NEXAIRA WIRELESS INC. - FORM 10-Q

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EX-31.1 - CERTIFICATION - NEXAIRA WIRELESS INC.	d211783dex311.htm
EX-32.1 - CERTIFICATION - NEXAIRA WIRELESS INC.	d211783dex321.htm
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EX-32.2 - CERTIFICATION - NEXAIRA WIRELESS INC.	d211783dex322.htm
EX-31.2 - CERTIFICATION - NEXAIRA WIRELESS INC.	d211783dex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended July 31, 2011

¨	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)


Nevada		20-8748507
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1404 510 West Hastings Street Vancouver, B.C. Canada		V6B 1L8
(Address of principal executive offices)		(Postal Code)

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

(Former name, former address and former fiscal year, if changed since last report) N/A

Indicate by check mark whether the registrant (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 x No ¨

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 x No ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 80,727,569 common shares issued and outstanding as of September 20, 2011.

INDEX


		Page
*PART I.*	*FINANCIAL INFORMATION*

ITEM 1.	Financial Statements		3

	Condensed Consolidated Balance Sheets as at July 31, 2011 (unaudited) with comparative figures as at October 31, 2010 (audited)		4

	Condensed Consolidated Statement of Operations (unaudited) for the three months ended July 31, 2011 and 2010 and the nine months ended July 31, 2011 and 2010		5

	Condensed Consolidated Statement of Cash Flows (unaudited) for the nine months ended July 31, 2011 and 2010		6

	Condensed Consolidated Statement of Shareholders’ Deficit and Other Comprehensive Loss for the year ended October 31, 2010 (audited) and the nine months ended July 31, 2011 (unaudited)		7

	Notes to the Condensed Consolidated Financial Statements.		8

ITEM 2.	Management’s Discussion and Analysis or Plan of Operation		19

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk		38

ITEM 4.	Controls and Procedures		38

*PART II.*	*OTHER INFORMATION*		40

ITEM 1.	Legal Proceedings		40

ITEM 1A.	Risk Factors		40

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47

ITEM 3.	Defaults Upon Senior Securities		47

ITEM 4.	Removed and Reserved		47

ITEM 5.	Other Information		47

ITEM 6.	Exhibits		48

	SIGNATURES

PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

While the information presented in the accompanying interim condensed consolidated financial statements for the quarter ended July 31, 2011 is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period. These interim condensed consolidated financial statements follow the same accounting policies and methods of their application as our October 31, 2010 annual audited condensed consolidated financial statements. All adjustments are of a normal recurring nature. It is suggested that these interim condensed financial statements be read in conjunction with our October 31, 2010 annual audited consolidated financial statements.

NEXAIRA WIRELESS INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets


	July 31, 2011 (unaudited)			October 31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	13,369		$	107,727
Accounts receivable, net		315,829			200,416
Inventories, net		139,694			162,525
Prepaid financing costs		1,020,950			—
Prepaids and other current assets		93,427			94,406

Total current assets		1,583,269			565,074

Property and equipment, net		136,609			205,599
Other assets:
Software development costs, net		790,381			917,417
Patents and trademarks, net		83,272			100,616

Total other assets		873,653			1,018,033

TOTAL ASSETS	$	2,593,531		$	1,788,706

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Short-term promissory notes payable	$	988,871		$	950,000
Note payable to vendor, net		—			576,449
Accounts payable		731,745			729,854
Accrued payroll and related liabilities		187,010			453,625
Convertible notes payable, net		722,718			281,319
Derivative liabilities		1,753,062			154,615
Debt discount		(175,000	)		—
Promissory notes payable to related parties		412,000			412,000
Interest payable		324,102			195,796
Note payable to bank		34,225			56,666
Accrued board of directors fees		67,000			73,000
Deferred consulting and management fees		1,090,584			562,769
Accrued expenses and other current liabilities		448,035			280,564

Total current liabilities		6,584,352			4,726,657

Commitments and contingencies
Shareholders’ deficit:
Preferred stock, $0.001 par value:
Authorized shares – 100,000,000
Issued and outstanding – Nil		—			—
Common stock, $0.001 par value:
Authorized shares – 600,000,000
Issued and outstanding – 80,350,217 and 59,811,116, respectively		80,350			59,811
Additional paid-in capital		7,679,269			5,622,753
Accumulated deficit		(11,482,923	)		(8,488,905	)
Other comprehensive loss:
Foreign exchange translation		(267,518	)		(131,610	)

TOTAL SHAREHOLDERS’ DEFICIT		(3,990,821	)		(2,937,951	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	2,593,531		$	1,788,706

See Accompanying Notes to Consolidated Financial Statements

NEXAIRA WIRELESS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended July 31,						Nine Months Ended July 31,
	2011			2010			2011			2010
Revenues	$	408,768		$	270,305		$	947,826		$	1,301,696

Cost of product revenues		182,841			119,535			501,593			971,905
Amortization expense		46,849			33,387			156,753			74,632

Total cost of revenues		229,690			152,921			658,346			1,046,536

Gross profit		179,078			117,384			289,480			255,160
Operating expenses:
Research and development		145,236			285,707			437,100			707,583
Selling, general and administrative		867,020			863,513			2,465,128			2,746,446

Total operating expenses		1,012,256			1,149,220			2,902,228			3,454,446

Loss from operations		(833,178	)		(1,031,836	)		(2,612,748	)		(3,198,869	)

Other (expense) income:
Gain on settlement of note payable and accounts payable		—			—			253,569			—
Interest income		—			1,163			35,981			2,303
Interest, amortization of debt fees and other expense		(311,905	)		(39,424	)		(670,020	)		(179,983	)

Total other (expense) income		(311,905	)		(38,261	)		(380,470	)		(177,680	)

Loss from operations before income taxes		(1,145,083	)		(1,070,097	)		(2,993,218	)		(3,376,549	)

Income tax provision		—			1,145			800			1,945

Net Loss	$	(1,145,083	)	$	(1,071,242	)	$	(2,994,018	)	$	(3,378,494	)

Per share data:
Weighted average shares outstanding used in computation of basic and diluted net loss per share:
Basic and diluted		78,545,869			59,528,328			72,863,693			57,343,062

Net loss per share:
Basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.04	)	$	(0.06	)

See Accompanying Notes to Condensed Consolidated Financial Statements

NEXAIRA WIRELESS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended July 31,
	2011			2010
Cash flows from operating activities:
Net loss	$	(2,994,018	)	$	(3,378,494	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		291,269			169,894
Loss on disposal of fixed assets		—			650
Provision for bad debts		71,950			(13,000	)
Provision for inventory obsolescence		—			46,051
Warranty reserve		2,064			22,199
Stock-based compensation expense		239,107			112,921
Stock issued to consultants		—			74,000
Gain on settlement of note payable to vendor and disputed accounts payable		(210,182	)		—
Gain on derivative liabilities		(229,411	)		—
Accretion of discount on debt		201,144			19,173
Issuance of common stock warrants in connection with extension of convertible debt		27,762			—
Changes in operating assets and liabilities:
Accounts receivable		(187,362	)		17,454
Inventories		22,831			452,009
Prepaid financing costs		(1,020,950	)		—
Debt discount in connection with convertible debt		(175,000	)		—
Prepaids and other current assets		979			104,418
Accounts payable		1,890			13,897
Accrued expenses and other current liabilities		606,481			466,279

Net cash used in operating activities		(3,351,446	)		(1,892,549	)

Cash flows from investing activities:
Purchases of property and equipment		(29,545	)		(74,599	)
Software development costs		(40,530	)		(3,350	)
Patents and trademarks		(3,375	)		(14,551	)

Net cash used in investing activities		(73,450	)		(92,500	)

Cash flows from financing activities:
Proceeds from issuance of common stock		1,285,000			1,100,000
Increase in paid-in capital relating to loan commitment fees		1,589,621			—
Net proceeds from promissory note payable to third party		263,075			—
Proceeds from promissory note payable to related party		—			362,000
Repayment of promissory note from related party		—			(200,000	)
Repayment of note payable to vendor		—			(308,696	)
Proceeds from loan agreement		345,399			850,000
Repayment of note payable to bank		(8,976	)		(20,947	)
Advances from shareholder		(6,148	)		9,609

Net cash provided by financing activities		3,467,971			1,791,966

Effect of exchange rate changes on cash		(137,433	)		(13,945	)

Net decrease in cash and cash equivalents		(94,358	)		(207,028	)
Cash and cash equivalents at beginning of period		107,727			260,067

Cash and cash equivalents at end of period	$	13,369		$	53,039

See Accompanying Notes to Condensed Consolidated Financial Statements

NEXAIRA WIRELESS INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Shareholders’ Deficit and Other Comprehensive Loss

For the Year Ended October 31, 2010 and the Nine Months Ended July 31, 2011

(Unaudited)


	Common				Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total			Comprehensive Loss
	Stock		Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total			Comprehensive Loss
BALANCE OCTOBER 31, 2009		36,329,262	$	36,329	$	1,504,289		$	(75,264	)	$	(3,824,143	)	$	(2,358,789	)

Conversion of convertible debentures into common stock		19,950,000		19,950		1,930,050									1,950,000
Conversion of promissory notes payable to related party into common stock		423,674		424		211,413									211,837
Conversion of promissory notes payables to third parties into common stock		580,849		581		289,844									290,425
Issuance of common stock in connection with private placements		2,025,000		2,025		1,297,975									1,300,000
Issuance of common stock in connection with consulting agreements		183,330		183		79,817									80,000
Issuance of common stock in connection with settlement of accounts payable		94,001		94		21,391									21,485
Issuance of warrants in connection with convertible note payable						49,458									49,458
Purchase price adjustment in connection with Share Exchange Agreement with Technology Publishing, Inc.						41,801									41,801
Exercise of stock options		225,000		225		33,525									33,750
Stock-based compensation						163,190									163,190
Net loss												(4,664,762	)		(4,664,762	)	$	(4,664,762	)
Foreign exchange translation									(56,346	)					(56,346	)		(56,346	)

Total comprehensive loss																	$	(4,721,108	)

BALANCE OCTOBER 31, 2010		59,811,116		59,811		5,622,753			(131,610	)		(8,488,905	)		(2,937,951	)

Issuance of common stock in connection with private placements		12,850,000		12,850		1,272,150									1,285,000
Issuance of common stock in connection with settlement of note payable to vendor		3,857,406		3,858		381,884									385,742
Issuance of warrants for replacement of options previously issued in connection with the amended convertible debenture						81,615									81,615
Issuance of common stock in connection with consulting agreements		900,000		900		89,100									90,000
Issuance of common stock in connection with conversion of debt		2,931,695		2,931		293,134									296,066
Issuance of warrants in connection with private placement						(163,808	)								(163,808	)
Issuance of warrants in connection with extension of note payable maturity date						27,763									27,763
Issuance of warrants in connection with loan agreement						(1,664,050	)								(1,664,050	)
Warrant derivative liability in connection with convertible note payable						1,589,621									1,589,621
Stock-based compensation						149,107									149,107
Net loss												(2,994,018	)		(2,994,018	)	$	(2,994,018	)
Foreign exchange translation									(135,908	)					(135,908	)		(135,908	)

Total comprehensive loss																	$	(3,129,926	)

BALANCE JULY 31, 2011		80,350,217	$	80,350	$	7,679,269		$	(267,518	)	$	(11,482,923	)	$	(3,990,821	)

See Accompanying Notes to Consolidated Financial Statements

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended July 31, 2011 and 2010

(Unaudited)

1. THE COMPANY

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 wireline and wireless carriers, Managed Service Providers (MSPs), Value Added Resellers (VARs) and distributors. The Company also provides customization services, marketing tools, provision 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.

