future issuance comprised of the following:

Stock Option Plans

On March 31, 2009, the Board of Directors of the Company cancelled all options previously granted under a 2007 Plan, and adopted the 2009 Employee Stock Option Plan providing for granting of up to 11,375,000 stock options to eligible officers, directors, senior management, employees and consultants of the Company. The new options were re-priced at an exercise price of $0.15, and retained their original issue dates and vesting schedules. The expiration date of the options was extended two years. Under ASC 718, the Company measured incremental compensation cost for the replacement stock options as the excess of the fair value of the replacement stock options over the fair value of the cancelled stock option at the cancelation date. The total compensation cost measured at the date of the cancellation and replacement was recognized as the portion of the grant-date fair value of the original award for which the requisite service is expected to be rendered as of March 31, 2009, plus the incremental cost resulting from the cancellation and replacement.

On September 28, 2009, pursuant to the Share Exchange Agreement entered into with TPI, the Company approved a Stock Option Plan (the “New 2009 Plan”) authorizing the grant of up to 15,000,000 stock options, the exercise of which is subject to shareholder approval. In conjunction with the reverse acquisition with TPI, the New 2009 Plan replaced the 2009 Plans that were approved on March 31, 2009. Under the terms of the new 2009 Plan, and pursuant to the terms to the Share Exchange Agreement, the Company granted 8,400,000 stock options to its employees, officers, directors, and consultants effective October 8, 2009. The Stock Option Plans provide for the granting of equity awards, including restricted stock and incentive and nonqualified stock options to purchase common stock, to employees, directors, officers and independent consultants of the Company. The options vest over periods as determined by the Board of Directors, generally three years.

F-26

A summary of stock option activity for the year ended October 31, 2010 is as follows:

Stock based compensation expense included in selling, general and administrative expense for the year ended October 31, 2010 and 2009 totaled $163,190 and $15,871, respectively. The amount of unearned stock-based compensation currently estimated to be expensed from now through fiscal 2012 related to unvested share-based payment awards at October 31, 2010 is $188,782.

Convertible Debenture

On November 10, 2009 and February 23, 2010, $1,600,000 and $350,000, respectively, of the convertible debt was converted into 19,250,000 and 700,000, respectively, restricted shares of the Company’s common stock. As of October 31, 2010, accrued interest payable outstanding in connection with the convertible debentures totals $98,861 and included in accrued expenses and other current liabilities as interest payable. See Note 7 - Bridge Credit Facility and Convertible Debenture.

Consulting Agreement

On March 17, 2008, the Company entered into a Consulting and Management Services Agreement (the “Consulting Agreement”) with Level Ten Corporate Services, Inc. (“Level Ten”), as amended on June 1, 2008. The Company’s current Chief Financial Officer is also an officer of Level Ten. The Consulting Agreement provided for the Company’s Chief Executive Officer and Chief Financial Officer (the “Consultants”) to provide certain management consulting services to the Company. The Consulting Agreement called for a monthly retainer of $35,000, and was on a month to month basis. See Note 13 – Shareholders’ Equity. Effective January 31, 2010, the Consulting Agreement was terminated.

Fees payable for the Company’s CEO and CFO have been accrued through their own individual consulting companies. As October 31, 2010 and 2009, deferred consulting fees outstanding totaled $562,769 and $179,025, respectively, which is included in accrued expenses and other current liabilities in the Consolidated Balance Sheets. Total payments for management services under the Consulting Agreements for the years ended October 31, 2010 and 2009 was $150,000 and $240,975, respectively.

F-27

The Company recognizes deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes, as appropriate. Realization of future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate future taxable income.

Significant components of the Company’s deferred tax assets and liabilities for federal and state income taxes as of October 31, 2010 and 2009 are as follows:

Provision for income tax (benefit) expense as of October 31, 2010 and 2009 consists of the following:

F-28

The income tax provision (benefit) differs from the amount of income tax determined by applying the U.S. federal tax rate to pretax income as of October 31, 2010 and 2009 as follows:

In assessing the realizability of deferred income tax assets, management follows the guidance contained within ASC 740, which requires that deferred income tax assets or liabilities be reduced by a valuation allowance, if based on weight of available evidence, considering all relevant positive and negative, objective and subjective evidence, it is “more likely than not” that some portion or all of the deferred income tax assets will not be realized. The Company’s historical operating losses make it very difficult to meet the “more likely than not” standard required to conclude that its deferred tax assets will be fully utilized. Therefore, management has recorded a valuation allowance equal to the total deferred income tax assets of $3,211,000 and $1,115,000 as of October 31, 2010 and 2009, respectively.

The Company adopted the provisions of ASC 740 effective for the first quarter of fiscal year 2008. The Company does not expect the unrecognized tax benefits to significantly increase or decrease within the next twelve months. Based on management’s assessment, the Company doesn’t have any material unrecognized tax benefits at October 31, 2010 and 2009, respectively.

As of October 31, 2010, the Company had federal and California net operating loss carryforwards of approximately $7,829,000 and $7,825,000, respectively, which will begin to expire in fiscal 2028, respectively. As of October 31, 2009, the Company had $110,000 income tax receivable related to refunds due from the Internal Revenue Service for income taxes overpaid, which was received in fiscal year ended October 31, 2010.

The Tax Reform Act of 1986 contains provisions that limit the federal net operating loss carryforwards that may be used in any given year in the event of specified occurrences, including significant ownership changes. As a result of these provisions, utilization of net operating losses would be limited in the event of any future significant ownership change. Such a limitation could result in the expiration of the net operating loss carryforwards before utilization. The Company had such an ownership change related to its parent Nexaira Wireless, a Nevada corporation in connection with the Share Exchange Agreement. The company’s ability to utilize its net operating loss carryforwards may be subject to limitation provided under IRC 382. Management believes the impact of any limitation of net operating loss carryforwards is immaterial.

Operating Leases

The Company leases its San Diego, California facilities totaling approximately 10,000 square feet, under non-cancelable operating leases, with term converting to month-to-month effective January 31, 2010. Current minimum monthly payments total $12,130 under the lease agreements, with provision for annual increases. Effective January 1, 2011 the Company consolidated its operations to approximately 5,000 square feet of space at the monthly of rate $7,445 under a month-to-month agreement. See Note 18 – Subsequent Events.

On February 9, 2010, the Company entered into a 12-month non-cancelable lease for its Midwest sales office calling for monthly payments of $1,200.

In February 2010, the Company also entered into a month-to-month rental agreement for its corporate offices in Vancouver, British Columbia. The office space comprises of approximately 2,300 square feet and calls for base monthly rental payments of $3,960 ($4,035 Canadian Dollars), plus a pro-rata share of common area expenses.

F-29

On June 27, 2008, the Company entered into a into a 12-month lease for additional corporate housing calling for monthly payments of $2,950. The lease converted to month-to-month effective July 1, 2009 at the rate of $3,050 per month. The Company terminated this lease effective August 31, 2010.

Annual future minimum payments under the Company’s operating lease agreements as of October 31, 2010 are as follows:

Total rent expense for the years ended October 31, 2010 and 2009 under the Company’s operating lease agreements was $238,120 and $201,189, respectively.

Contingencies

From time to time, the Company becomes involved in various investigations, claims and legal proceedings that arise in the ordinary course of business. These matters may relate to product liability, employment, intellectual property, tax, regulation, contract or other matters. The resolution of these matters as they arise will be subject to various uncertainties and, even if such claims are without merit, could result in the expenditure of financial and managerial resources. While unfavorable outcomes are possible, based on available information, the Company generally does not believe the resolution of these matters will result in a material adverse effect on the business, consolidated financial condition, or results of operations.

The Company established a 401(k) defined contribution retirement savings plan under which eligible U.S. employees may choose to defer a portion of their eligible compensation on a pre-tax basis, subject to certain IRS limitations. The 401(k) Plan qualifies under Section 401(k) of the United States Internal Revenue Code of 1986, as amended. The Company may at its sole discretion match employee contributions. The Company did not make matching contributions during the year ended October 31, 2010.

The Company has evaluated subsequent events, as defined by ASC 855, formerly SFAS 165, “Subsequent Events,” through the date that the financial statements are issued.

Note Payable to Vendor

On January 13, 2011, the Company entered into a Debt Settlement and Subscription Agreement with a vendor. Under the terms of the agreement, the Company issued to the vendor 1,500,000 and 2,357,406 shares of common stock of the Company at a deemed price of $0.10 and $0.20 per share, respectively, as full settlement of $150,000 and $471,481, respectively, of the outstanding debt and accrued interest thereon as of January 13, 2011. Effective the closing date of the transaction the Company will record a gain on the early extinguishment of the debt totaling $231,016.

Private Placement

On December 17, 2010, the Company closed a private placement of 8,600,000 shares of common stock at a purchase price of $0.10 per share for aggregate proceeds of $860,000. The Company issued 3,000,000 shares to two non-U.S. person (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended (the “Act”) and 5,600,000 shares to nine U.S. persons pursuant to Rule 506 of Regulation D and/or Section 4(2).

Additionally, 1,400,000 warrants were issued as a placement fee and for ongoing investment banking and other financial advisory services to three U.S. persons pursuant to Rule 506 of Regulation D and/or Section 4(2). The warrants are exercisable at a strike price equal to US$0.28 per share until November 18, 2013.

The effect of the issuance of the private placement transactions were not included in calculation of basic and diluted loss per share at October 31, 2010, which would be approximately ($0.07) per share had the issuance of private placement transaction been included.

F-30

Stock Options and Warrants to Related Party

On November 7, 2010, 1,129,034 stock options granted to a Lender and related party in November 2008 in connection with the Convertible Loan Agreement expired. On January 14, 2011 the company granted 1,129,034 warrants to purchase 1,129,034 shares of the Company’s common stock at the exercise price of $0.20 per share, expiring on January 15, 2013. The Company will recognize the fair value of the change under the Black-Scholes model totaling $55,809 effective December 17, 2010. See Note 7 – Bridge Credit Facility and Convertible Debenture.