2. BASIS OF PRESENTATION

The accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of management, contain all adjustments, which include normal recurring adjustments, necessary to present fairly the financial position as of July 31, 2011, and the results of operations and cash flows for the nine months ended July 31, 2011 and 2010. The balance sheet as of October 31, 2010 is derived from the Company’s audited financial statements. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes thereto incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended October 31, 2010.

Certain information and footnote disclosures normally included in financial statements that have been prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these financial statements are adequate to make the information presented therein not misleading. For further information, refer to the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2010, as filed with the Securities and Exchange Commission.

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 liabilities, and warrants issued in connection with debt.

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.

3. 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 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. Depending upon market conditions, the Company has plans to raise between $2-4 million by the end of the calendar year 2011 through equity and favorable debt financing.

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. 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. 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, 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.

4. SIGNFIICANT ACCOUNTING POLICIES

Revenue Recognition

The Company’s revenues comprise of the following:

•

distribution of third party mobile wireless broadband, modules and router solutions, 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 ASC 605-10, Revenue Recognition, 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 considered ASC 985-605, Software Revenue Recognition applied to the revenue recognition of the Company’s newly developed products sold during the nine months ended July 31, 2011 and 2010. 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 ASC 605-10 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.

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.

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 July 31, 2011 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 note 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 July 31, 2011 and October 31, 2010. The Company’s embedded derivative liability measured at fair value on a recurring basis was determined using the following inputs:


	Fair Market Measurement at July 31, 2011
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Embedded derivative liability – convertible note payable	$	181,347	$	—	$	—	$	181,347
Warrant derivative liability – private placement	$	63,329	$	—	$	—	$	63,329
Embedded derivative liability – convertible note payable	$	115,660	$	—	$	—	$	115,660
Warrant derivative liability – loan agreement	$	1,333,881	$	—	$	—	$	1,333,881
Warrant derivative liability – private placement	$	58,845	$	—	$	—	$	58,845

Total derivatives	$	1,753,062	$	—	$	—	$	1,753,062

The fair value of the embedded derivative related to the issuance of the convertible note payable as of July 31, 2011 was $181,347. The Company’s stock price was $0.04, risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $22,124 recorded as other expense in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

The fair value of the derivative related to the price protection of warrants in connection with the issuance of common stock in a private placement as of July 31, 2011 was $63,329. The Company’s stock price was $0.04, risk-free discount rate of 0.46% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $(62,692) recorded as other income in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

The fair value of the embedded derivative related to the issuance of the convertible note payable as of July 31, 2011 was $115,660. The Company’s stock price was $0.04, risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $9,186 recorded as other expense in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

The fair value of the derivative related to the price protection of warrants related to the issuance of warrants in connection with the convertible note payable as of July 31, 2011 was $1,302,463. The Company’s stock price was $0.04, risk-free discount rate of 0.55% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $(180,684) recorded as other income in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011. The fair value of the derivative related to the price protection of warrants issued in connection with July 22, 2011 Private Placement as of July 31, 2011 was $58,944. The Company’s stock price was $0.04, risk-free discount rate of 0.55% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $(15,484) recorded as other income in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

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


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivative Liabilities
	July 31, 2011 (unaudited)			October 31 2010
Balance beginning of period	$	154,615		$	—
Warrant derivative in connection with price placements and loan agreements		1,859,175			121,249
Total unrealized loss (income) included in earnings		(260,728	)		33,366

Balance end of period	$	1,753,062		$	154,615

Concentration of Credit Risk

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. For the three months ended July 31, 2011, three customers accounted for 24%, 22% and 14% respectively, of the Company’s revenues. Two customers accounted for 21%, and 11%, respectively, of the Company’s revenues for the nine months ended July 31, 2011. For the three months ended July 31, 2010, five customers accounted for 20%, 17%, 15%, 13% and 11%, respectively and two customers accounted for 36% and 12%, respectively, of the Company’s revenues for the nine months ended July 31, 2010.

Two customers accounted for 23%, and 36%, respectively, of trade accounts receivable as of July 31, 2011. As of July 31, 2010, five customers accounted for 27%, 18%, 14%, 13% and 10% of outstanding trade accounts receivable.

The Company relied on one supplier to provide 92% of total inventory purchases for the three months ended July 31, 2011. For the nine months ended July 31, 2011, the Company relied on inventory purchases of 71% and 13% from two suppliers, respectively. The Company relied on two suppliers to provide 55% and 30% of total inventory purchases for the three months ended July 31, 2011 and three suppliers to provide 43%, 20% and 13% of total inventory purchases for the nine months ended July 31, 2010 and respectively.

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. As of July 31, 2011, software development costs in the amount of $790,381 includes $109,374 related to the development of NexWare™ Enterprise Pro/Business Class III product expected to be released in the second quarter of fiscal 2012. Accordingly, amortization has not begun on NexWare™ Enterprise Pro/Business Class III to date.

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. Amortization expense for the three months and nine months ended July 31, 2011 was $6,156 and $18,469, respectively. Amortization expense for the three months and nine months ended July 31, 2010 was $5,363 and $14,551, respectively.

5. CERTAIN FINANCIAL STATEMENT INFORMATION

Inventories, net

Inventories consist of the following:


	July 31, 2011 (unaudited)			October 31, 2010
Broadband cards	$	—		$	14,390
End of life inventory		98,742			100,207
Modules		—			35,740
Routers		100,063			101,320
Raw materials		43,107			13,457
Accessories and branding collateral		68,534			77,164

		310,446			342,278
Less allowance for obsolescence		(170,752	)		(179,753	)

	$	139,694		$	162,525

Property and equipment, net

Property and equipment consist of the following:


	July 31, 2011 (unaudited)			October 31, 2010
Computer equipment	$	203,899		$	201,906
Computer software and website development costs		119,093			119,093
Office and lab equipment		46,438			46,438
Furniture and fixtures		25,793			25,793
Leasehold improvements		17,947			17,947
Product tooling and moulds		115,369			87,816

		528,539			498,993
Less accumulated depreciation and amortization		(391,930	)		(293,394	)

	$	136,609		$	205,599

Depreciation expense for the three and nine months ended July 31, 2011 totalled $31,554 and $98,533, respectively. For the three and nine months ended July 31, 2010, depreciation expense was $27,704 and $87,700, respectively.

6. SUPPLEMENTAL CASH FLOW INFORMATION


	Nine months Ended July 31,
	2011		2010
Cash paid for interest	$	21,070		79,923

Cash paid for income taxes	$	800	$	1,945

Non-cash financing and investing activities:
Issuance of common stock in connection with settlement of note payable to vendor	$	385,742	$	—

Issuance of common stock in connection with settlement of accounts payable	$		$	21,485

Issuance of common stock in connection with consulting agreements	$		$	74,000

Issuance of warrants for replacement of options previously issued in connection with the amended convertible debenture	$	81,615	$	—

Issuance of warrants in connection with private placement	$	163,808	$	—

Issuance of warrants in connection with extension of maturity date of a convertible note payable	$	27,762

Issuance of warrants in connection with loan agreement	$	1,557,576

Derivative liability for warrants issued with private placement	$	130,630	$	—

Derivative liability for warrants issued with private placement	$	106,474

Conversion of convertible debenture into common stock	$	—	$	1,950,000

Conversion of promissory notes payable to related parties into common stock	$	—	$	211,837

Conversion of promissory notes payable to third parties into common stock	$	296,065	$	290,425

Issuance of common stock in connection with settlement of short-term borrowing advanced for subscription agreement	$	—	$	200,000

7. NET LOSS PER SHARE

Basic earnings per share (“EPS”) exclude dilution and are computed by dividing net income or loss by the weighted 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 a convertible debenture and warrants, 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.

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


	Three Months Ended July 31,				Nine Months Ended July 31,
	2011		2010		2011		2010
Basic weighted average common shares outstanding		78,545,869		59,528,328		72,863,693		57,343,062
Effect of dilutive securities:
Convertible debenture		—		—		—		—
Stock options		—		—		—		—

Diluted weighted average common and potential Common shares outstanding		78,545,869		59,528,328		72,863,693		57,343,062

As of July 31, 2011, shares reserved for the exercise of warrants totaled 19,537,723 and 15,000,000 shares are reserved for issuance upon the exercise of options granted under the Company’s Stock Option Plan, of which 9,410,417 are outstanding. In addition, 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.

8. 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 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. The Company recorded a gain on the settlement of this note payable of $231,016, which is included in gain on settlement of note payable and accounts payable in the Company’s Condensed Consolidated Statements of Operations.

9. CONVERTIBLE NOTE PAYABLE

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 was is amortized over twelve months to July 31, 2011. The Convertible Note Agreement bore interest at 10% per annum and was due to mature July 31, 2011. In connection with the Agreement, the Company issued 333,333 three year warrants to purchase shares of common stock with an exercise price of $0.15 per share. On March 21, 2011, the Company entered into an amendment with the lender to extend the maturity date of the note payable from July 31, 2011 to October 31, 2011. In exchange for the extension, the Company issued an additional 333,333 three year warrants to purchase shares of common stock with an exercise price of $0.15 per share. Using the Black-Scholes model, the Company determined the fair value of the 666,666 warrants is $27,762 which is recorded as interest expense in the period in the Company’s Condensed Consolidated Statements of Operations.

The note holder has the option after nine 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 (“VWAP”) 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 for the nine months ended July 31, 2011 is $6,706 and is included in interest and other expense in the Company’s Condensed 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 at July 31, 2011 was determined to be $181,347. The Company’s stock price on July 31, 2011 was $0.04. A risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value as of July 31, 2011, resulting in the increase in fair value for the three month period ended July 31, 2011 of $22,124, which was which was recorded as other expense in the Company’s Condensed Consolidated Statements of Operations for the nine months ended July 31, 2011. Accretion of the debt discount associated with the embedded derivative totaled $72,951 for the nine months ended July 31, 2011 and is included in interest and other expense in the Company’s Condensed Consolidated Statements of Operations.

Under the scope of ASC 815-10, the 333,333 warrants issued on August 20, 2010 in connection with the issuance of the debt instrument, as well as the 333,333 warrants issued on March 21, 2011, 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 $39,023 for the nine months ended July 31, 2011 and is included in interest and other expense in the Company’s Condensed Consolidated Statements of Operations.

On February 25, 2011, the note holder executed a Form of Conversion Notice for conversion of $10,000, plus accrued interest thereon totaling $518, into 142,030 shares of common stock of the Company. On March 24, 2011, the note holder converted $20,000, plus accrued interest thereon totaling $21,172.60, into 289,665 shares of common stock.

10. BRIDGE LOAN AND REVOLVING LOAN

On May 16, 2011, Nexaira, Inc., the Company’s US subsidiary, entered into a Loan Agreement with Centurion Credit Funding LLC (the ‘Lender”), pursuant to which the Lender provided a $300,000 bridge loan (the “Bridge Loan”) and up to a $2.2 million revolving purchase order financing loan (the “Revolving Loan”). The maturity date for the Bridge Loan is November 16, 2011 and the maturity date for the Revolving Loan is May 16, 2012. The Bridge Loan and Revolving Loan are repayable without penalty prior to maturity at the Company’s option. The Loan Agreement was executed solely in connection with the conversion provisions of the Loan Agreement, pursuant to which any obligations (including any accrued interest and fees) owing under the Loan Agreement are convertible into shares of common stock at a conversion price equal to 70% of the weighted average sale price per share over the thirty (30) day period prior to the conversion date. As at July 31, 2011 $300,000 was outstanding on the Bridge Loan and $52,716 was outstanding on the revolving loan.

Outstanding advances under the Bridge Loan and the Revolving Loan bear interest at the rate of 36% per annum. Following the occurrence and during the continuance of an event of default advances bear interest at the rate of 46% per annum.

The Revolving Loan provides for advances for inventory in an amount equal to the initial deposit required by a supplier in connection with the manufacture or supply of inventory (a “Deposit Revolving Advance”). Any outstanding balance of any Deposit Revolving Advance is due and payable on the earlier of receipt of funds from the applicable customer or 120 days after the making of such Deposit Revolving Advance. The Revolving Loan also provides for advances in an amount equal to the remaining amount due to a supplier for inventory manufactured or supplied by such supplier (a “Balance Revolving Advance”). Any outstanding balance of any Balance Revolving Advance shall be due and payable on the earlier of receipt of funds from the applicable customer or 60 days after the making of such Balance Revolving Advance.

Maturity of the Bridge Loan and the Revolving Loan may be accelerated if there is an event of default, as that term is defined in the Loan Agreement.

In connection with the Loan Agreement, the Company granted security over all of its assets and guaranteed repayment of all obligations owing under the Loan Agreement.

Also in connection with the Loan Agreement, the Company issued share purchase warrants to the Lender to acquire up to 15 million shares of common stock, 4 million of which were immediately exercisable and 11 million of which become exercisable as the rate of 1 million per month beginning on June 16, 2011 provided that there remains unpaid amounts under the Loan Agreement. All warrants become immediately exercisable if there is an event of default, as that term is defined in the Loan Agreement. Upon repayment of all obligations under the Loan Agreement, all share purchase warrants that have not yet become exercisable will expire. All warrants will be exercisable for a period of three years from the date that such warrants become exercisable. The exercise price is equal to $0.10 subject to adjustment from time to time. As of July 31, 2011, 6,000,000 million are immediately exercisable.

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 at May 16, 2011 was determined to be $1,483,147. The Company’s stock price on July 31, 2011 was $0.04. A risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value as of July 31, 2011, resulting in the decrease in fair value for the three month period ended July 31, 2011 of $180,684 which was recorded as other expense in the Company’s Condensed Consolidated Statements of Operations for the nine months ended July 31, 2011.

$106,474 relating to the loan conversion feature and $193,526 related to the warrants issued were treated as a debt discount amounting to $300,000. This discount will be amortized over the life of the Bridge Loan which is 6 months. At July 31, 2011, amortization of the discount of $125,000 was included in interest and other expenses. The balance outstanding of the discount as at July 31, 2011 was $175,000.

$1,289,621 related to the warrants issued to secure the loan have been treated as prepaid financing costs in relation to the Revolving Loan. These costs will be amortized over the 12 month term of the Revolving Loan. At July 31, 2011, amortization of these fees of $268,671 was included in interest and other expense. The balance of the prepaid financing costs after amortization was $1,020,950 as at July 31, 2011.

On May 16, 2011, the Company issued 350,000 warrants as a commission in connection with the Loan Agreement. The warrants are exercisable at any time up to May 16, 2014 at an exercise price of $0.15 per share. 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 at July 31, 2011 was determined to be $14,000. The Company’s stock price on July 31, 2011 was $0.04. A risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value as of July 31, 2011, resulting in the decrease in fair value for the three month period ended July 31, 2011 of $15,484 which was recorded as other expense in the Company’s Condensed Consolidated Statements of Operations for the nine months ended July 31, 2011.

11. SHAREHOLDERS’ DEFICIT

Non-brokered 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. 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”) 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 March 23, 2011, the Company closed a private placement consisting of 2,250,000 units for aggregate gross proceeds of $225,000. Each Unit consists of one common share in the capital of the Company at a purchase price of $0.10 per share and one common share purchase warrant exercisable at a strike price of $0.15 per share at any time until March 23, 2014. The 2,250,000 units were issued to four U.S. persons pursuant to Rule 506 of Regulation D and/or Section 4(2).

The Company determined that the adjustment feature within the warrants require the Company to grant additional warrants to each warrant holder in the case that any future grants by the Company have an exercise price below $0.15 constituted a derivative. Using the Monte Carlo Valuation Model, the fair value of the derivative was determined to be $126,021 at the March 23, 2011 issuance date. At July 31, 2011, the value was determined to be $63,329. The Company’s stock price on July 31, 2011 was $0.04. A risk-free discount rate of 0.46% and volatility of 130% was used to obtain fair value as of July 31, 2011, resulting in the decrease in fair value of $62,692 recorded as other income in the Company’s Condensed Consolidated Statements of Operations for the nine months ended July 31, 2011.

On July 22, 2011, the Company closed a non-brokered private placement consisting of 2,000,000 units for aggregate gross proceeds of $200,000. Each unit consists of one common share in the capital of the Company at a purchase price of $0.10 per share and one common share purchase warrant exercisable at a strike price of $0.15 per share at any time until July 22, 2014. The 2,000,000 units were issued to one US person pursuant to Rule 506 of Regulation D and/or Section 4(2).

The Company determined that the adjustment feature within the warrants require the Company to grant additional warrants to each warrant holder in the case that any future grants by the Company have an exercise price below $0.15 constituted a derivative. Using the Monte Carlo Valuation Model, the fair value of the derivative was determined to be $74,429 at the July 22, 2011 issuance date. At July 31, 2011, the value was determined to be $58,944. The Company’s stock price on July 31, 2011 was $0.04. A risk-free discount rate of 0.55% and volatility of 130% was used to obtain fair value as of July 31, 2011, resulting in the decrease in fair value of $15,484 recorded as other income in the Company’s Condensed Consolidated Statements of Operations for the nine months ended July 31, 2011.

Short Term Note Payable

On February 2, 2011, the Company entered into short-term promissory note agreement in the amount of $263,075 with an unrelated party, for working capital purposes. The promissory note agreement is due on demand and bears interest at 12% per annum.

Convertible Note Payable

On February 25, 2011, a convertible note holder delivered a notice of conversion with respect to $10,000 of the principal amount of a note, dated August 20, 2010, in the principal amount of $400,000 issued by the company to the note holder. Effective February 25, 2011, the $10,000, and $518 accrued interest thereon, were converted into 142,030 common shares of the Company’s stock at a conversion price of $0.074053 per share.

On March 22, 2011, the convertible note holder delivered a notice of conversion with respect to $20,000 of the principal amount of the note, dated August 20, 2010. Effective March 23, 2011, the $20,000, and $1,172.60 accrued interest thereon, were converted into 289,665 common shares of the Company’s stock at a conversion price of $0.0731 per share. See Note 9 – Convertible Note Payable.

Conversion of Short-Term Promissory Note Payable

On February 25, 2011, the Company entered into a debt settlement and subscription agreement with one investor whereby the Company agreed to issue 2,500,000 shares of the Company’s common stock in settlement of $250,000 of a $300,000 short-term promissory note payable by us to the investor. The shares were issued at a price of $0.10 per share. On February 25, 2010 the Company issued the investor a note in the principal amount of $77,321with respect to the remaining principal plus interest payable on the debt as of that date.

Consulting Agreements

On February 24, 2011, the Company entered into a letter agreement with a financial advisor, whereby the advisor agreed to provide certain advisory services to the Company in consideration for the issuance of up to 1,800,000 shares of restricted common stock at a price of $0.10 per share, with the shares to be issued as follows: (a) 450,000 shares upon execution of the letter agreement; and (b) 150,000 shares at the end of each month starting on the last day of the fourth month through the twelfth month of the term of the agreement. Upon mutual agreement, the Company and financial advisor agreed to terminate the letter agreement on July 19, 2011 and entered into a return to treasury agreement on July 25, 2011 whereby 350,000 shares of the initial 450,000 shares issued were to be cancelled. These shares were cancelled and returned to treasury on August 12, 2011. See Note 13 – Subsequent Event.

Also, on February 24, 2011, the Company entered into a consulting agreement , whereby the consultant has agreed to provide certain consulting services to the Company in consideration for the issuance of up to 1,800,000 shares of restricted common stock at a price of $0.10 per share, to be issued as follows: (a) 450,000 shares upon execution of the consulting agreement; and (b) 150,000 shares at the beginning of each month starting on the last day of the fourth month through the twelfth month of the term of the agreement. Upon mutual agreement, the Company and consultant agreed to terminate the letter agreement on July 19, 2011 and entered into a return to treasury agreement on July 25, 2011 whereby 350,000 shares of the initial 450,000 shares issued were to be cancelled. These shares were cancelled and returned to treasury on August 12, 2011. See Note 13 – Subsequent Event.

On April 18, 2011, the Company entered into a letter agreement with a financial consultant, whereby the consultant agreed to provide certain advisory services to the Company in consideration for a $10,000 monthly retainer and the issuance of 500,000 options to purchase shares of common stock at a price of $0.15 per share, with the shares to vest over 18 months. The fair value of the options earned as of July 31, 2011 was approximately $1,000. The remaining unvested and unearned options will be valued each reporting period in accordance with ASC 505 and recorded in compensation expense.

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 July 31, 2011, shares reserved for future issuance are comprised of the following:


	Shares Reserved
Outstanding stock options under the 2009 Stock Option Plan		9,410,417
Additional shares available under the 2009 Stock Option Plan		5,589,583
Convertible note payable		1,666,666
Convertible promissory note dated July 28, 2011		8,688,525
Warrants issued in connection with convertible note payable		666,666
Warrants issued to related party in connection with debt		2,952,708
Warrants issued in connection with private placements		8,255,849
Warrants issued to vendor in connection with Promissory Note Agreement		1,312,500
Warrants issued in connection with Bridge & Purchase Order Financing		15,350,000

		53,892,914

Stock Option Plan

The Company’s 2009 Stock Option Plan provides for the granting of equity awards, including restricted stock and incentive and nonqualified stock options to purchase up to 15,000,000 shares of the Company’s common stock, to employees, directors, officers and independent consultants of the Company.

A summary of stock option activity in connection with the 2009 Stock Option Plan as of July 31, 2011 is as follows:


	Number Outstanding			Weighted Average Exercise Price
Options outstanding October 31, 2009		8,400,000		$	0.15

Granted		2,450,000		$	0.34
Exercised		(225,000	)	$	0.15
Forfeited		(518,750	)	$	0.15

Options outstanding October 31, 2010		10,106,250		$	0.20

Granted		500,000		$	0.15
Exercised		—			—
Forfeited		(1,195,833	)	$	0.15

Options outstanding July 31, 2011		9,410,417		$	0.20

Options exercisable July 31, 2011		8,289,583		$	0.18

Stock based compensation expense included in selling, general and administrative expense for the three and nine months ended July 31, 2011 totalled $49,673 and $149,107, 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 July 31, 2011 is $39,771.

12. RELATED PARTY TRANSACTIONS

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 recognized the fair value of the change under the Black-Scholes model totaling $81,615 effective December 17, 2010.

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.

Through March, April and May 2011, the Chief Executive Officer advanced the Company funds to cover operating expenses. As a July 31, 2011 the unpaid advances totaled $126,573. In addition, the Company uses a credit card provided by the Chief Financial Officer for business purposes. As at July 31, 2011, the balance owing was $37,478.

13. SUBSEQUENT EVENTS

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

On August 4, 2011, the Company closed a Securities Purchase Agreement transaction for proceeds of $53,000. This transaction provides for the issuance of an 8% convertible promissory note in the principal amount of $53,000 and has a maturity date that is nine months from the date of issuance of the Note. At any time on or after the date that is 180 days from the issue date, the principal amount and accrued interest will be convertible into shares of the Company’s common stock at a variable conversion price. In connection with the possible conversion of the Note the Company reserved 8,688,525 common shares.

On August 9, 2011, the convertible note holder delivered a notice of conversion with respect to $10,000 of the principal amount of the note, dated August 20, 2010. Effective August 9, 2011, the $10,000, and $950.68 accrued interest thereon, were converted into 388,139 common shares of the Company’s stock at a conversion price of $0.02820 per share. See Note 9 – Convertible Note Payable.

On February 24, 2011, the Company entered into a letter agreement with a financial advisor, whereby the advisor agreed to provide certain advisory services to the Company in consideration for the issuance of up to 1,800,000 shares of restricted common stock at a price of $0.10 per share, with the shares to be issued as follows: (a) 450,000 shares upon execution of the letter agreement; and (b) 150,000 shares at the end of each month starting on the last day of the fourth month through the twelfth month of the term of the agreement. Upon mutual agreement, the Company and financial advisor agreed to terminate the letter agreement on July 19, 2011 and entered into a return to treasury agreement on July 25, 2011 whereby 350,000 shares of the initial 450,000 shares issued were to be cancelled. The 350,000 shares were cancelled and returned to treasury on August 12, 2011.

On February 24, 2011, the Company entered into a consulting agreement , whereby the consultant has agreed to provide certain consulting services to the Company in consideration for the issuance of up to 1,800,000 shares of restricted common stock at a price of $0.10 per share, to be issued as follows: (a) 450,000 shares upon execution of the consulting agreement; and (b) 150,000 shares at the beginning of each month starting on the last day of the fourth month through the twelfth month of the term of the agreement. . Upon mutual agreement, the Company and financial advisor agreed to terminate the letter agreement on July 19, 2011 and entered into a return to treasury agreement on July 25, 2011 whereby 350,000 shares of the initial 450,000 shares issued were to be cancelled. The 350,000 shares were cancelled and returned to treasury on August 12, 2011

On August 30, 2011, the convertible note holder delivered a notice of conversion with respect to $10,000 of the principal amount of the note, dated August 20, 2010. Effective September 8, 2011, the $10,000, and $1,027.40 accrued interest thereon, were converted into 689,213 common shares of the Company’s stock at a conversion price of $0.016 per share. See Note 9 – Convertible Note Payable.

On September 12, 2011, the Company received $25,000 pursuant to a non-brokered private placement with a US accredited investor. The Company will enter into US subscription agreements at US $0.10 per unit, each unit compromising one common share and common share purchase warrant exercisable into one common share at the exercise price of US $0.15 at any time within three years from closing date. The offering is expected to close on or before September 26, 2011. These proceeds will be used for general working capital purposes.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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. This section discusses how forward-looking statements made by us in the MD&A and elsewhere in this report are based on management’s present expectations about future events and are inherently susceptible to uncertainty and changes in circumstances.

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Company Overview. This section provides an introductory overview and context for the discussion and analysis that follows in the MD&A.

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Results of operations. This section provides an analysis of our results of operations for the three months ended July 31, 2011 and 2010 and the nine months ended July 31, 2011 and 2010. A brief description is provided of transactions and events that impact the comparability of the results being analyzed.

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Outstanding Share Data. This section provides the designation and number or principal amount of (a) each class and series of voting or equity securities for which there are securities outstanding; (b) each class and series of securities for which there are securities outstanding if the securities are convertible into, or exercisable or exchangeable for, voting or equity securities and (c) each class and series of voting or equity securities that are issuable on the conversion, exercise or exchange of outstanding securities.

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Financial condition and liquidity. This section provides an analysis of our cash position and cash flows, as well as a discussion of our financing arrangements and financial commitments.

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Critical accounting policies. This section discusses those accounting policies that are both considered important to our financial condition and operating results and require significant judgment and estimates on the part of management in their application.

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for future operations. In some cases, you can identify forward-looking statements by the use of terminology such as “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terminology. Examples of forward-looking statements made in this quarterly report on Form 10-Q include statements about:

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Our future strategy discussed under the heading “Marketing Strategy”,

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Our belief that certain vertical sales channels may have an impact on our revenue plan;

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Our discussion regarding any future filings for patent protection;

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Our business plan for the next twelve months discussed under the heading “Plan of Operations”;

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Our ability to meet the demands from our growing customer base;

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Our encouragement by the positive trends established in terms of our month over month unit sales increases;

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Our intention to raise between $2-4 million by the end of the calendar year 2011 through equity and favorable debt financing.

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Our anticipated cash requirements for the next six and twelve months;

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:

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General economic and business conditions;

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We may not be able to obtain additional financing;

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We are dependent almost exclusively on outside capital;

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Our directors and officers have the ability to influence matters affecting our stockholders;

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Our financial results are subject to fluctuations;

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Our market share, revenues, and gross margin may decrease as a result of competition with new or established wireless communication companies;

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Our acquisition of additional assets and businesses may have a negative effect on our share price and results of operations;

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The loss of any of our significant customers could adversely affect our revenue and profitability;

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We are dependent on a single source supplier for some components, which increases the risk that we will be unable to obtain key materials required for our products;

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We rely on a limited number of third parties to manufacture our products, which increases the risk that we will be unable to obtain our products in a timely manner;

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Changing technology may reduce the value of our intellectual property;

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We may infringe on the intellectual property rights of others;

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Others may attempt to copy aspects of our products and technology without our permission;

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Exchange rates between the United States and Canada may affect our results of operations;

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We may be unable to retain our key employees;

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Government regulations could increase our cost of doing business;

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Our efforts to restructure our business may be unsuccessful; and

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The risks in the section of this quarterly report entitled “Risk Factors”,

any of which may cause our company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States and Canada, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

COMPANY OVERVIEW

We develop and deliver third and fourth generation (3G/4G) wireless routing solutions that offer speed, reliability and security for electronic transaction processing, smart energy management, business continuity, asset tracking and security and surveillance installations. Our routing solutions are simple to install, yet provide advanced management and business class features needed for stringent and sophisticated installations. 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 and can be used to provide complete device and network redundancy when wireline services are disrupted.

Our company was formed in 2005 as a value added wireless data device supplier and helped us develop considerable depth in the wireless industry. In 2008, we initiated the development of a new wireless routing platform and began writing our own proprietary firmware and software as we saw shortcomings in the flexibility and customization of commercially available products at the time. Our mandate was to provide compelling 3G/4G wireless routing solutions that were highly competitive in both function and price, but were capable of remote management with the ability to refresh the firmware and software on any of the access points once deployed in the field.

In March 2009, we announced the availability of our I3 GUI™ (patent pending) graphical user interface. The i3 GUI quickly and effortlessly displays a comprehensive real time view of router status, which helps reduce customer support requirements and maintenance costs.

In the last twelve months 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 2400 series M2M (machine to machine) platform. This highly robust and secure architecture incorporates security functionality and management capability historically only found in wireline routing hardware. Unlike many of our competitors, we own and control all aspects of the processor design, firmware and software and can rapidly develop features and functions necessary to meet our customer’s needs. This not only improves speed to market but enables us to customize our routing software for industry verticals such as electronic transaction processing, smart energy management, business continuity, asset tracking and security and surveillance installations.

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; all at a lower cost. Our customers have selected our routing solutions for their high availability WAN failover applications using a 3G or 4G 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, we believe there is potential revenue and sales growth to be realized. Additionally, we believe our customers can dramatically decrease their total cost of ownership (TCO), including management of their installed hardware base, by using our advanced firmware which can extend the shelf life of the 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 network agnostic broadband routers 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 network management capability and reliable operating design support the needs of the largest customer networks and easily rival existing wireline deployments but have all the benefits of wireless. Our proprietary wireless routing solutions, in our in house tests, outperform the competition at a lower price while maintaining significant gross margins.

Today, our solutions are being used for digital signage, ATM/Kiosk installations, Video Surveillance and Fleet/Asset Management applications in North America. We are also seeing interest from the rapidly growing Smart Grid sector.

In parallel with this product development we have recruited 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.

Our company is producing revenue and winning new customers each month. We expect router related sales in fiscal 2011 to triple over 2010. Approximately $9 million in equity and debt has been raised to date and management believes an additional $2 million of capital will be required by the end of our fiscal year ending October 31, 2011 to retire debt and provide the necessary working capital to achieve profitability on a monthly basis.

Marketing Strategy

We intend to:

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Continue to build on our Intellectual Property (IP) by designing and developing leading edge wireless routing solutions, including industry leading firmware and software (NexWare^TM)

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Price those solutions aggressively for rapid channel adoption

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Deliver routing platforms with all the security and management features historically only found on wireline routers

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Develop and deliver a suite of routing products through:

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Wireline Carriers

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Information Technology (IT) Resellers

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Wireless Operators

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Indirect Distribution Channels

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Strategic Partnerships

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Distributors

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Continue to develop expertise in specific vertical markets requiring secure wireless connections including ATM, Kiosk, CCTV, Secure LAN and remote electronic payment applications such as parking meters.

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To generate monthly recurring revenue, from the sale of our Network Management Services (NMS). .

Products and Services

Our highly customizable and secure routing solutions are designed to aggressively compete against both wireline and other wireless broadband data applications. By developing our own firmware and software and leveraging our deep understanding of wireline and wireless network security protocols we believe 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.

In addition to selling our many classes of routers, we have also developed a Network Management Services offering to allow our customers to monitor and manage all devices in their network whether provided by our company or others.

Powerful and Secure Software Tools

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Iconic images (similar to the iPhone) on the dashboard to improve customer confidence, ease of use, retention and use of router tools.

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Intuitive structure with simple and logical menu flow to accelerate customer understanding of router functions, minimize apprehension and providing a positive customer and user experience.

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Interactive and automated set-up wizard that displays auto-configuration results of the 3G or 4G connection and provides responsive functional tool tips, which minimizes user frustration and reduces product returns.

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The most advanced wireless features and performance in the industry such as self-provisioning and NexWare’s proprietary tuning algorithm which optimizes cellular bandwidth making it easy for end-users to take advantage of broadband speeds without delays, costs or complexities associated with wireline installs.

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Universal Plug in Play (UPnP) automatically connects any 3G or 4G data card to any cellular network.

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Enterprise-grade networking management and security capabilities include auto-failover to a 3G or 4G wireless network to back up the primary wireline network.

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Virtual router redundancy protocol (VRRP) eliminates single point of failure by providing redundancy for the wireline network and router.

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Virtual private networks (VPN) with internet protocol security (IPsec) pass-through and termination protocols provide business class security.

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Wi-Fi 802.11n 2x2 MIMO; statefull packet firewall technology; QOS (Quality of service) for business applications as well as support for General Routing Encapsulation (GRE).

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Wi-Fi scheduling and quality of service (QOS) provides the ability to segregate critical applications to ensure service quality.

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 supports VPNs with IPSec termination allowing up to five simultaneous encrypted sessions.

With the deployment of the new 3G+ and 4G networks and NexWare^TM secure business class capabilities customers with remote locations can use these new high speed cellular networks as their primary network connection, saving both time and money. The BCII connects seamlessly with HSPA and HSPA + networks from AT&T, Bell and Rogers and Telus as well as 4G networks including Sprint and Clear’s WiMax and Verizon’s 4G LTE (Long Term Evolution). The BCII with XtremeSpeed™ technology optimizes the network connection to the Internet and corporate networks to maximize speed and throughput for business applications. The ability to interface to both high speed 3G and 4G networks allows businesses to use bandwidth intensive applications such as video conferencing, video surveillance and voice over IP (VoIP) all with advanced security, speed and business class functionality.

HANA™

HANA (High Availability Network Adapter) provides our customers with access to the convenience and speed of the new high speed cellular networks for both existing and new business locations. HANA uniquely bundles all essential performance based cellular components including a directional antenna with 10dbi high gain (10x) for equipment rooms or noisy environments, an auto configurable network connection manager, and optional 3G/4G or dual mode modem for EVDO RevA, HSPA, HSPA+, WiMAX or LTE networks. All HANA products come in a ruggedized tamperproof enclosure and are also available with NEMA certification.

HANA provides immediate access to any cellular network for complete diversity to wired network infrastructure; industry standard VPN IPSec to ensure data security; IP 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 (Quality of service) for business applications as well as support for General Routing Encapsulation (GRE).

HANA 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, or where wireless signal strength is sub optimal.

SOHO

The new 3G/4G SOHO (Small Office Home Office) router is designed for the small office/home office market, the mobile worker and the road warrior. It provides instant and secure Wi-Fi service to a home or office without the need to run data cabling or subscribe to a wireline service.

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

Marketing and Sales Activities

We are seeing opportunities developing in multiple verticals across many market segments. Some select verticals listed below are where we are focusing our sales and marketing efforts and we believe that 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 segments:

Business Applications

Business Continuity – Existing wireline network customers of Tier One and Tier Two carriers want a wireless back-up 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 secure high availability and business continuity services no longer able to be met with expensive and antiquated dial backup solutions.

Wireline Replacement – We believe we can compete with traditional landline routing products and wireline services by offering higher function and lower cost than what service providers have available to choose from today. With the advent of 4G 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. It is our belief that businesses will continue to adopt wireless networking solutions to help run their business.

Small Medium Sized Enterprises (SMEs) – With over 27 million SMEs 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, we believe the reduced cost and improved performance of HSPA and HSPA + WiMAX and LTE networks will offer this segment a compelling alternative to wireline.

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.

SOHO (Small Office Home Office)

With millions working from home or on the road in hotel rooms, often in small teams of people, data cards with a one to one relationship to the wireless carrier are cumbersome and ineffective. A customer using our SOHO product can benefit from improved security and throughput speed at a lower price. One data card can serve the needs of many when connected with our router and it is more secure than a hotel lobby or coffee shop and one does not have to pay the often exorbident hotel rates for WiFi Internet access. US Government employees are strongly discouraged from connecting to their corporate email from unsecured WiFi hotspots. With the SOHO, we believe that they need not be concerned.

Speciality Verticals and M2M

Many installations currently exist that can take advantage of wireless networks connected using a Nexaira router, especially those applications that are difficult to reach with a wireline connection. One example is video survellence. Demand is ever increasing for CCTV cameras to be “networked” to allow for future viewing, but many installations cannot be reached with wireline connections or would be cost prohibitive even if they were. The market is also moving away from existing analog (dial-up) connections to IP Video connections using the Internet. According to IPMarketVideo.info IP video surveillance product sales will increase by 200% between 2010 and 2012, significantly disrupting and overtaking analog CCTV sales. Britain by all accounts has just 1% of the world’s population but accounts for over 20% of CCTV sales with an install base of more than 4.2 million. Another application where Nexaira routers are built directly into the device is ATMs (Automated Teller Machines). With over 500,000 ATM’s in North America alone, and an industry motivated to find a better solution because of the high cost and poor reliability of analog circuits or GPRS 2G radio signals, we believe a significant opportunity exists to migrate these existing devices to secure high speed wireless connections with our routing solutions. We have developed a specific solution to replace the function of the dial-up modem and analog circuit, without changing any of the other components in the ATM itself, while proving a faster more secure and more reliable wireless connections – at a lower cost.

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 three distinct categories:

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Legacy wireline providers who:

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treat wireless as a consumer routing application;

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use Cisco and Juniper type devices that can cost in excess of $1,000 per unit; and

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have limited cellular modem support or controlled modem distribution and pricing.

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Wireless device manufacturers targeting consumers that do not provide business class solutions including:

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reliability and high availability protocols;

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security and access protocols; and

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remote management.

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Expensive wireless router manufacturers that:

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charge more than double what the Company does for, what management believe, is equivalent functionality; and

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have brand awareness developed by costly sales and marketing budgets

Intellectual Property

We have filed trademark applications and secured trademark registrations in the United States and Canada 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;

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;

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 employees, including consultants.

Corporate History

We were incorporated in the State of Nevada on March 19, 2007 under the name of Technology Publishing, Inc. 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. (“Nexaira BC”), 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 BC 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 BC share.

Effective 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 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 believe our wireless devices are ideal for secure high availability wireless applications acting as the primary router on wireless or wireline networks or they can be used to provide complete device and network redundancy in failover/fail back applications and when connecting remote M2M devices such as ATMs and CCTV cameras.

Plan of Operations

After months of testing, field trials, customer driven enhancements and modifications, we believe that we not only understand the customer requirements and the market verticals but have better control on the business and the challenges facing it. Our planned revenue growth and ability to achieve profitability is expected to come as a result of (1) the introduction of our innovative wireless router products and solutions (2) marketing and sales of our suite of products catering to the growing 3G/4G wireless business segment (3) expansion of our sales and operations team focused on the wireless marketplace and (4) the capability of securing a continuous stream of router hardware components to meet current and future sales demand. This, of course, is dependent on our ability to attract and raise new growth and working capital.

Over the next twelve months, as part of our overall business strategy and success in raising capital to fund our growth plans, we intend to continue to develop new products, penetrate new market verticals, 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 including the addition of our new Network Management Services offering. We also intend to continue to strengthen our management by attracting seasoned executives with sales, marketing, finance and technical expertise from the wireless and wireline industries.

Our go-to-market strategy will focus on the following key areas:

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Working with wireless carriers to package WAN failover solutions to merchants experiencing service interruptions associated with wireline network failure.

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Continuing to build wireline and wireless carrier relationships with the goal of expanding relationships to approximately 300 carriers worldwide in five years.

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Continuing to identify and respond to our customers’ needs by introducing new product designs and solutions for 3G and 4G next generation networks.

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Engaging in business discussions with strategic partners in emerging nations where wireline infrastructure is not available.

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Establishing and developing relationships with manufacturers, VARS, distributors and managed service providers in North America.

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Leveraging customizable software and firmware to create new applications to enter new vertical markets.

We believe that we have established a strong foundation of IP (Intellectual Property), industry relationships, quality assurance methodologies and proprietary enabling technology, NexWare^TM, which can be readily adapted to meet the needs of specific partners and markets. Our objectives are to continue to build value inside the business and move our company to a profitable stage of growth. To support this growth, we believe we require approximately $2 million to drive our new business model, launch our new products, meet our customers’ needs and increase shareholder value.

We intend to use financing raised to launch our sales and marketing campaign, procure router hardware components and provide the necessary working capital to allow management to achieve profitability from operations.

RESULTS OF OPERATIONS

THREE AND NINE MONTHS ENDED JULY 31, 2011 COMPARED TO JULY 31, 2010

To ensure that we positioned our company for the future growth forecasted in the wireless 3G/4G sector, we turned our attention away from being solely dependent on the manufacturers we represented towards designing and developing our own products – specifically 3G/ 4G wireless routing firmware and hardware. This focus on developing and marketing our own line of products has impacted our revenues when compared to the same period in 2010. After 18 months of testing, field trials, customer driven enhancements and modifications, we believe that we not only understand the customer requirements and the market verticals but have better control on the business and the challenges facing it.

Revenues

Revenues for the three months ended July 31, 2011 were $408,768 compared to $270,305 for the three months ended July 31, 2010, an increase of $138,463 or 51.2%. Total revenues for the nine months ended July 31, 2011 amounted to $947,826 compared to $1,301,696 for the same period in 2010, a decrease of $353,870. The decline in revenues for the nine months ended July 31, 2011 was attributable primarily as a result of our decision to focus our resources on marketing our own line of products and move away from our dependence on the sale of low margin non-Nexaira products such as data cards and modules, which for the same period in 2010 amounted to $853,617 or 65.5% of our $1,301,696 revenues. By comparison, for the nine months ended July 31, 2011, of the $947,826 in total revenues, only $66,506 related to non-Nexaira products with the remaining $881,320 or 93% related to our own proprietary higher margin router related products. One of the key contributing factors of the lower sales in the nine months ended July 31, 2011, was the lack of inventory on hand to meet customer orders. We anticipate being able to utilize our $2.2 million purchase order financing line which we closed on May 16, 2011 more effectively in the future to enable our company to acquire inventory as needed to meet the demand of our suite of products from our growing customer base. On a more positive trend, our router related revenue for the nine months ended July 31, 2011 increased from $448,079 in 2010 to $881,320, up $433,241 or 96.7% during the same period in 2010.

Although the sales ramp has not materialized as quickly as we anticipated, we are encouraged by the positive trend being established in terms of our month over month unit sales increases and the increasing number of sales leads and deals. We are signing new contracts in the business application, small office/home office and specialty and machine to machine vertical markets. We believe the raising of additional working capital will allow our company to augment its sales and marketing resources required to support our planned future revenue growth.

Cost of Product Sales

Cost of product revenues before amortization of capitalized tooling and research and development costs of $46,849 for the three months ended July 31, 2011 amounted to $182,841 or 44.7% of product revenues compared to $119,535 or 44.2% of revenues for the same period in 2010. For the nine month period ended July 31, 2011, total cost of product revenue before amortization of capitalized tooling and research and development costs of $156,753 amounted to $501,593 or 53% of total revenues of $947,826. The higher cost of product revenues as a percentage of revenues reflects the liquidation of modules and data cards during the first and second quarter. Including amortization expenses noted above, total cost of revenues amounted to $229,690 for the three months ended July 31, 2011 and $658,346 for the nine month period ended July 31, 2011.

Gross Profit

Overall gross profit for the three and nine months ended July 31, 2011 was $179,078 and $289,480 respectively, or 44% and 30.5%, respectively, of total revenues from the sale of Nexaira routers, accessories and other manufacturer’s products that have lower margins. This compares to overall gross profit of $117,384 and $255,160, respectively, or 43% and 19.6%, respectively, of total revenues for the three months and nine months ended July 31, 2010. The lower gross profit for the nine month period ended July 31, 2011 was impacted as a result of liquidating end of life non-Nexaira products at low margins or at cost. More significant is that the gross profit on Nexaira product router related sales for the nine months ended July 31, 2011, excluding amortization expense of $156,753 (which is a non-GAAP measurement), amounted to $523,483 or 59% on router related revenues of $881,320. When amortization expense is included in the calculation, the gross profit on router product sales for the same period amounted to $366,730 or 41.6 % on router related revenues of $881,320. This increase in gross profit over the nine months of 2010 shows the positive impact of introducing our higher margin product line launched and marketed in fourth quarter of 2010 after receiving certification in May/June 2010.

Research and Development

Research and development totaled $145,236 and $285,707 for the three months ended July 31, 2011 and 2010, respectively, for a total decrease of $140,471. For the nine months ended July 31, 2011 and 2010, research and development totaled $437,100 and $707,583, respectively, for a total decrease of $270,483. This decrease reflects a temporary re-allocation of resources from strict research and development activities to building functions, features and enhancements into our commercial ready products and working collaboratively with our current and potential customers in the Specialty Channels in the Machine to Machine verticals. This collaborative work includes on-site field testing, resolution of hardware issues and sales, marketing and engineering support. We continue to believe that investments in research and development will drive innovation which is critical to our future growth in revenues and customers and our ability to compete effectively in the marketplace.

We capitalize 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 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 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 July 31, 2011, software development costs amounted to $790,381 which includes $109,374 related to the development of NexWare™ Enterprise Pro/BCIII products expected to be released in the second quarter of fiscal 2012. Accordingly, amortization has not begun on this product to date.

Selling, General and Administrative

Selling, general and administrative expenses amounted to $867,020 for the three months ended July 31, 2011 compared to $863,513 for the same period in 2010, an increase of $3,507. Included in the $867,020 expenses are approximately $100,000 in legal fees associated with the $300,000 bridge loan and $2,200,000 PO financing line negotiated in May 2011. For the nine months ended July 31, 2011, selling, general and administrative expenses amounted to $2,465,128 compared to $2,746,446 for the same period in 2010, for a total decrease of $281,318. The quarterly and nine month decrease in selling, general and administrative expenses is a result of cost cutting measures, including a reduction in the work force and a reduction in audit fees incurred during the same period in 2010. Included in selling, general and administrative expenses for the nine months ended July 31, 2011 is $149,107 for stock compensation expense compared to $112,921 for the same period in 2010.

Loss from Operations

For the three months ended July 31, 2011, our net loss from operations was $751,412, compared to $1,070,097 in the same period in 2010, a decrease of 29.8%. Our loss from operations amounted to $2,599,547 for the nine months ended July 31, 2011 compared to a loss of $3,376,549 for the same period in 2010, a decrease of 23%. The decrease in loss is primarily due to management reducing overhead and operating expense wherever possible.

Interest and Other Expense

On January 13, 2011, we entered into a Debt Settlement and Subscription Agreement with a vendor. The transaction was recorded as a gain on settlement of note payable totaling $231,016. The remainder was primarily attributed to settlement of disputed accounts payable to our benefit.

For the three and nine month period ended July 31, 2011, the Company recorded a gain of $35,981 on the decrease in fair value of the derivative related to warrants issued in connection with a private placement and an extension of the maturity date of a convertible note payable.

Interest and other expense for the three months ended July 31, 2011 amounted to $81,766 compared to interest and other expense of $39,424 for the same period in 2010. Interest and other expense for the nine months ended July 31, 2011 amounted to $276,349 compared to $179,983 for the nine months ended July 31, 2010. The increase is attributable to short term borrowings from a number of lenders and related parties during 2011 for general working capital purposes compared to the same period in 2010.

Included in interest and other expenses for the 3 months ended July 31, 2011 is amortization of the debt discount and prepaid financing costs associated with the Bridge and Revolving Loans in the amount of $125,000 and $268,671 respectively.

Net Loss

After including the amortization of the debt discount and prepaid financing costs noted above in the amount of $393,671 net loss after interest, other income and income taxes amounted to $1,145,083 for the three months ended July 31, 2011 compared to $1,071,242 for the same period in 2010. Net loss after interest, other income and income taxes amounted to $2,994,018 for the nine months ended July 31, 2011 compared to $3,378,494 for the same period in 2010. As our line of routers continues to gain acceptance in the marketplace, we believe our company’s losses will decrease over the next three quarters.

OUTSTANDING SHARE DATA

Common Shares

Total authorized share capital: 600,000,000 common shares @ U.S. $0.001 par value

COMMON SHARES


Total issued and outstanding as of October 31, 2009	36,329,262

Issued in connection with conversion of $1,600,000 convertible debenture on November 10, 2009	19,250,000
Issued in connection with $375,000 private placement and conversion of $502,262 debt on January 6, 2010	1,754,523
Issued in connection with $350,000 private placement and conversion of $350,000 convertible debenture on February 23, 2010	1,400,000
Issued in connection with $575,000 private placement on April 29, 2010	575,000
Issued on May 26, 2010 in connection with consulting agreement	16,666
Issued on May 26, 2010 in connection with consulting agreement	100,000
Issued on May 26, 2010 in connection with $21,487 debt conversion	94,001
Issued on June 17, 2010 in connection with consulting agreement	16,666
Issued on July 30, 2010 in connection with consulting agreement	33,332
Issued on August 12, 2010 in connection with exercise of stock options	65,000
Issued on September 22, 2010 in connection with consulting agreement	16,666
Issued on September 27, 2010 in connection with exercise of stock options	160,000

Total issued and outstanding as of October 31, 2010	59,811,116

Issued in connection with $860,000 private placement on December 17, 2010	8,600,000
Issued in connection with conversion of $150,000 debt on January 13, 2011	1,500,000
Issued in connection with conversion of $471,481 debt on January 13, 2011	2,357,406
Issued in connection with conversion of $250,000 debt on February 25, 2011	2,500,000
Issued in connection with an advisory consulting agreement on March 3, 2011	450,000
Issued in connection with a consulting agreement on March 3, 2011	450,000
Issued in connection with partial conversion of convertible note on February 25, 201	142,030
Issued in connection with partial conversion of convertible note on March 22, 2011	289,665
Issued in connection with $225,000 private placement on March 24, 2011	2,250,000
Issued in connection with $200,000 private placement on July 22, 2011	2,000,000

Total issued and outstanding as of July 31, 2011	80,350,217

Issued in connection with partial conversion of convertible note on August 9, 2011	388,139
Common shares cancelled and returned to treasury on August 12, 2011	(700,000	)
Issued on September 9, 2011 in connection with partial conversion of convertible note	689,213

Total issued and outstanding as of September 20, 2011	80,727,569

Common share issuances since October 31, 2010:

On December 17, 2010, as disclosed in our current report on Form 8K filed with the Securities and Exchange Commission (the “Commission”) on December 20, 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).

On January 13, 2011, as disclosed in our current Form 8K as filed with the Commission on January 20, 2011, we entered into a Debt Settlement and Subscription Agreement with a vendor whereby we issued 1,500,000 common shares at a price of $0.10 per share in settlement of $150,000 in outstanding account payable and 2,357,406 common shares at a price of $0.20 per share in settlement of $471,481 for the remainder of the outstanding account payable. We recorded a gain of $231,016 related to this settlement for the quarter ended January 31, 2011. We issued the shares to one U.S. person who is an accredited investor (as that term is defined in Rule 501 of Regulation D, promulgated under the Securities Act of 1933, as amended).

On February 25, 2011, as disclosed in our Form 8K as filed with the Commission on March 2, 2011, we entered into a debt settlement and subscription agreement with one investor whereby we agreed to issue 2,500,000 shares of our common stock in settlement of $250,000 of a $300,000 debt owing by us to the investor. The shares were issued at a price of $0.10 per share. We also issued the investor a note in the principal amount of $77,321 with respect to the remaining balance payable on the debt. On March 3, 2011 we issued the 2,500,000 shares of common stock to one non U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On February 24, 2011, the Company entered into a letter agreement with a financial advisor, whereby the advisor agreed to provide certain advisory services to the Company in consideration for the issuance of up to 1,800,000 shares of restricted common stock at a price of $0.10 per share, with the shares to be issued as follows: (a) 450,000 shares upon execution of the letter agreement; and (b) 150,000 shares at the end of each month starting on the last day of the fourth month through the twelfth month of the term of the agreement. Upon mutual agreement, the Company and financial advisor agreed to terminate the letter agreement on July 19, 2011 and entered into a return to treasury agreement on July 25, 2011 whereby 350,000 shares of the initial 450,000 shares issued were to be cancelled. These shares were cancelled and returned to treasury effective August 12, 2011. See Note 13 – Subsequent Event.

Also, on February 24, 2011, the Company entered into a consulting agreement , whereby the consultant has agreed to provide certain consulting services to the Company in consideration for the issuance of up to 1,800,000 shares of restricted common stock at a price of $0.10 per share, to be issued as follows: (a) 450,000 shares upon execution of the consulting agreement; and (b) 150,000 shares at the beginning of each month starting on the last day of the fourth month through the twelfth month of the term of the agreement. Upon mutual agreement, the Company and consultant agreed to terminate the letter agreement on July 19, 2011 and entered into a return to treasury agreement on July 25, 2011 whereby 350,000 shares of the initial 450,000 shares issued were to be cancelled. These shares were cancelled and returned to treasury effective August 12, 2011. See Note 13 – Subsequent Event.

On March 2, 2011, in connection with the entry into the letter agreement with the financial advisor and the consulting agreement as described above, we issued an aggregate of 900,000 shares of common stock to four U.S. persons who are accredited investors (as that term is defined in Rule 501 of Regulation D, promulgated under the Securities Act of 1933, as amended), and in issuing these securities to these persons we relied on the registration exemption provided for in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

In connection with a convertible note dated August 20, 2010 in the principal amount of $400,000, we have issued 1,509,047 common shares to the note holder with respect to conversion notices received as shown below:


Date of Conversion	Principal Amount		Accrued Interest		Deemed Conversion Price		Number of Shares Issued
February 25, 2011	$	10,000	$	518	$	0.74053		142,030
March 22, 2011		20,000		1,173	$	0.73093		289,665
August 9, 2011		10,000		951	$	0.02820		388,139
August 30, 2011		10,000		1,027	$	0.01600		689,213

								1,509,047

The note holder is an accredited investor (as that term is defined in Rule 501 of Regulation D, promulgated under the Securities Act of 1933, as amended), and in issuing these securities we relied on the registration exemption provided for in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.

On March 23, 2011, we closed a private placement consisting of 2,250,000 units at a purchase price of $0.10 per unit for aggregate gross proceeds of $225,000. Each unit consists of one share in the capital of our company’s common stock and one common share purchase warrant exercisable at a strike price of $0.15 per share at any time until March 23, 2014. The 2,250,000 units were issued to four U.S. persons who are accredited investors.

On July 22, 2011, we closed a private placement consisting of 2,000,000 units at a purchase price of $0.10 per unit for aggregate gross proceeds of $200,000. Each unit consists of one share in the capital of our company’s common stock and one common share purchase warrant exercisable at a strike price of $0.15 per share at any time until July 22, 2014. The 2,000,000 units were issued to a U.S. person who is an accredited investor.

Common share purchase warrants issued:


Granted October 26, 2009: Exercisable at $0.10 Expiry: June 29, 2011	875,000
Granted October 26, 2009: Exercisable at $0.20 Expiry: extended to January 15, 2013	*700,000
Granted October 26, 2009: Exercisable at $0.20 Expiry: September 30, 2011	1,312,500
Granted January 6, 2010: Exercisable at $1.00 Expiry: January 6, 2012	1,754,523
Granted February 23, 2010: Exercisable at $1.00 Expiry: February 23, 2012	1,400,000
Granted April 29, 2010: Exercisable at $1.50 Expiry: April 29, 2012	575,000
Granted August 20, 2010: Exercisable at $0.50 Expiry: August 20, 2013	333,333

Total granted and outstanding as of October 31, 2010	6,950,356

Granted December 20, 2010: Exercisable at $0.28 Expiry: December 20, 2013	1,400,000
Granted January 14, 2011: Exercisable at $0.20 Expiry: January 15, 2013	1,129,034
Granted March 21, 2011: Exercisable at $0.15 Expiry: March 21, 2014	333,333
Granted March 23, 2011: Exercisable at $0.15 Expiry: March 23, 2014	2,250,000
Granted May 16, 2011 to July 16, 2011: Exercisable at $0.10 Expiry: May 16, 2014	**6,000,000
Granted May 16, 2011: Exercisable at $0.15 Expiry: May 16, 2014	350,000
Expiry: Granted October 26, 2009: Exercisable at $0.10—Expired June 29, 2011	(875,000	)
Granted July 22, 2011: Exercisable at $0.15 Expiry: July 22, 2014	2,000,000
Total outstanding as of July 31, 2011	19,537,723

	**2,000,000

Total outstanding as of September 20, 2011	21,537,723

Common share purchase warrants issued since October 31, 2010:

In connection with the $860,000 private placement on December 20, 2010, we issued 1,400,000 warrants 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 December 20, 2013.

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

**Earned August 16 and September 16, 2011: Exercisable at $0.10 Expiry: May 16, 2014

On January 14, 2011, we granted 1,129,034 warrants at an exercise price of US $0.20 per share exercisable at any time until January 15, 2013 to a lender whose 1,129,034 options expired November 7, 2010. The warrants were granted 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 aggregated to $412,000. We issued the warrants to one non U.S. person (as that term is defined in Regulation S of the Securities Act of 1933) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On March 21, 2011, we entered into an amendment agreement with a lender to extend the maturity date of a 10% $400,000 convertible note from July 31, 2011 to October 31, 2011. In exchange for the extension, we issued 333,333 warrants with an exercise price of $0.15 per share until March 21, 2014.

**In connection with the $300,000 Bridge Loan and the Revolving Loan entered into on May 16, 2011, we issued share purchase warrants to the Lender to acquire up to 15 million shares of common stock, 4 million of which were immediately exercisable and 11 million of which become exercisable as to 1 million per month beginning on June 16, 2011 provided that there remains unpaid amounts under the Loan Agreement. All warrants become immediately exercisable if there is an event of default, as that term is defined in the Loan Agreement. Upon repayment of all obligations under the Loan Agreement, all share purchase warrants that have not yet become exercisable will expire. All warrants will be exercisable for a period of three years from the date that such warrants become exercisable. The exercise price is equal to $0.10 subject to adjustment from time to time. As of July 31, 2011, 6,000,000 were immediately exercisable and as of September 20, 2011, 8,000,000 million are immediately exercisable.

On May 16, 2011 we also issued 350,000 warrants at an exercise price $0.15 per share to two US persons who are accredited investors, as a commission in connection with the aforementioned loan agreements.

On June 29, 2011, 875,000 share purchase warrants granted on October 26, 2009 expired unexercised.

In connection with the 2,000,000 unit private placement entered into on July 22, 2011, we issued 2,000,000 common share purchase warrants to a US person who is an accredited investor. The warrants are exercisable at a strike price of $0.15 per share at any time until July 22, 2014.

Summary of Employee Stock Option Plan:


Total Options available for grant under our company’s Stock Option Plan: 15,000,000
Granted October 5, 2009: 8,400,000 Exercisable at $0.15 Expiry: July 17, 2013	8,400,000
Granted March 22, 2010: 2,012,500 Exercisable at $0.31 Expiry: March 22, 2015	2,012,500
Granted May 17, 2010: 437,500 Exercisable at $0.425 Expiry: May 17, 2015	437,500
Granted on April 20, 2011: 500,000 Exercisable at $0.15 Expiry: April 20, 2016	500,000
Exercised on August 12, 2010 at $0.15	(65,000	)
Exercised on September 27, 2010 at $0.15	(160,000	)
Cancelled during fiscal year 2010: Exercisable at $0.15	(518,750	)
Cancelled during current fiscal year: Exercisable at $0.15	(1,137,500	)
Cancelled during current fiscal year: Exercisable at $0.31	(58,333	)

Total outstanding stock options as of July 31, 2011	9,410,417
Cancelled August 25, 2011: Exercisable at $0.15	(262,500	)
Cancelled August 25, 2011: Exercisable at $0.31	(237,500	)

Total outstanding stock options as of September 20, 2011	8,910,417

Preferred Shares

After receiving shareholder approval in connection with our 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.

FINANCIAL CONDITION AND LIQUIDITY

Working Capital


	July 31, 2011			October 31, 2010
	(unaudited)
Current assets	$	1,583,269		$	565,074
Current liabilities	$	(6,584,352	)	$	(4,726,657	)
Working capital (deficiency)	$	(5,001,083	)	$	(4,161,583	)

Our cash on hand as of July 31, 2011 was $13,369. On May 16, 2011, we received proceeds of $300,000 for general working capital purposes under a Bridge Loan with an institutional lender. On July 22, 2011, we received proceeds of $200,000 for general working capital purposes under a private placement with an accredited investor. On July 28, 2011, we received proceeds of $53,000 for general working capital purposes under a Convertible Note. As of July 31, 2011, we had a working capital deficiency of $5,001,083. The $6,584,352 balance in current liabilities at July 31, 2011 includes amounts payable to related parties and supportive lenders in the amount of $3,009,130 and includes $988,871 in short term promissory notes, $324,102 in interest payable, $67,000 in accrued board fees, $1,090,584 in deferred management and consulting fees and $538,573 in short term notes and advances. Also included in current liabilities are derivative liabilities of $1,753,062. We have incurred operating losses since 2008, and this is likely to continue for the year ending October 31, 2011.

We anticipate that our cash on hand and the revenue that we anticipate generating from product sales will not be sufficient to satisfy all of our cash requirements for the next twelve months. In addition to raising $603,000 in a Bridge Loan and two Promissory Notes, since October 31, 2010 through September 20, 2011 we have successfully raised cash in the amount $1,310,000 in connection with non-brokered private placement transactions and converted $681,847 of our debt into equity. 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 of our own line of software to compliment the distribution side of our business. During this period we have experienced a decline in revenues from the legacy distribution business resulting in negative cash flow from operations. As of July 31, 2011 we have a total shareholders’ deficit of $3,990,821 compared to a shareholders’ deficit of $2,937,951 as of October 31, 2010. As discussed in Note 3 of the Notes to the Condensed 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. The Condensed 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.

Future Fundraising

Fundraising will be one of our primary objectives over the next three quarters. We anticipate our cash requirements for the next 3 months to carry out our business plan and retire debt maturing in the November / December 2011 timeframe will be at least $2 million. We intend to raise an additional $1-2 million in the 2^nd quarter of fiscal 2012 through equity financings to support our growth plans.

As noted above, our company’s success 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.

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.

Computation of Income and Loss per Share

We compute 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.

Derivative Financial Instruments

We account 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.

We do 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.

Fair Value of Financial Instruments

We adopted and follow 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.

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 our financial instruments that could have been realized as of July 31, 2011 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 our 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. Our 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 us for similar financial arrangements at July 31, 2011 and October 31, 2010. Our derivative liability measured at fair value on a recurring basis was determined using the following inputs:


	Fair Market Measurement at July 31, 2011
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Embedded derivative liability – convertible note payable	$	181,347	$	—	$	—	$	181,347
Warrant derivative liability – private placement	$	63,329	$	—	$	—	$	63,329
Embedded derivative liability – convertible note payable	$	115,660	$	—	$	—	$	115,660
Warrant derivative liability – loan agreement	$	1,333,881	$	—	$	—	$	1,333,881
Warrant derivative liability – private placement	$	58,845	$	—	$	—	$	58,845

Total derivatives	$	1,753,062	$	—	$	—	$	1,753,062

The fair value of the embedded derivative related to the issuance of the convertible note payable as of July 31, 2011 was $181,347. The Company’s stock price was $0.04. A risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $22,124 recorded as other expense in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

The fair value of the derivative related to the price protection of warrants in connection with the issuance of common stock in a private placement as of July 31, 2011 was $63,329. The Company’s stock price was $0.04. A risk-free discount rate of 0.46% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $(62,692) recorded as other income in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

The fair value of the embedded derivative related to the issuance of the convertible note payable as of July 31, 2011 was $115,660. The Company’s stock price was $0.04. A risk-free discount rate of 3.77% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $9,186 recorded as other expense in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

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


	Fair Value Measurements Using Significant Unobservable Inputs (Level 3) Derivative Liabilities
	July 31, 2011 (unaudited)		October 31 2010
Balance beginning of period	$	154,615	$	—
Warrant derivative in connection with price placements and loan agreements	$	1,859,175		121,249
Total unrealized loss (income) included in earnings		260,728		33,366

Balance end of period	$	1,753,062	$	154,615

Concentration of Risk

The Company relied on one supplier to provide 92% of total inventory purchases for the three months ended July 31, 2011. For the Nine months ended July 31, 2011, the Company relied on inventory purchases of 71% and 13% from two suppliers, respectively. The Company relied on two suppliers to provide 55% and 30% of total inventory purchases for the three and three suppliers to provide 43%, 20% and 13% of total inventory purchases for the nine months ended July 31, 2010 and respectively.

Research and Development Costs

Software Development Costs

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. Amortization expense for the three months and nine months ended July 31, 2011 was $6,156 and $18,469, respectively. Amortization expense for the three months and nine months ended July 31, 2010 was $5,363 and $14,551, respectively.

Revenue Recognition

Our revenues comprise of the following:

•

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

•

our proprietary wireless router solutions that are integrated with our 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.

We recognize revenue, net of sales tax, in accordance with ASC 605-10, Revenue Recognition, 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 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. We considered ASC 985-605, Software Revenue Recognition applied to the revenue recognition of our newly developed products sold during the nine months ended July 31, 2011 and 2010. We do not currently sell our proprietary router product and internally developed software separately, and no services are provided after the product is shipped. Therefore, normal ASC 605-10 revenue recognition guidance applies as noted above.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.

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(e) or 15d-15(e) 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 quarterly report, being July 31, 2011. Based on this evaluation, these officers concluded that, as of July 31, 2011, 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:

(1)

Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant;

(2)

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and

(3)

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, or use or disposition of the registrant’s assets that could have a material effect on the financial statements.

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 July 31, 2011 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 July 31, 2011.

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 July 31, 2011, we determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:

(1)

inadequate segregation of duties and effective risk assessment;

(2)

insufficient staff knowledge for which complex accounting transactions are not determined and recorded on a timely basis;

(3)

insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines; and

(4)

inadequate security and restricted access to computers, including insufficient disaster recovery plans.

These control deficiencies resulted in a reasonable possibility that a material misstatement of the 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 July 31, 2011 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 quarterly report on Form 10-Q, we have not been able to remediate the weaknesses described above as we have not had sufficient financial resources to hire additional administrative and accounting personnel to implement our remediation plan. However, with additional funding we intend 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 three months 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 July 31, 2011.

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.

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 incorporated by reference 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.

It is our plan, with additional funding in place, 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.

PART II OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

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.

ITEM 1A.

RISK FACTORS

In addition to other information in this quarterly 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:

We are unsuccessful in penetrating our target markets and realizing our targeted revenues;

The cost of manufacturing exceeds our estimated costs and we are not able to realize expected gross margins to support our overhead; or

Costs associated with developing our products or filing patents exceed estimates or our IP is infringed upon and we have to defend it in a court of law.

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 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.

Excluding warrants and stock options, our directors and officers, in the aggregate, beneficially own 27.89% of the 80,350,217 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:

•

Possible delays or shortages in manufactured components;

•

Price and product competition, which may result in lower selling prices for some of our products or lost market share;

•

Transition periods associated with the migration of new technologies;

•

The development and timing of the introduction of our new products;

•

The securing of channel slots for new products and the timing of sales orders and OEM and carrier customer sell through;

•

Product mix of our sales as our products have different gross margins;

•

The amount of inventory held by our channel partners;

•

Possible cyclical fluctuations related to the evolution of wireless technologies;

•

Possible delays in the manufacture or shipment of current or new products;

•

Possible product quality that may increase our cost of goods sold;

•

Possible increased inventory levels;

•

Concentration in our customer base; and

•

The achievement of milestones related to signing new customers.

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:

•

Exposure to unknown liabilities of acquired companies, including unknown litigation related to acts or omissions of our acquired company and/or its directors and officers prior to the acquisition;

•

Higher than anticipated acquisition and integration costs and expenses;

•

Effects of costs and expenses of acquiring and integrating new businesses on our operating results and financial condition;

•

The difficulty and expense of integrating the operations and personnel of the companies;

•

Disruption of our ongoing business;

•

Diversion of management’s time and attention away from our remaining business during the integration process;

•

Failure to maximize our financial and strategic position by the successful incorporation of acquired technology;

•

The inability to implement uniform standards, controls, procedures and policies;

•

The loss of key employees and customers as a result of changes in management; and

•

The incurrence of amortization expenses.

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.

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:

•

the absence of guaranteed or adequate manufacturing capacity;

•

reduced control over delivery schedules, production levels, manufacturing yields and costs;

•

their inability to secure adequate volumes of components in a timely manner at a reasonable cost; and

•

unexpected increases in manufacturing costs.

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.

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:

•

our ability to attract and retain skilled technical employees;

•

the availability of critical components from third parties;

•

our ability to successfully complete the development of products in a timely manner; and

•

our ability to manufacture products at an acceptable price and quality.

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:

•

We may be liable for potentially substantial damages, liabilities and litigation costs, including attorneys’ fees;

•

We may be prohibited from further use of the intellectual property and may be required to cease selling our products that are subject to the claim;

•

We may have to license the third party intellectual property, incurring royalty fees that may or may not be on commercially reasonable terms. In addition, there is no assurance that we will be able to successfully negotiate and obtain such a license from the third party;

•

We may have to develop a non-infringing alternative, which could be costly and delay or result in the loss of sales. In addition, there is no assurance that we will be able to develop such a non-infringing alternative;

•

The diversion of management’s attention and resources;

•

Our relationships with customers may be adversely affected; and

•

We may be required to indemnify our customers for certain costs and damages they incur in such a claim.

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:

•

Non-recognition of the proprietary nature or inadequate protection of our methodologies in the United States, Canada or foreign countries;

•

Undetected misappropriation of our intellectual property;

•

The substantial legal and other costs of protecting and enforcing our rights in our intellectual property; and

•

Development of similar technologies by our competitors.

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.

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, 2009 and 2008 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:

•

variations in our quarterly operating results;

•

changes in market valuations of similar companies;

•

announcements by us or our competitors of significant new products; and

•

the loss of key management.

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 September 20, 2011 there were 80,350,217 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.

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

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 holders 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.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Disclosure contained under Part 1 – Item 2 under the heading “Outstanding Share Data” is responsive to this item.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

(Removed and Reserved)

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS


Exhibit Number		Description

(3)		Articles of Incorporation and Bylaws

3.1		Articles of Incorporation (incorporated by reference from our registration statement on Form S-1/A filed on October 10, 2008)

3.2		Bylaws (incorporated by reference from our registration statement on Form S-1/A filed on October 10, 2008)

3.3		Amendment to Articles of Incorporation and Bylaws – 8 for 1 forward split (incorporated by reference from our Form 8-K filed on September 24, 2009)

3.4		Certificate of Amendment to Articles of Incorporation and Bylaws – filed on October 7, 2010 with the Secretary of State of Nevada creating 100,000,000 preferred stock with a par value of $0.001 per share (incorporated by reference from our Annual Report on Form 10K for the year ended October 31, 2010 as filed with the Commission on January 28, 2011)

(10)		Material Contracts

10.1		Form of Subscription Agreement used in a private placement offering that closed on July 25, 2007 between our company and 32 investors (incorporated by reference from our registration statement on Form S-1/A as filed with the Commission on October 10, 2008)

10.2		Share Exchange Agreement dated September 29, 2009 (incorporated by reference from our current report on Form 8-K as filed with the Commission on October 2, 2009)

10.3		Assumption Agreement dated September 29, 2009 (incorporated by reference from our current report on Form 8-K as filed with the Commission on October 2, 2009)

10.4		Return to Treasury Agreement dated October 28, 2009 between our company and Edward Dere (incorporated by reference from our current report on Form 8-K as filed with the Commission on November 9, 2009)

10.5		Share Purchase Agreement dated October 29, 2009 between our company and Slawek Kajko (incorporated by reference from our current report on Form 8-K as filed with the Commission on November 9, 2009)

10.6		Form of Stock Option Agreement (incorporated by reference from our current report on Form 8-K as filed with the Commission on November 9, 2009)

10.7		Form of Debt Conversion Subscription Agreement (incorporated by reference from our annual report on Form 10-K for the year ended August 31, 2009 as filed with the Commission on November 18, 2009). Form of Subscription Agreement for Non-US Persons (incorporated by reference from our current report on Form 8-K as filed with the Commission on January 11, 2010)

10.8		Form of Assumption Agreement (incorporated by reference from our current report on Form 8-K as filed with the Commission on January 11, 2010)

10.09		Form of Assumption Agreement (incorporated by reference from our current report on Form 8-K as filed with the Commission on February 24, 2010)

10.10		Form of Debt Conversion Agreement (incorporated by reference from our current report on Form 8-K as filed with the Commission on February 24, 2010)

10.11		Form of Subscription Agreement for Non-US Persons (incorporated by reference from our current report on Form 8-K as filed with the Commission on February 24, 2010)



10.12		Form of Subscription Agreement (incorporated by reference from our current report on Form 8-K as filed with the Commission on April 29, 2010)

10.13		$400K Convertible Note (incorporated by reference from our current report on Form 8-K as filed with the Commission on August 26, 2010)

10.14		Form of Warrant, US and non-US Subscription Agreements used in a private placement offering that closed on December 17, 2010 between our company and 2 non-US and 9 US investors (incorporated by reference from our current report on Form 8K as filed with the Commission on December 20, 2010)

10.15		Debt Settlement and Subscription Agreement dated January 13, 2011 with Nexaira Inc. and Novatel Wireless, Inc. (incorporated by reference from our current report on Form 8-K as filed with the Commission on January 20, 2011)

10.16		Form of Debt Settlement and Subscription Agreement (incorporated by reference from our current report on Form 8-K as filed with the Commission on March 2, 2011)

10.17		Letter Agreement with Garden State Securities Inc. (incorporated by reference from our current report on Form 8-K as filed with the Commission on March 2, 2011)

10.18		Consulting Agreement with JFS Investments, Inc. (incorporated by reference from our current report on Form 8-K as filed with the Commission on March 2, 2011)

10.19		Amendment Agreement and warrant issued to Gemini Master Fund and Form of Subscription Agreement (US person) (incorporated by reference from our current report on Form 8-K as filed with the Commission on March 24, 2011)

10.20		Bridge Loan and Revolving Loan agreements (incorporated by reference from our current report on Form 8-K as filed with the Commission on May 19, 2011)

(14)		Code of Ethics

14.1		Code of Ethics(incorporated by reference from our annual report on Form 10-K for the year ended August 31, 2009 as filed with the Commission on November 18, 2009)

(21)		Subsidiaries

21		Direct and Indirect Wholly-Owned Subsidiaries of Nexaira Wireless Inc.: Nexaira Wireless (BC) Ltd.., a British Columbia company and Nexaira, Inc., a California company

(31)		Certifications

31.1*		Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Principal Financial Officer and Principal Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(99)		Additional Exhibits

99.1		Audit Committee Charter – Adopted on January 25, 2011 (incorporated by reference from our Annual Report on Form 10K for the year ended October 31, 2010 as filed with the Commission on January 28, 2011)

99.2		Compensation Committee Charter – Adopted on January 26, 2011 (incorporated by reference from our Annual Report on Form 10K for the year ended October 31, 2010 as filed with the Commission on January 28, 2011)

101**		The following financial statements and footnotes from the Nexaira Wireless Inc. Quarterly Report on Form 10-Q for the quarter ended July 31, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Cash Flows; (iv) Condensed Consolidated Statements of Changes in Shareholders’ Deficit and Other Comprehensive Income Loss; and (v) the Notes to Condensed Consolidated Financial Statements, tagged as blocks of text

*	Filed herewith

**	Furnished herewith

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NEXAIRA WIRELESS INC.

/s/ Mark Sampson

By: Mark Sampson

President, Chief Executive Officer and Director

(Principal Executive Officer)

Dated: September 20, 2011

/s/ Ralph Proceviat

By: Ralph Proceviat

Treasurer and Director

(Principal Financial Officer and Principal Accounting Officer)

Dated: September 20, 2011

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