On January 14, 2011, the Board of Directors extended the expiry dates of warrants, issued in August 2009 in connection with the borrowing of funds for working capital purposes, from January 15, 2011 to January 15, 2013.The funds were provided by 0840386 B.C. Ltd. and/or its nominees, 0793296 B.C. Ltd, and 0885084 Alberta Inc., a company related to the Company’s Chief Executive Officer, Chief Financial Officer, and other third party investors. See Note 12 – Working Capital Loans from Related Parties.

F-31

On January 4, 2010, as disclosed in our current report on Form 8-K as filed with the Securities and Exchange Commission on January 4, 2010, Manning Elliott LLP, Chartered Accountants (“Manning Elliott”), was dismissed as our principal independent accountant, and on January 4, 2010, we engaged, BDO Seidman, LLP as our principal independent accountant to audit our company’s annual consolidated financial statements for the year ending October 31, 2009. BDO USA, LLP were reappointed for the current year by our shareholders at our annual shareholders’ meeting held on June 22, 2010.

In connection with the change of accountants from Manning Elliott to BDO USA, there were no disagreements of the type described in Item 304(a)(1)(iv) of Regulation S-K.

ITEM 9A(T). CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our president, to allow timely decisions regarding required disclosure.

As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, our management, with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this annual report, being October 31, 2010. Our president and our chief financial officer evaluated our company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of October 31, 2010.

Based on this evaluation, these officers concluded that, as of October 31, 2010, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company’s management, including our president and chief financial officer, to allow timely decisions regarding required disclosure.

The conclusion that our disclosure controls and procedures were not effective was due to the presence of material weaknesses in internal control over financial reporting as identified below under the heading “Management’s Report on Internal Control Over Financial Reporting.” Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. Our company intends to remediate the material weaknesses as set out below under the heading, “Management’s Remediation Initiatives”.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.

The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant’s principal executive officer, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

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Under the supervision of our chief executive officer and chief financial officer, being our principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 31, 2010 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting was not effective as at October 31, 2010.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of our internal control over financial reporting as of October 31, 2010, we determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:

These control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements could not have been prevented or detected on a timely basis. As a result of the material weaknesses described above, we concluded that we did not maintain effective internal control over financial reporting as of October 31, 2010 based on criteria established in Internal Control—Integrated Framework issued by COSO. Our management, board of directors and audit committee are currently evaluating remediation plans for the above deficiencies. During the period covered by this annual report on Form 10-K, we have not been able to remediate the weaknesses described above. However, we plan to take steps to enhance and improve the design of our internal control over financial reporting. Our proposed plans are set out below under the heading, “Management’s Remediation Initiatives”.

Changes in Internal Controls

As discussed above, we conducted an evaluation of the effectiveness of our internal control over financial reporting during our most recent fiscal year end using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation using the criteria established, our management concluded that our internal controls over financial reporting were not effective as of October 31, 2010.

Management’s Remediation Initiatives

Although our company has been unable to meet the standards under COSO because of the limited funds that have been available to a company of our size and stage of development, we are committed to improving our financial organization. Under the corporate governance practices underway, the Board of Directors and management are indentifying ways to reduce the risk of the possibility that a material misstatement is prevented or detected on a timely basis.

As indicated in last year’s annual report, on October 26, 2009, we established an audit committee consisting of four directors, two of whom are independent directors, who oversee the establishment and monitoring of required disclosure controls and procedures and internal control over financial reporting. Effective January 25, 2011, a more comprehensive Audit Committee Charter was adopted, a copy of which is attached as Exhibit 99.1 to this Report. Messrs. Grey, Weinert, Sampson and Proceviat have acted as the members of the audit committee. Messrs. Grey and Weinert are independent as defined by Nasdaq Marketplace Rule 4200(a)(15) or National Instrument 52-110 as adopted by the British Columbia Securities Commission. The audit committee is directed to: review the scope, cost and results of the independent audit of our books and records; review the results of the annual audit with management; review the adequacy of our accounting, financial and operating controls; recommend annually to the board of directors the selection of the independent registered accountants; consider proposals made by the independent registered chartered accountants for consulting work; and report to the board of directors, when so requested, on any accounting or financial matters.

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It is our plans for 2011, to undertake to: (1) create a position to segregate duties consistent with control objectives, (2) increase our personnel resources and technical accounting expertise within the accounting function (3) augment our staff knowledge to ensure timely reporting and disclosure of complex accounting transactions and (4) prepare and implement sufficient written policies and checklists which will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.

We will continue to monitor and evaluate the effectiveness of our disclosure controls and procedures and our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. However, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks.

Attestation Requirement

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Our management’s report on internal controls over financial reporting was not subject to attestation by our independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only a management’s report in this annual report.

ITEM 9B. OTHER INFORMATION.

None.

PART III

Directors and Executive Officers, Promoters and Control Persons

Our directors and executive officers are as follows: