__________________________________________________________________________________

__________________________________________________________________________________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________



FORM 10-K

______________



|xANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|-------------------------------------------------------------------------------------



For the fiscal year ended June 30,
2014



|☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|-----------------------------------------------------------------------------------------



For the transition period from ______________
to ______________



Commission File No.000-52488



|Infrax Systems, Inc.                                  
|------------------------------------------------------
|(Exact name of Registrant as specified in its charter)



|Nevada                                                                         |  | 20-2583185                          
|------------------------------------------------------------------------------ |  | ------------------------------------
|(State or other jurisdiction
        of
        incorporation or organization) |  | (I.R.S. Employer Identification No.)



|3637 4th Street North, Suite 330, St. Petersburg, FL |  | 33704     
|---------------------------------------------------- |  | ----------
|(Address of principal executive offices)             |  | (Zip Code)



|                                                           
|-----------------------------------------------------------
|(Former name, former address, if changed since last report)



|Tel:   (727) 498-8514      
|---------------------------
|(Issuer’s telephone number)



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 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2)has been
subject to such filing requirements for the past 90 days. YesxNoo



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



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 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 YesxNoo



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



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











State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed fiscal
quarter, June 30, 2014: 380,000.



Number of the issuer’s Common Stock outstanding as
of September 29, 2014: 110,592,793



Documents incorporated by reference: None.



Transitional
Small Business Disclosure Format (Check One): YesxNoo











INFRAX SYSTEMS, INC

Annual Report
on Form 10-K

For the Fiscal Year Ended June 30, 2014



INDEX



|           |                                                                                                              | Page
        Number
|---------- | ------------------------------------------------------------------------------------------------------------ | -------------------
|PART  I    |                                                                                                              |                    
|Item 1.    | Business                                                                                                     | 5                  
|Item 1A.   | Risk Factors                                                                                                 | 17                 
|Item 1B.   | Unresolved Staff Comments                                                                                    | 19                 
|Item 2.    | Properties                                                                                                   | 19                 
|Item 3.    | Legal Proceedings                                                                                            | 19                 
|Item 4.    | MineSafety Disclosures                                                                                       | 19                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|PART  II   |                                                                                                              |                    
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 20                 
|Item 6.    | Selected Financial Data                                                                                      | 21                 
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 25                 
|Item 8.    | Financial Statements and Supplementary Data                                                                  | 27                 
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 45                 
|Item 9A.   | Controls and Procedures                                                                                      | 45                 
|Item 9A(T) | Controls and Procedures                                                                                      | 45                 
|Item 9B.   | Other Information                                                                                            | 46                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|PART  III  |                                                                                                              |                    
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                       | 47                 
|Item 11.   | Executive Compensation                                                                                       | 48                 
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 51                 
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence                                    | 51                 
|Item 14.   | Principal Accountant Fees and Services                                                                       | 52                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|PART  IV   |                                                                                                              |                    
|Item 15.   | Exhibits and Financial Statement Schedules                                                                   | 52                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|Signatures |                                                                                                              | 53                 











Forward-Looking Statements



The following discussion should be read in conjunction with
the financial statements and related notes contained elsewhere in this annual report on Form 10-K. We make forward-looking statements
in this report, in other materials we file with the Securities and Exchange Commission (the “SEC”) or that we otherwise
release to the public, and on our website. In addition, our senior management might make forward-looking statements orally to analysts,
investors, the media, and others. These statements are “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended. Statements concerning our
future operations, prospects, strategies, financial condition, future economic performance (including growth and earnings) and
demand for our products and services, and other statements of our plans, beliefs, or expectations, including the statements contained
in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding
our future plans, strategies and expectations are forward-looking statements. In some cases these statements are identifiable through
the use of words such as “anticipate,” “believe,” “estimate,” “predict,” “expect,”
“intend,” “plan,” “project,” “target,” “continue,” “can,”
“could,” “may,” “should,” “will,” “would,” and similar expressions.
You are cautioned not to place undue reliance on these forward-looking statements because these forward-looking statements we make
are not guarantees of future performance and are subject to various assumptions, risks, and other factors that could cause actual
results to differ materially from those suggested by these forward-looking statements. Thus, our ability to predict results or
the actual effect of our future plans or strategies is inherently uncertain. Factors which could have a material adverse effect
on our operations and future prospects include, but are not limited to, our ability to secure additional financing and/or defer
expenditures; our ability to retain and attract customers; our expectations regarding our expenses and revenue; strategic alternatives
that may become available to us; expectations regarding our ability to reduce operating expenses as a result of streamlining operations
anticipated trends and challenges in our business and the markets in which we operate, including the market for smart grid technologies;
our expectations regarding competition as more and larger companies enter our markets and as existing competitors improve or expand
their product offerings; our plans for future products and enhancements of existing products; our anticipated cash needs and our
estimates regarding our capital requirements. These risks and uncertainties, together with the other risks described from time
to time in reports and documents that we file with the SEC, should be considered in evaluating forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results,
performance or achievements. Indeed, it is likely that some of our assumptions will prove to be incorrect. Our actual results and
financial position will vary from those projected or implied in the forward-looking statements and the variances may be material.
Moreover, we do not assume the responsibility for the accuracy and completeness of these forward-looking statements. We expressly
disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events,
or otherwise, except as required by law.



Item 1.  Business



Background information



OUR HISTORY



“We”, “us”, “our”,
“Opticon” and “Infrax” refer to Infrax Systems, Inc. (formally known as OptiCon Systems, Inc.),
a Nevada corporation. We were incorporated in Nevada on October 22, 2004. On January 10, 2010, we officially changed the name of
the Company from OptiCon Systems, Inc. to Infrax Systems, Inc. to reflect the change in the Company’s direction and were
issued a new trading symbol as “IFXY”.



The address of our executive offices is 3637 4th
Street North, Suite 330, St. Petersburg, FL 33704 and our telephone number at that address is 727-498-8514. The address of our
web site is www.infraxinc.com. The information at our web site is for general information and marketing purposes and is not
part of this annual report for purposes of liability for disclosures under the federal securities laws.



|● | On January 10, 2010, we officially changed the name of the Company from OptiCon Systems, Inc. to Infrax Systems, Inc. and were issued a new trading symbol: “IFXY”.                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|● | On June 29, 2010, the Company acquired the assets and management of Trimax Wireless Systems, Inc. (“Trimax”), in exchange for equity and a note payable.    The Trimax product line is expected to provide an operating platform and enhanced operating effectiveness to the Secure Intelligent Energy Platform.
|● | On May 8, 2011 we acquired a 70% controlling interest in Lockwood Technology Corporation, to supply RFID and asset tracking, among other technology value to our product lines.                                                                                                                                 
|● | On July 14, 2011 the Company's Board of Directors affected a 1:500 reverse stock split, effective August 26, 2011 (record date).  The shares have been retroactively stated to reflect the reverse-split shares.                                                                                                



















OUR BUSINESS



While we continue to enhance the OptiCon Network Management
platform, the Company has shifted its focus and energies towards the “Smart Grid” energy sector. The Company believes
our secure integrated platform will hasten the deployment of all Smart Grid technology for resource constrained small and mid-sized
utilities.  Infrax’s advantage comes from our products ability to enable the creation of a secure platform scalable
to deliver a broad set of intelligent Smart Grid initiatives across millions of endpoints for Utilities.



INFRAX market opportunity exists in one of the largest industries
in the world. Globally, according to the International Energy Agency (IEA), this industry is expected to spend close to $10 trillion
dollars by 2030 to upgrade electrical infrastructure. Technology innovations in power delivery have been fermenting for years,
but only now is the confluence of physical need and social expectations creating an environment in which real and sustained monetary
commitments are being made to create a “Smart Grid” built on information-based devices, digital communication and advanced
analytics. Networking giant Cisco has estimated that the market for smart grid communications will grow into a $20 billion-a-year
opportunity as the infrastructure is built out over the next five years. Researchers at Specialists in Business Information (SBI)
forecast the market will grow to $17 billion-per-year by 2014 from today’s $6 billion. Globally, SBI expects the market for
smart grid technologies to grow to about $171 by 2014 up from approximately $70 billion in 2009.



According to a report issued to Congress
by the Office of Electricity Delivery and Energy Reliability, as required by Section 1309 of Title XIII of the Energy Independence
and Security Act of 2007, the security of any future Smart Grid is dependent on successfully addressing the cyber security issues
associated with the nation’s current power grid.



The complexity of the grid implies that
vulnerabilities exist that have not yet been identified. It is particularly difficult to estimate risk from cyber-attack because
of the size, complexity, and dynamic nature of the power grid and the unpredictability of potential attackers.



Infrax creates a unified solution path to securely manage
Advanced Metering Infrastructure (AMI) and other Smart Grid optimization applications such as substation and distribution automation.
Our product portfolio provides Network Transport and Management, Secure Intelligent Devices, Threat Detection, and Grid Optimization,
all integral components of a state-of-the-art Smart Grid solution.



Through our wireless broadband business unit, Infrax Networks,
we provide outdoor mesh-relay based wireless broadband networks used by customers as the metro-scale IP foundation upon which to
run one or many applications that help build greener, safer, smarter communities. Our products have been deployed globally to help
connect the unconnected. In addition, our networks are used by electric utilities to build large scale, reliable, and secure networks
that deliver the high bandwidth and low latency required for deploying smart grids.



Every utility, telecommunications carrier, wireless service
provider, government and businesses with the need to securely transmit data and manage their network is a potential customer for
the Infrax product line.



Infrax’s innovative and comprehensive solutions have
the power to secure the future.



Industry Background



In today’s environment of increasing threat sophistication
and regulatory pressures, managing risk has become a primary concern for Utility IT organizations. Today, a single breach can cost
millions, be devastating to industrial, commercial and residential consumers, and create a threat to national security. Infrax’s
Secure Network Interface Card (SNIC), GridMesh and GRid Intrusion Management (GRIM) products provide a secure solution for complete
grid, network and intelligent device management.



Like the internet does today, the utility network needs to
able to connect millions of devices and still operate in a reliable and secure grid. Because of increased demand and growing environmental
concerns, this grid also needs to become far more flexible than it is today, accommodating distributed power generation from renewable
sources and use several energy efficiency techniques. The vision of tomorrow’s utility grid involves a number of technologies
that need to be put in place to make the power grid smarter, with more automation within the network and tools to give end users
better information and control. The overall change that the utility needs to make is to go from a centralized generation and distribution
model to one that is more distributed and diverse.



Today’s electric system was not designed to handle
extensive, well-organized acts of terrorism aimed at strategic elements. The threat of attack is growing and a widespread attack
against the infrastructure is more likely today than ever before.  It is therefore critical that the Smart Grid address
security from the outset, making it a requirement for all the elements of the grid and ensuring an integrated and balanced approach
across the system.



Ongoing Mandates









Title XIII of the Energy Independence and Security Act
of 2007, mandates that the Department of Energy provides a quantitative assessment and determination of the existing and potential
impacts of the deployment of Smart Grid systems on improving the security of the Nation’s electricity infrastructure and
operating capability, including recommendations on:



(1) How smart grid systems can help in making the
Nation’s electricity system less vulnerable to disruptions due to intentional acts against the system.



(2) How smart grid systems can help in restoring
the integrity of the Nation’s electricity system subsequent to disruptions.



(3) How smart grid systems can facilitate nationwide,
interoperable emergency communications and control of the Nation’s electricity system during times of localized, regional,
or nationwide emergency.



(4) What risks must be taken into account that smart
grid systems may, if not carefully created and managed, create vulnerability to security threats of any sort, and how such risks
may be mitigated.



The National Institute for Standards and Technology (NIST)
stated, “Identifying and implementing security controls is vital in protecting the confidentiality, integrity, and availability
of the connected systems and the data that is transferred between the systems. If security controls are not in place or if they
are configured improperly, the process of establishing the interconnection could expose the information systems to unauthorized
access.”



Our SNIC and GRid Intrusion Management (GRIM) systems provide
an enhanced Cyber Security platform which prevents unwarranted intrusion into any part of the electrical grid. Using advanced encryption
algorithms, a secure virtual network can be created over a private or public network. Infrax's GRIM technologies will evolve to
include software and hardened hardware solutions for substation deployment.



The energy industry’s assets and systems are not equipped
to handle well designed acts of cyber terrorism. With the growing threat of internet attacks, it is critical that robust security
is introduced for all the elements of the grid. The deployment of a Smart Grid that reaches from the producer to the consumer,
will ultimately add over 150,000,000 communications capable meters in the U.S. alone, creating over 150,000,000 unsecure access
points into the grid that previously did not exist.  The lack of secure AMI solutions is a major concern of utilities
and regulators alike, and Infrax can fill the void.



The market for Infrax’s SNIC and GRIM solutions includes
over 3,400 electric utilities in the United States, several thousand more globally, large consumers of commercial power, as well
as power producers and utilities providing water and gas.



According to the research-based business strategy firm Zpryme,
Smart Grid IT hardware and software spending in the U.S. was $39.4 billion by 2014.



Our Technology and Solution



The foundation of our technology is a standards-based and
secure network. Our network is composed of our hardware such as collectors and repeaters (where required), our network operating
system, and our Electric Power Grid Mesh software suite, which together provide electric power utilities the ability to communicate
with and control devices connected to the electric power grid. We plan to offer a suite of solutions that run on top of our network,
including advanced metering, distribution automation, and demand-side management. These solutions include additional hardware,
such as our collectors and concentrators, and applications from our asset tracking and management and networking software. Our
solutions combine with devices from the large number of third parties with whom we collaborate to form end-to-end smart electric
power grid offerings built on our network. In addition, we offer a wide range of services that enable our utility customers to
deploy, operate and maintain our networking platform and solutions. These service offerings include professional services to implement
our products, managed services and software to assist electric power utilities with managing the network and solutions, and ongoing
customer support.





Key Features and Benefits of Our Networking Platform



We believe that utilities require a robust networking platform
that allows them to transform the power grid infrastructure into the smart grid, thereby generating significant benefits to utilities,
consumers and the environment. We believe that the only way to effectively enable the smart grid is through the implementation
of a robust networking platform that meets stringent requirements: We have designed and built our networking platform from the
ground up for the sole purpose of enabling electric power utilities to transform the electric power grid infrastructure into the
smart electric power grid. We believe our utility customers benefit in the following ways:



Standards-Based. We believe the most successful networks
have been those based on open standards. With an open, standards-based networking platform, utilities can choose from a diverse
set of products from a variety of vendors. Our networking platform is based on standards, which enable electric power utilities
to deploy standards-based networking throughout their infrastructure and allows for interoperability with other standards-based
devices. As a result, we believe electric power utilities can readily







extend our networking platform to support a broad set of
end-to-end smart electric power grid offerings in a cost-effective and timely manner. We utilize web services and open software
standards and interfaces to enable integration with third-party software and devices. We believe this open and flexible architecture
enables multi-vendor interoperability and facilitates integration with devices and software from other vendors. As a result, we
believe utilities can readily extend our networking platform to support a broad set of end-to-end smart grid offerings in a cost-effective
and timely manner.



High-Performance. We believe a networking platform must deliver
high performance by maximizing throughput and minimizing latency. To accommodate an increasing number of solutions, such as distribution
automation and demand-side management, the networking platform must be able to easily and economically support these solutions
without negatively impacting performance. Our networking platform delivers high-bandwidth, low-latency performance and traffic
prioritization, which allows electric power utilities to run multiple solutions, including those that require high-throughput communications,
such as distribution automation, while maintaining robust operating performance and meeting the stringent requirements of multiple
time-sensitive solutions for the smart grid. Our network hardware devices incorporate powerful two-way multi-channel radios, sophisticated
routing techniques and high-speed node-to-node communications. Our platform is specifically designed to have ample bandwidth, which
allows utilities to run multiple solutions including those that require high-throughput communications, such as distribution automation,
while maintaining robust operating performance.



Scalable. We believe a networking platform must be easily
and quickly scalable to accommodate an ever-increasing number of devices generating and transmitting ever-increasing amounts of
data. Large utilities have millions of consumers, and the networking platform must be capable of supporting all of them and the
addition of many new devices in the future. Our networking platform can be deployed rapidly at scale to accommodate millions of
devices on the electric power grid, allowing electric power utilities that deploy our networking platform to easily and cost-effectively
expand beyond the scope of their initial deployments.



Extensible. We believe a networking platform requires upgradable
software and hardware designed to allow utilities or developers to expand its capabilities. Extensibility reduces the need for
additional future investments and mitigates the risk of technological obsolescence and stranded assets. Our communications modules
are designed for over-the-air upgrades, enabling us, for example, to deliver software over the air, allowing us to augment the
functionality of, and to deploy new solutions and applications to, previously deployed hardware. As a result, we believe our electric
power utility customers can mitigate the risk of technology obsolescence.



Secure. The power grid is vulnerable to the risk of data
loss, theft and malicious attacks, and a smart grid often provides a command-and-control function for the power grid. In addition,
many of the power grid’s components are located in easily accessible and unsecured, outdoor locations. As a result, a networking
platform for the smart grid must integrate highly sophisticated and proven security technologies deployed across multiple layers.
Our networking platform incorporates an end-to-end, multi-layer security architecture and uses proven technologies and associated
security techniques to allow electric power utilities to operate large-scale networks while minimizing security risk. By encrypting
data to and from the devices and by ensuring the devices are authenticated, we preserve the integrity of the entire network even
if an individual device is compromised. We use standards based encryption technologies and associated security techniques to enable
our utility customers to benefit from a technology that has had to evolve over the decades to address constant, increasingly sophisticated
attacks in a wide variety of industries and applications. Our robust security and enhanced authentication schemes prevent man-in-the-middle
attacks and allows utilities to operate large-scale networks while mitigating security risk. Our security model incorporates sophisticated
techniques to secure every device on the network but is also designed d to preserve the integrity of the entire network even if
an individual device is compromised. We are focused on using highly encrypted data over secure tunnels using a variety of communications
medium including WiFi, Cellular or other public communication media. We believe this is more reliable and secure than radio frequency
(RF) technology. Our SEIP incorporates a communications transport known as Electric power gridMeshTM, and a device and data
security management tool known as GRiM. Secure management of the "last mile" backhaul is necessary for electric power
utilities to implement Smart Electric power grid applications such as AMI, and substation and distribution automation.



Reliable. Much of the physical infrastructure that makes
up the network must reside outdoors, where factors such as weather, the growth of foliage or construction can change operating
conditions over the infrastructure’s lifetime. In addition, this infrastructure can be deployed in locations that are costly
or difficult to service. As a result, a networking platform must be resilient, self-configuring and self-healing to function reliably
with minimal intervention. Our communications modules communicate with multiple access points, providing redundant paths to the
utility, and dynamically adjust their connections to the network and to neighboring devices to accommodate changes in the physical
environment that impact wireless throughput, such as new construction or foliage growth. In addition, our GridMesh network operating
system routinely re-evaluates the optimal path for communications traffic. As a result, utilities benefit from built-in optimization
and self-healing capabilities that allow our networking platform to function reliably with minimal interruption and limited manual
intervention.



Cost-Effective. The networking platform must deliver a compelling
business case, both at installation and as additional solutions are added to the network. Maintenance and upgrade costs must also
be low, and the network must integrate with the utility’s existing information technology and systems to facilitate deployment
without expensive installation or integration costs. Our architecture enables our electric power utility customers to leverage
a single network, rather than build multiple networks, when







deploying additional solutions. This approach limits capital
and operational expenditures and enhances our electric power utility customers’ return on investment. Our networking platform
is designed to limit both capital and operational expenditures relative to more expensive alternatives such as cellular- or PLC-based
architectures. In contrast to such alternatives, our architecture enables our utility customers to leverage a single network, rather
than build multiple networks, when deploying additional solutions such as distribution automation and demand-side management. Equipment
requirements are mitigated because our access points support data from thousands of our communications modules, and all communications
modules can act as relays for data from other communications modules. Our hardware and software is highly automated and operates
with minimal manual intervention, thereby reducing upfront and ongoing maintenance expenses. We believe this approach limits capital
and operational expenditures and enhances our utility customers’ return on investment.



Components of our smart energy platform.



Our product portfolio provides Network Transport and Management,
Secure Intelligent Devices, Threat Detection, and Electric power grid Optimization, all integral components of a state-of-the-art
Smart Electric power grid solution. Our devices and platform are built on information-based devices, digital communications and
advanced analytics. Through our wireless broadband business unit, Infrax Networks, we provide outdoor mesh-relay based wireless
broadband networks used by customers as the metro-scale IP foundation upon which to run one or many applications that help build
greener, safer, smarter communities. In addition, our networks are used by electric power utilities to build large scale, reliable,
and secure networks that deliver the high bandwidth and low latency required for deploying smart electric power grids.



Secure Intelligent Energy Platform (SIEP) TM



Our Secure Intelligent Energy Platform (SIEP) TM competes
in three distinct market segments of the smart electric power grid industry;

-Network Transport and Management
(secure, two-way communication),

-Secure Smart Sensors and Devices
(Smart Meters),

-Asset Tracking;

-a electric power grid Optimization
and

-Threat Detection, Electric power
grid Optimization and Security.

We have developed a series of interrelated operational management,
communications, and electric power grid security related products and services, under one platform, that together enable a comprehensive
and unified solution for communications and applications management of the Smart Electric power grid. Each product meets a specific
need in the spectrum of controls necessary to effectively manage a Smart Electric power grid and together they will offer unparalleled
security and data management.



To address this international opportunity, we plan to aggressively
invest in our products, marketing efforts and delivery capabilities to serve these markets.



Our Secure Intelligent Energy Platform enables utilities
to transform the existing power grid infrastructure into the smart grid and includes our networking platform and solutions that
run on top of the network as well as complementary services. Our networking platform facilitates two-way communications between
the utility back office and devices on the power grid. We also offer a suite of solutions and applications that run on top of our
network including advanced metering, distribution automation, and demand-side management. These solutions and applications are
integrated with third-party products from the large number of third parties with whom we partner to form end-to-end smart grid
offerings. In addition, we offer a wide range of services that enable our utility customers to deploy, operate and maintain our
Secure Intelligent Energy Platform.



Within our Secure Intelligent Energy Platform, we provide
a full stack of software capabilities that underlie our networking platform and enable the solutions and applications we offer
on top of our network. At the core is our operating system that drives the functionality of all our devices. Our GridMesh suite
provides management and security for our overall network. The Asset Tracker application suites provide business intelligence and
management for our solutions..



Communications Platform



At the foundation of our Secure Intelligent Energy Platform
is a standards-based and secure network. The networking platform is composed of our hardware such as access points and repeaters,
network operating system, and our GridMesh management and security software. This network provides utilities the ability to communicate
with devices connected to the power grid.



Communication Devices:



•	 	Secure Network Interface Card (SNIC).
Our SNIC is a combo card that resides inside the utility power meter. The meter data such as usage, voltage, current etc. are encrypted
and transported to the collector via a wireless module over proprietary mesh architecture. The wireless devices, operating in the
2.4 GHz spectrum link devices in the neighborhood







area network to a utility’s back office or data center
over the wide area network.



•	 	Collectors, concentrators and repeaters.
Our collectors are devices that communicate to the SNIC on one side and transport the data over an appropriate wide area network
(WAN) to a concentrator, typically installed at a utility’s substation. Repeaters are devices that extend the reach of our
network. Collector has the option to support a variety of WAN modules such as RF, cellular, WiMax etc. These devices are engineered
to withstand harsh environmental conditions, including wind, lightning strikes, and rain, snow, and temperature extremes; are packaged
in a standard form factor; and can be installed in a variety of locations such as a power pole.



Networking Software:



•	 	GridMesh: Our proprietary mesh software
for the SNIC is powerful software based on clustering concept to help build a dynamic mesh network between the meters and the collector.
GridMesh allows our hardware devices to securely join the network and communicate with each other. GridMesh provides a comprehensive
set of advanced networking features including network discovery, network addressing and address management, advanced routing, and
secure communications. GridMesh also allows our devices to be remotely programmable over the air, enabling device upgrades without
costly maintenance visits.



Secure Network Interface Card (SNIC)



Our advanced metering solution provides utilities with two-way
communications from our communications module integrated into a third-party meter to their back office, enabling utilities to remotely
perform such functions as reading meter usage, capturing time-of-use consumption data, connecting and disconnecting service, and
detecting power outages. Our current version of the card is made for Itron’s Centron II meters, with the ability to modify
the geometric design to fit inside other third party meters. Our advanced metering solution comprises communications modules that
are integrated into partner meters and our UtilityIQ software applications. We do not manufacture meters; instead, we partner with
various meter manufacturers to provide a range of meter options for our utility customers. We are in the process of completing
a Security and Network Interface Card (SNIC), based on higher levels of encryption, which can be imbedded in all intelligent end
devices including Smart Meters and sensors. We plan to offer our SNIC in a variety of configurations; all equipped with standards
based encryption with robust authentication schemes. Data traffic passing through our SNIC will be encrypted using AES 256, once
the devices are authenticated. These keys are periodically rotated to negate “man in the middle” attacks. When combined
with our security based software and management tools, our SNIC will create an impenetrable barrier against cyber-attacks. Our
SNIC coupled with our Grid Intrusion Management (GRIM) system, will provide an enhanced cyber security platform which prevents
unwarranted intrusion into any part of an electrical electric power grid. Using advanced encryption algorithms, a secure virtual
network can be created over a private or public network. We believe our SNIC is the next generation of electric power grid security
products. SNIC addresses the advanced metering infrastructure requirements of electric power utilities and provides the highest
level of meter security available to date. SNIC employs military grade encryption, meeting or exceeding current and emerging security
standards. The universal host interface board carries a single wireless module for both home area networking (HAN) and for communicating
the data to the electric power utility’s control center using standards based communications technology called GridMesh.



GridMesh



We believe our wireless smart meter mesh platform solves
what has been the biggest challenge faced by electric power utilities, connecting each home to the smart electric power grid in
an efficient, scalable and secure way. Utilizing our proprietary wireless system, GridMesh enables each smart meter to interconnect
with one another to create a large, scalable mesh network.



UMAX and UMAX + The Utility Max (UMAX) product family is
an extremely cost effective wireless solution for electric power utilities and telephone carrier who are looking to either set
up a point-to-point or point-to-multipoint Ethernet links. The UMAX+ uses an adjunct box that is connected to the UMAX radio over
an Ethernet link to provide T1/E1 communications at the remote locations. Due to the advanced implementation of both, frequency
division duplex and time division duplex in the wireless domain the UMAX products can operate on a single channel eliminating the
need for a guard band between the transmit and receive signals.



Grid Intrusion Management (GRIM)



We expect our GRIM system to evolve to include software and
hardened hardware solutions for substation deployment.



Distribution Automation



Our current version of distribution automation solution provides
a very reliable two-way communications from distribution devices along the power grid to the back office or substations, providing
utilities with real-time information for grid monitoring and control. While utilities have been implementing distribution automation
for many years, adding two-way communications over a common networking platform significantly improves their visibility into and
control over the power grid. As a result,







utilities gain the information needed to better contain and
more quickly resolve outages, monitor power-quality metrics with greater granularity, and adjust voltage levels dynamically to
reduce energy waste.



Secure Intelligent Energy Platform Services



Through our Smart Grid Consulting & Professional Services
organization, we offer a wide range of services related to the initial deployment and ongoing operation of our networking platform.
Our services include professional services, managed services and customer support, including Network Design, Deployment Support
and Program Management. We offer an array of services to help utilities deploy our networking platform and solutions. Our Professional
Services include network design and optimization, taking into account geographical terrain, wireless propagation characteristics,
device density and routing design, to ensure data is transmitted through the network in an efficient and secure manner. Soon we
will have the ability to provide installation services directly to the utilities. We will be able to provide complete deployment
support to ensure that our hardware devices are properly installed and registered with the network..



Professional Services



Infrax Systems has introduced a new division which provides
engineering and professional services to its energy customers. This division is charged with packaging Infrax Systems products
into engineered solutions that are marketed to their customers. Professional services provides engineering, construction and project
managements services to the smaller utilities such as local municipalities, Rural Electric Cooperatives and Investor Owned Utilities
who may not have the manpower or expertise to accomplish their goals. By leveraging our over 100 years of combined experience in
the electric utility and telecommunications industries, Infrax Systems is well placed in an industry which is becoming the newest
high tech phenomenon. The Smart Grid vision relies on vast networks of intelligent devices which sources in the Data and Enterprise
Network industry indicate will surpass by several orders of magnitude of any know data network of today. Even a relatively small
utility will have upwards of a million devices operating on thousands of individual domains. These networks not only will control
instant and real time power flow but will also be the cash register for the Utility industry. Security, scalability and authenticity
as well as day to day maintainability are the utmost concerns in providing an intelligent power grid that is safe and secure. Infrax
Systems will be a leader in designing, building and securing these networks and solutions.



Initial marketing campaigns have been targeting the municipalities
and Electrical Cooperatives. Currently we have responded to one major RFP for Capacitor Bank networks and Smart Grid infrastructure
worth in excess of 1.5 million dollars. We are also working on a pilot project for our AMI product with the availability of the
SNIC, with a major utility. If the pilot project is accepted and successful, we may be asked to provide AMI to all their customers.
The revenue from such project, for only one utility, will be overwhelmingly substantial. We are also in the process of negotiations
for a contract to provide customer engineer expertise for a fiber optic construction project and we have installed several radios
for one of our initial customers. We have started to communicate with few utilities in Florida to become qualified bidders for
the coming projects. We will continue this process with utilities all along the east coast of USA.



Asset Tracker solution



Our Asset Tracker solution provides for complete inventory
management of utility smart electric power grid assets, including meters, collectors and concentrators, as well as all substation
and field deployable assets. Asset Tracker validates inventory and equipment information received via RFID from tagged assets and
seamlessly provides that information across the enterprise bus of an electric utility in a format customizable for each utility.
Access to real time information provides operations personnel with the ability to locate material, track consumption and streamline
procurement.



Business Benefits of Our Smart Energy Platform



Our networking platform is designed to yield significant
benefits to electric power utilities, end users and the environment. We believe that utility investments in the networking platform
will help utilities mitigate future costs and improve their ability to manage the power grid. Over time, we expect these benefits
will translate into rates for consumers below what they would otherwise have been, absent such investments. In addition, many of
the benefits will flow directly to consumers by empowering them to use energy more efficiently and save money. The benefits of
transforming the power grid into the smart grid via our technology include more efficient management of energy, improved grid reliability,
capital and operational savings, the ability to pursue new initiatives, consumer empowerment, and compliance with evolving regulatory
mandates through reduced carbon emissions. EPRI estimates the benefits of deploying a smart grid in the United States to be worth
$1.3 to $2.0 trillion in 2010 dollars between 2010 and 2030.



Examples of the tangible benefits delivered by our networking
platform and solutions include:



Operational savings for electric power utilities. Utilizing
our advanced metering solution, electric power utilities can significantly reduce costs by automating certain key operational functions
required to run their business, including meter reading, and connecting and disconnecting electricity service. These tasks have
historically been labor intensive for electric power utilities and inconvenient for end users.









Empowering end users. When completed, our demand response
solution will allow electric power utilities to engage and empower end users by offering new time-based pricing options and connecting
in-home technologies to provide opportunities for end users to better understand their energy usage and save money. With these
new pricing options, utilities can better smooth electric demand, reducing the need to build additional power plant capacity to
accommodate peak demand, generating large capital expense savings from avoiding construction of power plants and reduced operating
costs of generating electricity during peak times.



Increasing the efficiency of the electric power grid. With
our advanced metering and distribution automation solutions, electric power utilities can more effectively and efficiently deliver
electricity to homes and businesses with less waste. With our products, electric power utilities can monitor actual voltage levels
at each consumer’s location and adjust system voltage remotely, improving energy efficiency. Green Circuits, a distribution-efficiency
initiative led by EPRI, has shown that utilities can achieve 1.8% to 2.7% overall energy reduction with conservation voltage reduction.
Pacific Northwest National Laboratory estimates that 2% energy savings in the United States from conservation voltage reduction
and advanced voltage control can reduce carbon emissions by 2% in the United States, or 59 million metric tons per year, by 2030.
McKinsey & Company estimates that by 2019, energy savings from conservation voltage reduction and volt-VAR optimization will
total $43 billion in 2009 dollars annually in the United States.



Competitive pricing. We believe our SEIP will is priced to
facilitate and hasten the deployment of smart electric power grid technology among resource constrained small and mid-sized electric
power utilities. There are 3,448 small to mid-sized electric power utilities in the United States, a majority of which we believe
lack the resources to adequately migrate to the smart electric power grid infrastructure.



Our Competitive Strengths



We believe we have a number of unique advantages that position
us for continued leadership and growth in providing the networking platform and solutions electric power utilities use to transform
the electric power grid infrastructure into the smart electric power grid. Our competitive strengths include:



Secure, reliable network for the smart electric power grid.
Our primary purpose is help electric power utilities build a reliable communication network with a strong emphasis on security
to help the utilities transform the power grid into the smart grid. The core of our technology is the network, which was designed
and built from the ground up for the specific purpose of addressing the stringent requirements of the smart electric power grid.
Alternative solution providers often repurpose networking technologies that have not comprehensively addressed the challenging
requirements of the smart electric power grid.



Innovative technology. We are building our networking platform
through our focused development of core networking, communications, semiconductor and power electronics technologies. We have developed
what we believe is the most secure networking platform that enabled two-way communications between electric power utilities and
millions of devices connected to the electric power grid. We are continuing to add features and functionality to improve our networking
platform and currently have our second generation of technology under development. We are also building a significant core competency
in key software disciplines, including operating system design, network management, security and analytics that both underlie our
networking platform and also enable the advanced solutions and applications we offer on top of our network.



Low total cost of ownership. We are designing our networking
platform to be high-performing, flexible and capable of supporting multiple solutions. As a result, we believe electric power utilities
can reduce their capital and operational expenditures by leveraging a single platform as compared to alternatives that will likely
require the deployment of additional, duplicative networking infrastructures to support additional solutions. The design of our
networking platform, which includes features such as self-healing, high-powered and modular architectures, allows for cost-effective
implementation in support of a single solution, such as advanced metering. Utilities that choose to deploy additional solutions,
such as distribution automation and demand-side management, can leverage their existing networking platform, resulting in lower
operating expenses, better capital efficiency and faster deployment, ultimately resulting in shorter time to value. We believe
for every solution that electric power utilities add to our networking platform, they further reduce their total cost of ownership
when compared to these alternatives.



Encryption and detection. Based on our review of smart electric
power grid related products against which SEIP now competes, we believe that none of them provide the required encryption and threat
detection capabilities required to secure the smart electric power grid.



Blue chip utility relationships. Our relationships are with
some of the largest and most recognizable electric power utilities in the United States. We have worked closely with these utility
customers with a focus on delivering superior products and a high level of service, allowing us to form long-term relationships.
Our close working relationships provide us with early and deep insight into their needs and future requirements, which then drives
our development efforts. When new projects arise with these customers, our relationships position us well to compete for their
business. In addition, our existing utility customers often serve as strong references when we compete for business from new utility
customers.









Our Strategy



Our objective is to provide the leading networking platform
and solutions that enable electric power utilities to transform the electric power grid into the smart electric power grid, ultimately
becoming the industry standard for electric power utilities worldwide. To achieve this objective, we intend to:



Exceed our customers’ expectations. We seek to differentiate
ourselves from our competitors through superior product reliability, performance and service. We believe that this focus has strengthened
our relationships with our existing utility customers. We have regular feedback sessions with our utility prospects, which allow
us to better understand their evolving needs and continuously improve our products and services. We also believe that a global
presence and investments in software engineering and support will create competitive advantages in serving domestic and international
utilities.



Expand internationally. Our goal is to be the leader in every
market we enter. We believe the smart electric power grid has become a priority for electric power utilities worldwide, and to
address this opportunity we plan to aggressively invest in our products, marketing efforts and delivery capabilities to serve international
markets including Australia, South America, Europe and Asia. We have prioritized our international activities based on countries
with a combination of the following attributes: high GDP, high total and per-capita electricity consumption, utilities with a large
number of homes and businesses, government mandates, available RF spectrum, high energy theft, reliability concerns and operating
inefficiencies. To address this international opportunity, we plan to aggressively invest in our products, marketing efforts and
delivery capabilities to serve these markets.



Broaden our solutions and services. We strive to broaden
the scope of our solutions and services to maximize the benefit our utility customers receive from having deployed our Secure Intelligent
Energy Platform. This expansion includes providing electric power utility customers with additional solutions and services from
our current portfolio and developing new solutions and services to address our electric power utility customers’ evolving
requirements.



Extend our technology leadership. We intend to continue to
invest in research and development to further enhance our technology leadership. Since the deployment of our networking platform,
we have been able to simultaneously reduce hardware production costs while materially enhancing its functionality. Over the long
term, we believe our networking platform has the potential to be extensible to areas beyond electric energy, enabling the Internet
of things.



Build relationships. We are in the process of building relationships
with electric power utilities, manufacturers, major DC lobby firms, and international law firms, and certain government officials
nationally and locally. These relationships will afford us the visibility needed for government grants, loan guarantees, and funding,
as well as aid in the prioritization of global markets.



We intend to generate revenues from the design, sales, installation,
and support of the hardware, software and technology, associated with SIEPTM. Additionally, revenues may be generated from
licensing our GRiM and, Infrax Networks wireless communications and future products. We believe that by continuing to execute our
strategy and connect additional homes and businesses, we will experience a network effect that will establish our Secure Intelligent
Energy Platform as the platform of choice for electric power utilities.



Our Partners



Although we believe our networking platform is the core enabler
of the smart grid, meters and other third-party products are critical to meeting the needs of our utility customers and unlocking
the full value of our platform. Because our products are built using open standards, third-party hardware and software vendors
can integrate both new and existing devices with our platform, forming end-to-end smart grid offerings.



To meet the needs of the market, we have entered into a Technical
Information License Agreement with Itron, Inc., the leading manufacturer of smart meters. The license agreement allows us to design
our SNIC and communications module for inclusion in the Itron Centron I & Centron II meters. We have been working closely with
Itron during this process to ensure that we are fully compliant and the results to date have all met Itron’s criteria. When
the qualification testing process is finished, we will be able to license the communications module to Itron and sell the product
directly as Itron-compliant.



While we have also been in discussions with several other
global meter manufacturers regarding the inclusion of the SNIC and GridMesh into their AMI meters, we believe that Itron’s
dominant market position and the strength of our relationship will drive the results required to meet our business objectives.



Our hardware vendors manufacture meters, capacitor bank controllers,
in-home displays, electric vehicle charging stations, energy storage devices, smart thermostats and other related devices. Our
software vendors provide various applications including meter data management, consumer information management, energy management,
work order management, and outage management software that leverages our outage detection application.



INFRAX Strategy









We intend to generate revenues from the design, sales, installation,
and support of the hardware, software and technology, associated with our integrated solution, Infrax Secure Intelligent Energy
Platform (SIEP) TM.  Additionally, revenues may be generated from licensing our Security, GRiM and, Infrax
Networks wireless communications and future products.



Our efforts are presently focused on attaining the following:



INCREASED MARKET PENETRATION OF OUR WIRELESS BROADBAND
PRODUCTS



Our strategy is to capitalize on the millions of dollars
and thousands of man hours invested in one of our core technologies, the T-Max family of wireless broadband products, developed
by Trimax Wireless, Inc, which we acquired in June 2010. We own the Intellectual Property of these systems having acquired Trimax
Wireless, Inc and have enhanced the T-Max product line for use in Smart Grid applications for utility infrastructure management.



The new UMAX and UMAX+ product lines provide additional functionality
and features to an already robust platform. Designed to provide data acquisition, network extension and backhaul capabilities,
the UMAX+ is now available in 4-port and 8-port configurations supporting either 4 or 8 T1 links. The units provide Ethernet on
the drop side in addition to handling TDM traffic.



INCREASED MARKET PENETRATION AND INTEGRATION OF OUR
ASSET MANAGEMENT PRODUCTS



We continue to discover new and exciting applications for
the asset management, tracking and security products developed by Lockwood Technology. Infrax acquired controlling interest in
Lockwood in April 2011 and has been focused on integrating Lockwood’s capabilities into the Secure Intelligent Energy Platform.
While we continue to support Lockwood’s existing municipal and public safety applications, there is vast potential to deploy
this technology within the utility sector.



Asset management has long been a goal of utilities, especially
in times of storms and weather related circumstances. Disaster response can be greatly improved through comprehensive reporting
on asset and material location and availability. The Asset Tracker allows utility vehicles to be quickly and accurately inventoried
each time they are deployed and return for restocking. Mobile solutions are also available to relay asset utilization over wireless
links on a real time basis from the site of a service interruption.



EXPAND OUR STRATEGIC ASSOCIATIONS



Since our inception, we have built relationships with Utilities,
Manufacturers, major DC Lobbyist Firms, and International Law firms, and certain Government Officials nationally and locally. These
relationships will afford us the visibility needed for Government grants, loan guarantees, and funding, as well as aid in the prioritization
of global markets.



DRIVE BUSINESS DEVELOPMENT



We believes the industry will be driven by a few, key early
adopters who will set the stage for North American smart grid deployments, especially those companies that have been awarded millions
in stimulus grants . Initially we have been focusing our efforts on utilities that have recently obtained grants from the Stimulus
Act.  Upon funding, we will direct our business development effort towards the 3,448 small to mid-sized utilities in
the United States, as the majority of these utilities lack the resources to adequately migrate to the Smart Grid infrastructure.



PURSUE OUR ROLE AS A SECURE SYSTEMS INTEGRATOR



We are committed to our role as a supplier of secure Smart
Grid communications platforms. We will continue to expand our professional services including network design, hardware and software
development and integration, installation support, operator training and network management. Our understanding of the architecture,
hardware, and software requirements of major utilities from our prior experience enables us to design solutions from the ground
up and to meet utility requirements. We intend to design, manufacture and market all of the key components of the network.



BECOME A LEADING SOLUTIONS PROVIDER WITH
A DIVERSIFIED PLATFORM AND A GLOBAL PRESENCE



Our customers’ requirements create the need for our
products and our goal is to drive application development to meet these needs. While Infrax’s Secure Intelligent Energy
Platform incorporates our secure wireless technology, we believe that growth in the Smart Grid communications industry will come
primarily as utilities deploy Smart Grid applications including AMR/AMI, distribution and substation automation. These future points
of entry for Smart Grid applications may include home energy management systems, demand response tools and other applications which
will require the secure access provided by our Secured Network Interface Card (SNIC) TM technology currently under development.



EXPAND OUR STRATEGIC COLLABORATIVE RELATIONSHIPS









Continued collaboration with our development partners, utility
customers and synergistic smart grid application providers will further enhance the development and functionality of our Secure
Intelligent Energy Platform. We have established joint development arrangements with a host of technology providers to keep us
on the cutting edge of new technologies, and we will continue to create working relationships with leading suppliers of critical
network and IEDs (Intelligent Endpoint Devices) components such as sensors, integrated communication hub and aggregators, consumer
centric energy management devices as well as metering solution providers.  We are working with electric utilities to
conduct application trials. We intend to strengthen these relationships and to seek out new strategic and commercial relationships
with utilities and other technology companies.



Infrax Systems has entered into a Technical Information License
Agreement (TIL) with Itron, the leading manufacturer of smart meters.  The license agreement allows Infrax to design its Secure
Network Interface Card (SNIC) and communications module for inclusion in Itron Centron I & Centron II meters. We have been
working closely with Itron during this process to ensure that we are fully compliant and the results to date have all met Itron’s
criteria. When the qualification testing process is finished, Infrax can license the communications module to Itron and sell the
product directly as Itron-compliant.



While we have also been in discussions with several other
global meter manufacturers regarding the inclusion of the SNIC and GridMesh into their AMI meters, we believe that Itron’s
dominant market position and the strength of our relationship will drive the results required to meet our business objectives.



ACTIVELY PURSUE TARGETED STRATEGIC ACQUISITIONS



We intend to actively pursue selective acquisitions to enhance
our product/service offerings and to further expand our solutions into the alternative energy and intelligent energy solutions
sector. Utilizing our core platform as the foundation for additional products and services, we can increase the potential of other
technology products by integrating them with our solution. We have identified several potential technology companies which have
technologically advanced products to complement our solution.  We intend to look for opportunities to acquire technologies
that would support and enhance our current technology platform with a particular focus on growing managed services offerings through
our energy management solutions.



Our Intellectual Property and Its Protection



Infrax Systems:  Opticon Network Manager
software and Smart Grid products



Our intellectual property consists of all of Corning Cable,
Inc,’s intellectual property related to the Opticon Network Manager software. Our rights by purchase in our intellectual
property are equivalent to that of any developer or creator of intellectual property. We have exclusive ownership of the Opticon
Network Manager software and all its revisions and new versions, including R4, with the exclusive right to license it to others.



Additionally, our intellectual property relating to our Smart
Grid products includes the design of the Secure Network Interface Card (SNIC) and its associated proprietary mesh routing scheme,
customized modifications to our security software platform, and the wireless equipment hardware and software designs as well as
the associated patents included in the Trimax Wireless, Inc. acquisition.



We regard all of our hardware, software and its documentation
as proprietary and the source code for the software as a trade secret. We intend to complete the implementation of confidentiality
procedures, contractual arrangements, physical security systems and other measures to protect our proprietary and trade secret
information when we begin to hire employees. As part of our confidentiality procedures, we will generally enter into non-disclosure
agreements with our key employees, and our license agreements will include provisions for protection of our proprietary information.
We also plan to educate our employees on trade secret protection and employ measures to protect our facilities and equipment.  We
plan to license our software products under signed license agreements that impose restrictions on the licensee’s ability
to utilize the software and do not permit the re-sale, sublicense or other transfer of the software.



We have filed two provisional patent applications for our
Smart Grid products, and intend to do more as development progresses. We do hold seven patents associated with the Trimax acquisition
and continue to patent our wireless mesh technology as we complete each development phase.



Our software is protected under U.S. and international copyright
laws and laws related to the protection of intellectual property and proprietary information. We do not need to do any further
steps to protect our IP than stated. Neither we, nor to our knowledge Corning Cable, has filed a U.S. copyright registration. We
will file a registration for the Secure Intelligent Energy Platform products as they are completed. We take measures to label our
product with the appropriate proprietary rights notices, and we plan to actively enforce such rights in the U.S. and abroad. We
believe that our ability to maintain and protect our intellectual property rights is important to the success of our business.
Our intellectual property is at this time our only asset that will enable us to engage in our planned business. The measures for
its protection described in this section may not provide sufficient protection and our intellectual property rights may be challenged.
Efforts to enforce our intellectual property rights in







litigation, or defend suits brought against us for copyright
infringement, which we do not have reason to expect, would be expensive and consume substantial amounts of our management’s
time. Our ability to pursue remedies against person who we believe may infringe our intellectual property rights will depend on
our financial condition from time to time.



Trimax Wireless Systems (acquired intellectual property
June 29, 2010)



Trimax' solutions enable multiple applications to run concurrently
over the same standards-based infrastructure, leveraging capital investment and operating costs.  Trimax has a growing
list of Solution Partners that provide best-of-breed complementary products to help customers implement whole product solutions.



The Trimax Wireless TMAXTM Cross Platform product line
is the first to combine Wi-Fi, WiMAX and DECT into a single unified system. TMAX includes base stations, broadband wireless routers,
edge nodes and CPE devices. The entire TMAX product line is based on modular, rugged outdoor platforms that support a common set
of radio modules.



Around the world, Trimax leads the way in helping to increase
public safety, improve mobile worker efficiency, boost the local economy, and deliver wireless broadband connectivity to people
wherever they are...and wherever they're going.



Lockwood Technology Corporation (acquired controlling
interest and intellectual property April 8, 2011)



Lockwood has focused on developing world class asset tracking
software and asset tracking services using bar coding, radio frequency (RFID), imaging, and wireless technologies. The "Lockwood
solution" is comprised of a "set" of services and products, which can be implemented as a whole or implemented as
building blocks. Each component is able to work independently of the others, yet when combined, serve to provide a complete seamless,
integrated system.



Our proprietary software provides:



|· | Mobile Public Safety - Providing public safety workers in the field with timely access to the information they need is reducing crime and saving lives                                                                    
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | Video Surveillance - A cost-effective alternative to adding additional people to increase security coverage, cameras are extending the visual reach of police, fire, lifeguards and park rangers                          
|· | Utility Meter Reading - Centrally connected utility meters are improving customer satisfaction and encouraging conservation while lowering operational costs                                                              
|· | Intelligent Transportation Systems (ITS) - Real-time traffic analytics and control is minimizing congestion and improving safety on crowded roadways as well as reducing emissions                                        
|· | Municipal Modernization and Mobility - Extending office IT resources to the field is improving worker efficiency, lowering costs, and raising citizen satisfaction                                                        
|· | Automated Parking Meters - Variable parking rates, and flexible payment options, are improving main street business.                                                                                                      
|· | Industrial - Often operating in hostile conditions, industrial site networks are used for a range of activities that improve business operational efficiencies, reduce operating cost, and increase worker and site safety
|· | Public Access - Citywide, campus-wide, and hot zone Wi-Fi networks increase quality of life, educational opportunities, and economic development                                                                          



Security and Network Interface Card (SNIC)(Intellectual
Property Rights filed)



We have filed for global patent for our Security and Network
Interface Card after the successful completion of the field trials in 2014.



GridMesh (Intellectual Property Rights have been filed)



We have filed for global patent for our GridMesh technology
after the successful completion of the field trials in 2014.



Competitive Landscape



Competition in our market is intense
and involves rapidly changing technologies, evolving industry standards, frequent new product introductions, and changes in customer
requirements. To maintain and improve our competitive position, we must keep pace with the evolving needs of our utility customers
and continue to develop and introduce new products, features and services in a timely and efficient manner.



The principal competitive factors that
affect our success include:



•	 	Our ability to anticipate
changes in utility customer requirements and to develop new or improved products that meet these requirements in a timely manner;



•	 	The price, quality
and performance of our products and services;









| | • | Our ability to differentiate our products and services from those of our competitors and thereby
win new utility customers;
| | - | ---------------------------------------------------------------------------------------------------------------------------

•	 	Our reputation, including
the perceived quality and performance of our products and services;



| | • | Our ability to ensure that our products conform to established and evolving industry standards
and governmental regulations;
| | - | ----------------------------------------------------------------------------------------------------------------------------



•	 	Our customer service
and support;



•	 	Warranties, indemnities,
and other contractual terms; and



•	 	Customer relationships
and our ability to obtain strong customer references that will support future sales efforts and market awareness of our Secure
Intelligent Energy Platform.



We believe we compete effectively in
the market as a result of a number of factors including the innovative nature of our technology, the breadth of our product offerings,
field-proven performance, competitive cost of ownership, our extensive relationships with third-party vendors and strong references
from our utility customers.



Our competitors range from small to
very large and established companies. These companies offer a variety of products and services related to the smart grid and come
from a number of industries, including traditional meter manufacturers, application developers, telecommunications vendors, and
other service providers.



We compete with traditional meter manufacturers
that incorporate various communications technologies that provide some level of connectivity to the utility’s back office.
Our key competitors in this segment include Echelon Corporation, Elster Group SE, Landis+Gyr AG, and Sensus Metering Systems Inc.
Similarly, we compete with traditional providers of distribution automation equipment, such as S&C Electric Company and Schweitzer
Engineering Laboratories, Inc.



We also face competition from other
entrants that are providing specific narrowly focused products for the smart grid, including Coulomb Technologies Inc., Ambient,
Silver Springs, E2O Communications Inc., Grid Net Inc., OPOWER Inc., SmartSynch, Inc. and Tendril Networks Inc. We anticipate that
in the future, additional competitors will emerge that offer a broad range of products and services related to the smart grid,
some of which may be directly competitive with our offerings.



These companies may have competitive
advantages in the market, including strong brand recognition, long-standing customer relationships, established distribution networks,
deep financial resources and broad product portfolios. In addition, some of our competitors may have larger patent portfolios than
we have which may provide them with a competitive advantage and may require us to engage in costly litigation to protect and defend
our intellectual property rights.



We compete in four distinct market sectors:

-advanced metering,

-networking and communications,

-electric power grid optimization/distribution
automation, and

-software.



We may compete directly with certain
companies in certain sectors and indirectly in others. It is important to note that some market segments are more defined than
others.



The market for our products is in its
infancy and there is no clear market leader, which provides Infrax entry with a unique product line. We also believe that none
of our competitors offer a unique blend of network, device, data and security management as Infrax. In order to maintain and improve
our competitive position in the market, we must continue to invest in research and development, and continue to anticipate changes
in the market and our customers’ requirements.

Recent Competitor’s activity &
Recent Industry Acquisitions of Our Competitors



• Silver Springs Networks –
competitive advantage

»
Developed Smart Grid Energy Platform with NIC for GE meters and end-to-end
management

» Have won several utility contracts
for AMI deployment

» Public Company as of 2013 (SSNI)



• LandysGyr

» Large meter manufacturer

» Acquired by Toshiba in July 2011
for 2.3B

» Combined company targeting Advanced
Metering Infrastructure (AMI)



• eMeter







» A premium Meter Data Management
(MDM) company

» Acquired by Siemens – terms
not disclosed, but Siemens invested $12.5 M in 2008



• SmartSynch

» Smart Grid Company focused on
meter communications over public wireless

» In business since 2000 providing
innovative solutions for utilities

» Acquired in January 2012 by Itron
for $100M



• Schneider Electric

» Strong energy Management Company
with a variety of products for utilities

» Acquired Telvent, a provider
of IT and software solutions to the power grid for $2B in

June 2011







Our Employees



At the date of this annual report, we have seven (7) full-time
and three part-time employees. The majority of employees work out of our offices in Saint Petersburg. We have several remote employees
dedicated to sales and deployments.



Item 1A.  Risk factors



We wish to caution you that there are risks and uncertainties
that could cause our actual results to be materially different from those indicated by forward looking statements that we make
from time to time in filings with the U.S. Securities and Exchange Commission, news releases, reports, proxy statements, registration
statements and other written communications as well as oral forward looking statements made from time to time by our representatives.
These risks and uncertainties include, but are not limited to, those risks described below that we are presently aware of. Additional
risks and uncertainties that we currently deem immaterial may also impair our business operations, and historical results are not
necessarily an indication of the future results. The cautionary statements below discuss important factors that could cause our
business, financial condition, operating results and cash flows to be materially adversely affected.



An investment in our common
stock involves a high degree of risk. Therefore, if you are considering buying our common stock, you should consider all of the
risk factors discussed below, as well as the other information contained in this annual report. You should not invest in our common
stock unless you can afford to lose your entire investment and you are not dependent on the funds you are investing in order to
pay your monthly expenses.



Without minimum funding of
$5 million and additional funding of up to $20 million, we may not be able to establish, maintain and grow our business.



At the date of this annual report, we do not have the
funding we require to maintain our business and we have had limited success in raising capital in the past 2 years.  We
have concentrated mainly on developing our hardware and software solutions. Furthermore, we do not have any existing or ongoing
arrangement, understandings, commitments or agreements for additional funding.  Failure to raise additional debt or equity
funding would prevent us from completing development of the Secure Intelligent Energy Platform and associated products and possibly
cease operations. There is no assurance that we will be able to obtain sufficient debt or equity funding, or that the terms of
available funding will be acceptable to us. Failure to raise additional debt or equity funding would most probably result in a
complete loss of their investment by purchasers of our common stock.



“Penny Stock” rules may make buying or
selling our common stock difficult.



Trading in our securities is expected to be subject, at least
initially, to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to
be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions, none of which apply
to our common stock. These rules require that a broker-dealer, who recommends our common stock to persons other than its existing
customers and accredited investors, must, prior to the sale:



|● | Make a suitability determination prior to selling a penny stock to the purchaser;                                               
|- | --------------------------------------------------------------------------------------------------------------------------------
|● | Receive the purchaser’s written consent to the transaction;                                                                     
|● | Provide certain written disclosures to the purchaser;                                                                           
|● | Deliver a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market;
|● | Disclose commissions payable to both the broker-dealer and the registered representative; and                                   
|● | Disclose current quotations for the common stock.                                                                               



The additional burdens imposed upon broker-dealers by
these requirements may discourage broker-dealers from effecting







transactions in our common stock, which could severely
limit the market price and liquidity of our common stock. These requirements may restrict the ability of broker-dealers to sell
our common stock and may affect your ability to resell our common stock.



The price of our common stock may fluctuate significantly
and you may find it difficult to sell your shares at or above the price you paid for them.



We do not know the extent to which the market for our
shares of common stock may be volatile. Therefore, your ability to resell your shares may be limited. Actions or announcements
by our competitors and economic conditions, as well as period-to-period fluctuations in our financial results and other factors,
may have significant effects on the price of our common stock and prevent you from selling your shares at or above the price you
paid for them.



We have a limited operating revenue history that can be used
to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications
and delays that we may encounter because we are a small business. As a result, we may not be profitable and we may not be able
to generate sufficient revenue to develop as we have planned.



Our ability to achieve and maintain profitability and positive
cash flow will be dependent upon:



|Ø | Management’s ability to maintain the technology skills for our services;                                     
|- | -------------------------------------------------------------------------------------------------------------
|Ø | The Company’s ability to keep abreast of the changes by the government agencies and law;                     
|Ø | Our ability to attract customers who require the services we offer; and                                      
|Ø | Our ability to generate revenues through the sale of our services to potential clients who need our services.



Based upon current plans, we expect to incur operating
losses in future periods because we will be incurring expenses and not generating sufficient revenues to cover our expenses.  We
cannot be sure that we will be successful in generating revenues in the future.  Failure to generate sufficient revenues will
cause us to go out of business and any investment in our Company would be lost.



Managing a small public company involves a high degree of
risk. Few small public companies ever reach market stability and we will be subject to oversight from governing bodies and regulations
that will be costly to meet.  Our present officers and directors do not have any experience in managing a fully reporting
public company so we may be forced to obtain outside consultants to assist with our meeting these requirements.  These outside
consultants are expensive and can have a direct impact on our ability to be profitable. This will make an investment in our Company
a highly speculative and risky investment.



While the Company is attempting to disclose all of the
potential risks associated with an investment in the Company, there can be no assurance that all of the risks are visible to management.
 Events occurring in the future may cause additional risks to an investment in the Company which are currently unforeseen.



We have a limited operating history that you can use to evaluate
us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays
that we may encounter because we are a small company.  As a result, we may not be profitable and we may not be able to
generate sufficient revenue to develop as we have planned.



The success of our business depends, in part, upon proprietary
technologies and information which may be difficult to protect and may be perceived to infringe on the intellectual property rights
of third parties.



We believe that the identification, acquisition and development
of proprietary technologies are key drivers of our business. Our success depends, in part, on our ability to obtain patents, maintain
the secrecy of our proprietary technology and information, and operate without infringing on the proprietary rights of third parties.
We cannot assure you that the patents of others will not have an adverse effect on our ability to conduct our business, that the
patents that provide us with competitive advantages or will not be challenged by third parties, that we will develop additional
proprietary technology that is patentable or that any patents issued to us will provide us with competitive advantages or will
not be challenged by third parties. Further, we cannot assure you that others will not independently develop similar or superior
technologies, duplicate elements of our technology or design around it.



Item 1B.  Unresolved staff comments



None.



Item 2.  Properties



Our executive office is now located in an office complex
under annual five year lease, beginning June 1, 2012 at a rent of $3,315 per month and escalating to $4,765 per month.. We entered
into this 5-year commercial lease agreement in St. Petersburg, Florida with Kalyvas Group II, LLC. Our lease provides us with approximately
4,100 square feet of: reception area, nine offices, a lab/production area, inventory room, server room, kitchenette and one conference
rooms.  We believe the facilities are adequate for our operational needs.  We may require additional offices
in the event we obtain funding and acquire additional customers.









Item 3.  Legal proceedings



| | (a) | During the fourth quarter of our year ended June 30, 2011, Trimax Wireless filed a complaint
relating to the unpaid balance of the Promissory Note executed with the acquisition of Trimax Wireless. The Company has filed a
motion to dismiss such action which is set for hearing. The note is unsecured, however, if holders prevail, they may be entitled
to legal cost, in addition to payments per the term of the agreement. The Company believes that it has sufficient affirmative defenses
to this complaint and does not believe that it will have a material effect on the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | We have filed a Federal lawsuit against Lockwood Worldwide and its owners, current and previous
management in the UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA. We are requesting an award of compensatory damages,
an award of treble damages pursuant to the provisions of RICO and other applicable federal and state statutes and an award of punitive
damages in the full amount by the jury against each of the Defendants. As Plaintiff, we have suffered damages as a result thereof,
an amount in excess of $4,350,000.00. We are asking for a total damages up to 4 times the amount of loss or close to $16M. As of
the filing of this 10/K, We have had success in freezing their operational account and all funds associated with that account.
As of filing of this 10/K, we are planning on mediation in October 2014, ordered by the federal court, to settle the case for monetary
considerations.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



(b)  We did not terminate any
legal proceedings during the fourth quarter of our 2013 fiscal year.



Item 4.  Submission of matters to a vote of security
holders



We did not submit any matter to a vote of our security holders,
through the solicitation of proxies or otherwise during the fourth quarter of our 2013 fiscal year.



PART II



Item 5.  Market for registrant’s common equity,
related stockholder matters and issuer purchases of equity securities



Our common stock is quoted on OTC Bulletin Board under the
symbol “IFXY”. The Company began trading on January 11, 2008.



Price History of our common stock.



The following table sets forth high and low bid quotations
for the quarters indicated and trading volume data for our common stock for the period indicated.  These quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.



|                                       |  | High  Bid |       |  | Low  Bid |  
|-------------------------------------- |  | --------- | ----- |  | -------- | -
|Fiscal Year 2013*                      |  |           |       |  |          |  
|Fourth Quarter Ended June 30, 2013     |  | $         | 0.022 |  |          | $
|Third Quarter Ended March 31, 2013     |  | $         | 0.06  |  |          | $
|Second Quarter Ended December 31, 2012 |  | $         | 0.06  |  |          | $
|First Quarter Ended September 30, 2012 |  | $         | 0.12  |  |          | $
|                                       |  |           |       |  |          |  
|Fiscal Year 2014*                      |  |           |       |  |          |  
|Fourth Quarter Ended June 30, 2014     |  | $         | 0.03  |  |          | $
|Third Quarter Ended March 31, 2014     |  | $         | 0.03  |  |          | $
|Second Quarter Ended December 31, 2013 |  | $         | 0.03  |  |          | $
|First Quarter Ended September 30, 2013 |  | $         | 0.03  |  |          | $



* On July 14, 2011 the Company's Board of Directors affected
a 1:500 reverse stock split, effective August 26, 2011 (record date). The share prices have been retroactively stated to reflect
the reverse-split shares.



As of September 19, 2014 we had 65 shareholders of record
and approximately 4, 352 beneficial shareholders, and we had 110,592,793 shares of $0.001 par value common stock outstanding.



Dividend Policy



We have never declared or paid any cash dividends on our
capital stock, except for distribution of shares previously held in FutureWorld (FWDG), that were acquired in the exchange for
intellectual property. We do not have earnings out of which to pay cash dividends.  Our board of directors has the authority
to declare cash dividends when and if we have earning sufficient for that







purpose.



Equity Compensation Plan



See description our Stock Option Plan in Item 12.



Transfer Agent



We have engaged ClearTrust, Inc. to serve as our stock register
and transfer agent.  ClearTrust’s address is 17961 Hunting Bow Circle, Unit 102, Lutz, FL 33558.



Sales of Unregistered Securities



None



Item 6.  Selected financial data



The following financial data is derived from, and should
be read in conjunction with, the “Financial Statements” and notes thereto. Information concerning significant trends
in the financial condition and results of operations is contained in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”





|                                                 |  | 2014 |             |  | 2013 |  
|------------------------------------------------ |  | ---- | ----------- |  | ---- | -
|                                                 |  |      |             |  |      |  
|Cash                                             |  | $    | 547         |  | 1    | $
|Current assets                                   |  |      | 23,920      |  |      |  
|Total Assets                                     |  |      | 1,883,721   |  |      |  
|                                                 |  |      |             |  |      |  
|Total current liabilities                        |  |      | 2,531,628   |  |      |  
|Total liabilities                                |  |      | 3,355,319   |  | 8    |  
|Total stockholders' equity (deficit)             |  |      | (1,471,598) |  |      |  
|                                                 |  |      |             |  |      |  
|Working Capital                                  |  |      | (2,507,708) |  |      |  
|                                                 |  |      |             |  |      |  
|Net Cash (Used) Provided by Operating Activities |  |      | (60,856)    |  |      |  
|                                                 |  |      |             |  |      |  



|For the Year Ended June 30,      |  | 2014 |            |   | 2013 |  
|-------------------------------- |  | ---- | ---------- | - | ---- | -
|                                 |  |      |            |   |      |  
|Revenues                         |  | $    | 136,901    |   |      | $
|Direct costs                     |  |      | 46,722     |   |      |  
|Interest exp & Minority Interest |  |      | 117,063    |   |      |  
|Operating expenses:              |  |      | 2,418,793  |   |      |  
|Net loss                         |  | $    | (2,211,551 | ) |      | $





Item 7.  Management’s discussion and analysis
of financial condition and results of operations



You should read the following discussion and analysis in
conjunction with the information set forth under Item 6, Selected Consolidated Financial Data, and our consolidated financial statements
and related notes included elsewhere in this Annual Report on Form 10-K. The statements in this discussion regarding our expectations
of our future performance, liquidity and capital resources, and other non-historical statements in this discussion are forward-looking
statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the
risks and uncertainties described under "Risk Factors" and elsewhere in this Annual Report on Form 10-K. Our actual results
may differ materially from those contained in or implied by any forward-looking statements. Our significant accounting policies
are more fully described in Note 1 to the financial statements. However, certain accounting policies are particularly important
to the portrayal of our financial position and results of operations and require the application of significant judgment by our
management; as a result they are subject to an inherent degree of uncertainty. In applying these policies, our management uses
their judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are
based on knowledge of our industry, historical operations, terms of existing contracts, and our observance of trends in the industry,
information provided by our customers and information available from other outside sources, as appropriate.



Overview









INFRAX market opportunity exists in one of the largest industries
in the world. Globally, according to the International Energy Agency (IEA), this industry is expected to spend close to $10 trillion
dollars by 2030 to upgrade electrical infrastructure. Technology innovations in power delivery have been fermenting for years,
but only now is the confluence of physical need and social expectations creating an environment in which real and sustained monetary
commitments are being made to create a “Smart Grid” built on information-based devices, digital communication and advanced
analytics. Networking giant Cisco has estimated that the market for smart grid communications will grow into a $20 billion-a-year
opportunity as the infrastructure is built out over the next five years. Globally, SBI expects the market for smart grid technologies
to grow to about $171 billion by 2014 up from approximately $70 billion in 2009.



The complexity of the grid implies that vulnerabilities exist
that have not yet been identified. It is particularly difficult to estimate risk from cyber-attack because of the size, complexity,
and dynamic nature of the power grid and the unpredictability of potential attackers.



Infrax creates a unified solution path to securely manage
Advanced Metering Infrastructure (AMI) and other Smart Grid optimization applications such as substation and distribution automation.
Our product portfolio provides Network Transport and Management, Secure Intelligent Devices, Threat Detection, and Grid Optimization,
all integral components of a state-of-the-art Smart Grid solution. Every utility, telecommunications carrier, wireless service
provider, government and businesses with the need to securely transmit data and manage their network is a potential customer for
the Infrax product line.



We believe our technology is particularly well suited for
a range of other solutions across the broad category of the IoT (internet of things). We are focused on critical infrastructure
that requires similar networking performance as the current market we serve. Our first expansion beyond the power grid has been
on facility infrastructure, specifically automated wireless LED lights. We believe that by applying advanced networking technology,
we can enable facilities and cities to achieve their goals for increasing energy and operating efficiency while improving quality
of life. We expect to expand our offerings in this area as the market opportunity evolves.



Infrax’s innovative and comprehensive solutions have
the power to secure the future.



Factors Affecting Our Performance



The Pace of Smart Grid Adoption



Our financial performance is correlated to the pace of adoption
of the smart grid in the utility industry. The adoption of the smart grid in the United States and globally is evolving and is
impacted by multiple factors including the business needs and priorities for utilities, cost benefit analysis, technology testing,
rate case timing, regulatory or government reviews and approvals and consumer sentiment. Smart grid adoption in international markets
has trailed adoption in the United States as international markets continue to explore the technology and define the benefits and
regulatory requirements for the smart grid. Although we believe the adoption of the smart grid will continue to expand globally,
the future pace and degree of adoption cannot be determined with certainty.



Long and Unpredictable Sales Cycles



Sales cycles with our prospective customers, particularly
to utilities, which are our primary set of prospective customers, tend to be long and unpredictable. Sales cycles can be subject
to multiple trial deployments, or pilots, before a full deployment contract is awarded, with no assurance that our networking platform
and solutions will be selected. Our customers also typically need to obtain regulatory approval for these deployments.



Reliance on Third-Party Manufacturers



We outsource the manufacturing of our hardware products to
third-party contract manufacturers. Accordingly, a significant portion of our cost of revenues and substantially all of our deferred
costs consist of payments to our contract manufacturers. Our contract manufacturers generally secure capacity and procure component
inventory on our behalf based on a rolling forecast. As part of our design review process, we also attempt to identify alternative
or substitute parts for single-source components to further mitigate the risk of shortages.



Innovation of New Products and Services Expansion



An important aspect of our strategy depends on our ability
to expand beyond advanced metering sales and sell additional solutions to our existing and prospective customers. There can be
no assurance that these products and services will be accepted by utilities or consumers. Similarly, our future success depends
on our ability to expand our business beyond the smart grid into IoT (Internet of Things) infrastructure. We have only recently
introduced automated wireless LED lights for other industries. There can be no assurance that this or other future IoT products
and services will be accepted by potential customers. Other competing products and services for both the smart grid and IoT may
emerge and may be more successful.









Investments in Growth



We believe the smart grid and IoT markets are still in their
infancy and our objective is to continue to invest for long-term growth. We expect to continue to invest heavily in our research
and development initiatives to expand the capabilities of our secure networking platform. In addition, we expect to continue to
aggressively expand our sales organization and partnerships to market our solutions both in the United States and internationally.
We may incur losses in future periods as we continue to invest in our growth.



Our Marketing Plan



The first phase in our plan of operations, subject to adequate
funding, will be implementation of our sales and marketing plan. We plan to initially select several resource constrained small
to mid-sized utilities to function as beta test sites for our Secure Intelligent Energy Platform.  We are currently working
with one mid-sized utility during the design phase of product development.  We will also be targeting utilities for the
immediate deployment of our “Smart Grid Ready” wireless products in preparation of the completion and launch of our
SIEP.



Infrax Systems has entered into a Technical Information License
Agreement (TIL) with Itron, the leading manufacturer of smart meters.  The license agreement allows Infrax to design its Secure
Network Interface Card (SNIC) and communications module for inclusion in Itron Centron I & Centron II meters. We have been
working closely with Itron during this process to ensure that we are fully compliant and the results to date have all met ITRON’s
criteria. When the qualification testing process is finished, Infrax can license the communications module to Itron and sell the
product directly as Itron-compliant. As of the filing of this 10/K, Infrax is in the process of certification of its flagship product
with ANSI and Itron.



While we have also been in discussions with several other
global meter manufacturers regarding the inclusion of the SNIC and GridMesh into their AMI meters, we believe that ITRON’s
dominant market position and the strength of our relationship will drive the results required to meet our business objectives.



Product Research and Development



Our Smart Grid products are in the final stages of development
and we anticipate delivering prototype solutions to our targeted beta customers by the end of the 4th quarter of 2014. We have
budgeted $1.0 M for the completion of our hardware and software products. We may not have financial or other resources to undertake
this development. Without additional funding sufficient to cover this budgeted amount, we may not have the resources to conduct
this development.



We anticipate that as funding is received, of which there
is no assurance, and we will begin hiring the appropriate technical staff that will be able to handle support requirements for
this market segment. We anticipate a need for up to forty-four employees by the end of the first year of full operation after funding.
The number of employees we hire during the next twelve months will depend upon the level of funding and sales achieved.



Funding



To support our activities and provide the initial sales and
support for entry into the Utility marketplace, as noted above, we will require an initial investment of approximately $5 million.
We expect this level of funding to carry us into the Smart Grid and Utility marketplaces and provide the capital necessary to complete
the development of our SIEP and SNIC products.



Key Elements of Operating and Financial Performance



We monitor the key elements of our operating and financial
performance to help us evaluate growth trends, determine investment priorities, establish budgets, measure the effectiveness of
our sales efforts and assess operational efficiencies.



Revenue



Currently, we derived all of our revenue from sales of Lockwood
Technology products and services that enable customers to manage their assets internally. In 2014, product revenue represented
31% and service revenue represented 69% of our total revenue.



Our product revenue is derived from sales of asset management
system software. To date, in our typical customer deployments, we have sold our Lockwood asset management system directly to our
customers. However, when requested by our customers, we have sold third-party devices such as handheld inventory counting devices
directly to our customers.



Our service revenue includes fees for professional services,
managed services and SaaS, and ongoing customer support. To date, a substantial majority of our revenue is attributable to a limited
number of customer solutions that includes Lockwood’s current customers such as Sapient and Level 3.









We expect that a limited number of customers will continue
to account for a substantial portion of our revenue in future periods (although these customers have varied and are likely to vary
from period to period) until the completion of our Smart Grid platform.



Cost of Revenue and Gross Profit (Loss)



Product cost of revenue consists of third party product costs,
including raw materials, component parts and associated freight, and normal yield loss in the period in which we recognize the
related revenue. In addition, product cost of revenue may include compensation, benefits and stock-based compensation provided
to our personnel, and overhead and other direct costs, which are recognized in the period in which we recognize the related revenue.
Further, we recognize certain costs, including logistics costs, expenses for inventory obsolescence, warranty obligations, lower
of cost or market adjustments to inventory, and amortization of intangibles, in the period in which they are incurred or can be
reasonably estimated.



Service cost of revenue includes compensation and related
costs for our yearly maintenance service delivery, customer operations and customer support personnel, facilities and infrastructure
cost and depreciation. In accordance with our accounting policies, we recognize service cost of revenue in the period in which
it is incurred even though the associated service revenue may be required to be deferred as described under "-Critical Accounting
Policies and Estimates-Revenue Recognition."



Our gross profit (loss) varies from period to period based
on the volume, average selling prices, and mix of products and services recognized as revenue, as well as product and service costs,
expense for warranty obligations, and inventory write-downs. The timing of revenue recognition and related costs, which depends
primarily on customer acceptance, can fluctuate significantly from period to period and have a material impact on our gross profit
and gross margin results.



Operating Expenses



Operating expenses consist of research and development, sales
and marketing, and general and administrative expenses, as well as legal settlement expenses and amortization of acquired intangibles.
Personnel-related expense represents a significant component of our operating expenses.



Sales and Marketing



Sales and marketing expense consists primarily of; compensation,
benefits, sales commissions and stock-based compensation provided to our sales, marketing and business development personnel, as
well as facility costs and other related overhead; marketing programs, including expenses associated with industry events and trade
shows; and travel costs.



General and Administrative



General and administrative expense consists primarily of;
compensation, benefits and stock-based compensation provided to our executive, finance, legal, human resource and administrative
personnel, as well as facility costs and other related overhead; and

fees paid for professional services, including legal, tax
and accounting services.



RESULTS OF OPERATIONS



Comparison year ended June 30, 2014 to June 30, 2013



Total Revenue. Total revenue for 2014 was $136,901
compared to $116,776 in 2013, representing an increase of approximately 17%. Substantially all revenue from 2014 and 2013 was derived
from few customers. The increase in total revenue is attributable to the revival of older expired annual Maintenance & Support
contracts for the Lockwood Asset Tracking & Management Software.



Selling, General and Administrative Expenses. Selling,
general and administrative expenses for 2014 were approximately $46,722 compared to $11,913 for 2013. The increase in selling,
general and administrative expenses in 2014 as compared 2013 was due primarily to the cost of updating the existing maintenance
software to a higher sophisticated level.



Net Loss from Operations. For the year ended June
30, 2014 and 2013, we incurred net losses of $2,211,551 and $2,254,374, respectively.   Losses included $110,702
and $0.00 of stock based compensation for the years ended June 30, 2014 and 2013, respectively.  Losses also include
depreciation and amortization, non-cash expenses, in the amount of $1,662,002 and $1,663,023 for the years ended June 30, 2014
and 2013, respectively. There were no write downs in 2014: however, impairments and write downs of certain assets occurred in 2014
and 2013, due to valuation assessments by management, incurring charges of approximately $25,338 and $31,538 respectively.



Compensation and consulting expenses decreased approximately
$160,668 for the comparative periods, due to the decrease in reduction in operations and officer compensation. General and administrative
decreased approximately $61,836, while professional fees increased approximately $25,932.









LIQUIDITY AND CAPITAL RESOURCES



As of June 30, 2014, we had approximately $547 in cash. We
have exceeded the line of credit from Mr. Talari for which to pay normal operating expenses. Mr. Talari has continued funding our
operations. Mr. Talari has expressed commitment to $1 million dollars of funding; the Company is currently in process of formalizing
the agreement. We believe this support will allow our continuation while we attempt to secure other sources of financing to develop
our business plan, and increase efforts of our marketing plan.  Cash used in operations was $60,856. which was primarily
provided from advances from our majority shareholder.



We anticipate that, depending on market conditions and our
plan of operations, we may incur operating losses in the future. We base this expectation, in part, on the fact that we may not
be able to generate enough gross profit from our sales and services to cover our operating expenses and increased sales and marketing
efforts. Consequently, there remains doubt about the Company’s future and sustained profitability.



Recent Accounting Pronouncements



We have reviewed accounting pronouncements and interpretations
thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the
new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles
will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability
of any standard is subject to the formal review of our financial management and certain standards are under consideration.  Those
standards have been addressed in the notes to the audited financial statement and in our Annual Report, filed on this Form 10-K.



Critical Accounting Policies



The Company’s significant accounting policies are presented
in the Company’s notes to financial statements for the period ended June 30, 2014 and 2013, which are contained in this filing,
the Company’s 2013 Annual Report on Form 10-K. The significant accounting policies that are most critical and aid in fully
understanding and evaluating the reported financial results include the following:



The Company prepares its financial statements in
conformity with generally accepted accounting principles in the United States of America. These principals require management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results
could differ from those estimates.



The Company issues restricted stock to employees
and consultants for various services.  Cost for these transactions are measured at the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is measurable more reliably measurable.  The value
of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to
earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.



Long-lived assets such as property, equipment and
identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not
be recoverable.  When required impairment losses on assets to be held and used are recognized based on the fair value
of the asset.  The fair value is determined based on estimates of future cash flows, market value of similar assets,
if available, or independent appraisals, if required.  If the carrying amount of the long-lived asset is not recoverable
from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value
of the asset.  When fair values are not available, the Company estimates fair value using the expected future cash flows
discounted at a rate commensurate with the risk associated with the recovery of the assets.  We did not recognize any
impairment losses for any periods presented.



Off-Balance Sheet Arrangements



We do not participate in transactions that generate relationships
with unconsolidated entities or financial partnerships, such as special purpose entities or variable interest entities, which have
been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes.



Management Consideration of Alternative Business Strategies



In order to continue to protect and increase shareholder
value management believes that it may, from time to time, consider alternative management strategies to create value for the company
or additional revenues.  Strategies to be reviewed may include







acquisitions; roll-ups; strategic alliances; joint ventures
on large projects; and/or mergers.



The Company is currently in merger or acquisition negotiations
with entities which management believes to be key components of the Smart Grid solutions we envision. Management believes that
acquisitions will be a catalyst for advancing the Company’s existing technology to attain greater market share. We are currently
in valuation negotiations with the targeted companies; acquisitions will be primarily share exchanges. Additionally, we are seeking
capital financing for the purposes of furthering our plan of operations. These negotiations have not advanced, at this point, to
an issuance of a letter of intent; however management believes this ongoing strategy will best serve existing shareholders.



Item 7A.  Quantitative and Qualitative Disclosures
about Market Risk.



Not Required.



Item 8.  Financial statements and supplementary data















Infrax Systems, Inc.

2013 Annual Report

Index to Financial Statements and Financial
Statement Schedules



|                                                           | Page
|---------------------------------------------------------- | ----
|                                                           |     
|Report of Independent Registered Public Accounting Firm    | 26  
|                                                           |     
|Consolidated Balance Sheets                                | 27  
|                                                           |     
|Consolidated Statements of Operations                      | 28  
|                                                           |     
|Consolidated Statements of Cash Flows                      | 29  
|                                                           |     
|Consolidated Statements of Changes in Stockholders’ Equity | 30  
|                                                           |     
|Notes to Consolidated Financial Statements                 | 31  















| |  | 2451 N. McMullen Booth
        Road
        Suite.308
        Clearwater, FL 33759
        
        Toll fee: 855.334.0934
        
        Fax: 800.581.1908
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of

Infrax Systems, Inc.

Saint Petersburg, Florida



We have audited the accompanying consolidated balance sheet
of Infrax Systems, Inc. as of June 30, 2014 and 2013 and the related consolidated statements of operations, stockholders’
equity, and consolidated cash flows for the years then ended. These consolidated financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on
our audits.



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



In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated financial position of Infrax Systems, Inc. as of June 30, 2014 and 2013,
and the results of their operations, changes in their stockholders' equity and their cash flows for the years then ended in conformity
with accounting principles generally accepted in the United States of America.



The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As shown in the financial statements and discussed in Note
3 of the accompanying consolidated financial statements, the Company has incurred significant recurring losses from operations
and is dependent on outside sources of financing for continuation of its operations. These factors raise substantial doubt about
the Company’s ability to continue as a going concern.





/s/  DKM Certified Pubic Accountants

Clearwater Florida

September 29, 2014











Infrax
Systems, Inc.

Consolidated Balance Sheets



|                                                                                                                                                              |  | June 30, 2014 |              |  | June 30, 2013 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ------------ |  | ------------- | -
|Assets                                                                                                                                                        |  |               |              |  |               |  
|Current assets                                                                                                                                                |  |               |              |  |               |  
|Cash                                                                                                                                                          |  | $             | 547          |  |               | $
|Accounts receivable                                                                                                                                           |  |               | 5,000        |  |               |  
|Inventory                                                                                                                                                     |  |               | 6,200        |  |               |  
|Loan receivable from affiliate                                                                                                                                |  |               | 12,173       |  |               |  
|Note receivable                                                                                                                                               |  |               | -            |  |               |  
|Total current assets                                                                                                                                          |  |               | 23,920       |  |               |  
|                                                                                                                                                              |  |               |              |  |               |  
|Property & equipment, net
        of accumulated
        depreciation
        of $139,469 and $106,345, respectively                                          |  |               | 41,338       |  |               |  
|                                                                                                                                                              |  |               |              |  |               |  
|Intangible property, net of accumulated
        amortization
        of  $6,201,411 and $4,572,532, respectively                                              |  |               | 1,813,963    |  |               |  
|Deposits                                                                                                                                                      |  |               | 4,500        |  |               |  
|Total Assets                                                                                                                                                  |  | $             | 1,883,721    |  |               | $
|                                                                                                                                                              |  |               |              |  |               |  
|Liabilities and Stockholders' Equity                                                                                                                          |  |               |              |  |               |  
|Current liabilities                                                                                                                                           |  |               |              |  |               |  
|Accounts payable                                                                                                                                              |  | $             | 164,040      |  |               | $
|Accrued expenses                                                                                                                                              |  |               | 1,589,760    |  |               |  
|Customer deposits and deferred revenue                                                                                                                        |  |               | 53,328       |  |               |  
|Notes payable                                                                                                                                                 |  |               | 724,500      |  |               |  
|Loans and notes payable, related parties                                                                                                                      |  |               | -            |  |               |  
|Total current liabilities                                                                                                                                     |  |               | 2,531,628    |  |               |  
|                                                                                                                                                              |  |               |              |  |               |  
|Notes payable to Shareholder                                                                                                                                  |  |               | 823,691      |  |               |  
|Total liabilities                                                                                                                                             |  |               | 3,355,319    |  |               |  
|                                                                                                                                                              |  |               |              |  |               |  
|Stockholders' Equity                                                                                                                                          |  |               |              |  |               |  
|Preferred Stock, 100,000,000 authorized, $.001 par value:                                                                                                     |  |               |              |  |               |  
|Series A
        Convertible: 5,000,000 shares designated;
        2,524,834
        and 2,524,834 issued and outstanding                                     |  |               | 2,525        |  |               |  
|Series B Convertible:
        10,000,000 shares designated;
        12,330
        and12,330issued and outstanding                                            |  |               | 13           |  |               |  
|Common Stock,
        $.001 par value, 900,000,000 shares
        authorized; 110,592,793 and 103,212,682 shares
        issued and outstanding, respectively |  |               | 110,593      |  |               |  
|Additional paid-in capital                                                                                                                                    |  |               | 13,783,942   |  |               |  
|Minority interest in subsidiary                                                                                                                               |  |               | (344,437)    |  |               |  
|Accumulated deficit                                                                                                                                           |  |               | (15,024,234) |  |               |  
|Total stockholders' equity                                                                                                                                    |  |               | (1,471,598)  |  |               |  
|                                                                                                                                                              |  |               |              |  |               |  
|Total Liabilities and Stockholders' Equity                                                                                                                    |  | $             | 1,883,721    |  |               | $





The accompanying notes are an integral
part of these financial statements.











Infrax
Systems, Inc.

Consolidated Statements of Operations



|                                         |  | For the Year Ended June 30, |            
|---------------------------------------- |  | --------------------------- | -----------
|                                         |  | 2014                        |            
|                                         |  |                             |            
|Revenues                                 |  | $                           | 136,901    
|Direct costs                             |  |                             | 46,722     
|                                         |  |                             | 90,179     
|                                         |  |                             |            
|Operating expenses:                      |  |                             |            
|Salaries and benefits                    |  |                             | 491,230    
|Stock based compensation                 |  |                             | 110,702    
|Professional fees                        |  |                             | 76,593     
|General and administrative               |  |                             | 78,266     
|Amortization and depreciation            |  |                             | 1,662,002  
|Total operating expenses                 |  |                             | 2,418,793  
|                                         |  |                             |            
|Other income (expense):                  |  |                             |            
|Interest expenses                        |  |                             | (44,341)   
|Total other income (expense)             |  |                             | (44,341)   
|                                         |  |                             |            
|Loss from operations before income taxes |  |                             | (2,372,955)
|                                         |  |                             |            
|Provision for income taxes               |  |                             | -          
|                                         |  |                             | (2,372,955)
|                                         |  |                             |            
|Minority Interest                        |  |                             | 161,404    
|                                         |  |                             |            
|Net loss                                 |  | $                           | (2,211,551)
|                                         |  |                             |            
|                                         |  |                             |            
|Earnings (loss) per share:               |  |                             |            
|Basic and dilutive                       |  | $                           | (0.02)     
|                                         |  |                             |            
|Weighted average shares outstanding      |  |                             |            
|Basic and dilutive                       |  |                             | 108,627,578



The accompanying notes are an integral
part of these financial statements.











Infrax
Systems, Inc.

Consolidated Statements of Cash Flows



|                                                                                               |  | For the Year Ended June 30, |            
|---------------------------------------------------------------------------------------------- |  | --------------------------- | -----------
|                                                                                               |  | 2014                        |            
|Cash Flows from Operating Activities:                                                          |  |                             |            
|Net loss                                                                                       |  | $                           | (2,211,551)
|Adjustment
        to reconcile Net Income to net
        cash provided
        by operations: |  |                             |            
|Depreciation and amortization                                                                  |  |                             | 1,662,003  
|Issuance of stock in settlement of services                                                    |  |                             | 110,702    
|Amortization of deferred revenue                                                               |  |                             | (94,888)   
|Loss on sale of assets                                                                         |  |                             | -          
|Impairment loss                                                                                |  |                             | -          
|Minority interest                                                                              |  |                             | (161,404)  
|Changes in assets and liabilities:                                                             |  |                             |            
|Accounts receivable                                                                            |  |                             | 14,256     
|Inventory                                                                                      |  |                             | 25,338     
|Due from affiliate                                                                             |  |                             | (9,952)    
|Prepaid and other                                                                              |  |                             | -          
|Accounts payable                                                                               |  |                             | 26,411     
|Accrued expenses                                                                               |  |                             | 498,171    
|Customer deposits and deferred revenue                                                         |  |                             | 80,058     
|Net Cash (Used) in Provided by Operating Activities                                            |  |                             | (60,856)   
|                                                                                               |  |                             |            
|Cash Flows from Investing Activities:                                                          |  |                             |            
|Purchase of property and equipment                                                             |  |                             | -          
|Proceeds from sale of assets                                                                   |  |                             | -          
|Decrease (increase) in other assets                                                            |  |                             | -          
|Net Cash (Used) in Investing Activities                                                        |  |                             | -          
|                                                                                               |  |                             |            
|Cash Flows from Financing Activities:                                                          |  |                             |            
|Related party advances                                                                         |  |                             | 61,103     
|Net Cash (Used) Provided by Financing Activities                                               |  |                             | 61,103     
|                                                                                               |  |                             |            
|                                                                                               |  |                             |            
|Net increase/decrease in Cash                                                                  |  |                             | 247        
|Cash at beginning of period                                                                    |  |                             | 300        
|Cash at end of period                                                                          |  | $                           | 547        
|                                                                                               |  |                             |            
|                                                                                               |  |                             |            
|Supplemental cash flow information:                                                            |  |                             |            
|Interest paid                                                                                  |  | $                           | -          
|Taxes paid                                                                                     |  | $                           | -          
|                                                                                               |  |                             |            
|Supplemental Schedule of Noncash Investing and Financing Activities                            |  |                             |            
|Issuance of preferred stock in exchange for accrued salaries                                   |  | $                           | -          
|Issuance of common stock in satisfaction of payables                                           |  | $                           | -          



The accompanying notes are an integral
part of these financial statements.











Infrax
Systems, Inc.

Consolidated Statement of Stockholders'
Equity











|                               |  | Preferred |           |  | Common    |   |       | Additional
        Paid in |  |  | Minority    |  |  | Accumulated
        Deficit
        Development |         |  | Stock-
        holders' |  
|------------------------------ |  | --------- | --------- |  | --------- | - | ----- | -------------------------- |  |  | ----------- |  |  | ----------------------------------------------- | ------- |  | ----------------------- | -
|                               |  | shares    |           |  | $.001 par |   |       | shares                     |  |  | $.001 par   |  |  | Capital                                         |         |  | Interest                |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Balance at June 30, 2012       |  |           | 2,524,834 |  |           | $ | 2,525 |                            |  |  | 98,580,428  |  |  | $                                               | 98,580  |  |                         | $
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Shares for services            |  |           |           |  |           |   |       |                            |  |  | 3,653,754   |  |  |                                                 | 3,654   |  |                         |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Conversion of salaries payable |  |           | 12,330    |  |           |   | 13    |                            |  |  |             |  |  |                                                 |         |  |                         |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Shares for accounts payable    |  |           |           |  |           |   |       |                            |  |  | 978,500     |  |  |                                                 | 979     |  |                         |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Net loss                       |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Balance at June 30, 2013       |  |           | 2,537,164 |  |           | $ | 2,538 |                            |  |  | 103,212,682 |  |  | $                                               | 103,213 |  |                         | $
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Shares for services            |  |           |           |  |           |   |       |                            |  |  | 7,380,111   |  |  |                                                 | 7,380   |  |                         |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Net loss                       |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  
|Balance at June 30, 2014       |  |           | 2,537,164 |  |           | $ | 2,538 |                            |  |  | 110,592,793 |  |  | $                                               | 110,593 |  |                         | $
|                               |  |           |           |  |           |   |       |                            |  |  |             |  |  |                                                 |         |  |                         |  







The accompanying notes are an integral
part of these financial statements.











Infrax Systems,
Inc.

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2014
and 2013



1.           History
of the Company and Nature of the Business



History of the Company



Infrax Systems, Inc. (formerly OptiCon Systems, Inc.) (“theCompany”, “Infrax” ) was formed as a Nevada corporation on October 22, 2004.  On July 29,
2005, the stockholders of the Company entered into an agreement to exchange 100% of the outstanding common stock of the Company,
for common and preferred stock of FutureWorld Energy, Inc. (formerly Isys Medical, Inc.), a publicly traded company, at which time,
the Company became a wholly owned subsidiary of FutureWorld Energy, Inc..



FutureWorld Energy, Inc. ( “FutureWorld”
), Infrax’s parent company, announced its intention to spin off Infrax (formerly OptiCon Systems, Inc.) by the payment of
a stock dividend.  In connection with the proposed spinoff, Infrax’s board of directors approved a stock dividend
of 99,118 shares to FutureWorld, its sole shareholder.  On August 31, 2007, FutureWorld paid a stock dividend to its
stockholders, consisting of 100% of the outstanding common stock of the Company, at the rate of one share of Infrax’s stock
for every two shares they own of FutureWorld.  As of August 31, 2007, Infrax ceased being a subsidiary of FutureWorld.



Nature of Business



Since its inception till September 2009, the Company has
been dedicated to selling and/or licensing a fiber optic management software system under the name OptiCon Network Manager, originally
developed, and acquired from Corning Cable System, Inc.  From inception, the Company has funded its operations with proceeds
from the sale of securities and, from 2011, with revenue from sales of products services.



In October 2009, the Company shifted its focus and energies
towards the “Smart Grid” energy sector. The Company believes our secure integrated platform will hasten the deployment
of all Smart Grid technology for resource constrained small and mid-sized utilities.  Infrax’s advantage comes
from our products ability to enable the creation of a secure platform scalable to deliver a broad set of intelligent Smart Grid
initiatives across millions of endpoints for Utilities.



As of June 29, 2010, the Company acquired the assets and
management of Trimax Wireless Systems, Inc. (“Trimax”), in exchange for equity and a note payable.  The Trimax
product line is expected to provide an operating platform and enhanced operating effectiveness to the Infrax smart grid wireless
platforms. Furthering our development towards becoming a leader in the emerging smart-grid industry asset management, on April
8, 2011 we acquired a 70% controlling interest in Lockwood Technology Corporation, to supply RFID and asset tracking, among other
technology value to our product lines.



2.           Summary
of Significant Accounting Policies



Basis of Accounting



The Company prepares its consolidated financial statements
in conformity with generally accepted accounting principles in the United States of America. These principals require management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual
results could differ from those estimates.



Use of Estimates



The Company prepares its financial statements in conformity
with generally accepted accounting principles in the United States of America. These principals require management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management
believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could
differ from those estimates.



Principles of Consolidation



The consolidated financial statements include the accounts
and operations of Infrax Systems, Inc., and Lockwood Technology Corporation (70%), net of minority interests (collectively referred
to as the “Company”).  Accordingly, the assets and liabilities, and expenses of this company have been included
in the accompanying consolidated financial statements, and material intercompany transactions have been eliminated.









The Trimax Wireless, Inc. acquisition was effective June
29, 2010.  The agreement acquired all the assets and certain liabilities of Trimax Wireless, Inc.  As an asset
purchase the acquired assets and liabilities are included in the accounts of Infrax Systems, Inc.



The Company acquired a controlling interest (70%) of Lockwood
Technology Corporation (“LTC”) on May 8, 2011. LTC’s activities, during the period of ownership, have been included
in the reported consolidated financial statements.



Development Stage Enterprise



The Company, in prior periods, presented financial statements
as a development stage enterprise.  In the initial years the Company, devoted substantially all of its efforts to raising
capital, planning and implementing the principal operations.  The Company may continue to incur significant operating
losses and to generate negative cash flow from operating activities. The Company's ability to eliminate operating losses and to
generate positive cash flow from operations in the future will depend upon a variety of factors, many of which it is unable to
control.  However, based on current and subsequent events, primarily the acquisitions of Trimax Wireless Systems, Inc.
and Lockwood Technology Corporation, management believes that the Company has established the primary business development plan.





Variable Interest Entities



The Company considers the consolidation of entities to which
the usual condition (ownership of a majority voting interest) of consolidation does not apply, focusing on controlling financial
interests that may be achieved through arrangements that do not involve voting interest. If an enterprise holds a majority
of the variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary is generally
required to consolidate assets, liabilities and non-controlling interests at fair value (or at historical cost if the entity is
a related party) and subsequently account for the variable interest as if it were consolidated based on a majority voting interest.  The
Company has evaluated all related parties, contracts, agreements and arrangements in which it may hold a variable interest. All
companies identified have been included in the consolidated financial statements.



Financial Instruments



The Company’s balance sheets include the following
financial instruments: cash, accounts receivable, notes receivable, inventory, accounts payable and note payable and notes payable
to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively
short period of time between the origination of these instruments and their expected realization. The carrying values of the note
payable to stockholder  approximates fair value based on borrowing rates currently available to the Company for instruments
with similar terms and remaining maturities.



The Company measures at fair value its assets and liabilities
based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data
obtained from independent sources, while unobservable inputs reflect the Company’s own assumptions. These two types of inputs
have created the following fair value hierarchy:



| | · | Level 1 - Quoted prices in active markets for identical assets or liabilities.                                                                                                                                                                                                                                                                                                 
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities, which include certificates of deposits and money market funds.
| | · | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.                                                                                                                                                                                                                      



Fair value estimates discussed herein are based upon certain
market assumptions and pertinent information available to management as of June 30, 2014. The respective carrying value of certain
on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These
financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses.
The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar
terms which is not significantly different from its stated value.



The Company applied ASC 820 for all non-financial assets
and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities
did not have a significant impact on the Company’s financial statements.



As of June 30, 2014 and 2013, the fair values of the
Company’s financial instruments approximate their historical carrying amount.



Cash and Cash Equivalents



The majority of cash is maintained with major financial institutions
in the United States.  Deposits with these banks may exceed







the amount of insurance provided on such deposits.  Generally,
these deposits may be redeemed on demand and, therefore, bear minimal risk. The Company considers all highly liquid investments
purchased with an original maturity of three months or less to be cash equivalents.



Accounts Receivable and Credit



Accounts receivable consist of amounts due for the delivery
of sales or services to its customers.  Prepayments on account are recorded as customer deposits, a current liability. An
allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on
an analysis of the Company’s customer credit worthiness, and current economic trends.  Based on management’s
review of accounts receivable, no allowance for doubtful accounts was considered necessary.   Receivables are determined
to be past due, based on payment terms of original invoices.  The Company does not typically charge interest on past
due receivables.



Inventories



Inventories are stated at the lower of standard cost or market,
which approximates actual cost. Cost is determined using the first-in, first-out method.  Inventory is comprised of component
parts and accessories available for sale.  Parts are generally purchased for projects, as minimal inventory is held to
supply customers.



Property & Equipment



Property and equipment are recorded at historical cost or
acquisition value. Depreciation is computed on the straight-line method over estimated useful lives of the respective assets, ranging
from three to five years. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to
the depreciation and amortization period or the unamortized balance is warranted. Based upon the Company's most recent analysis,
management believes that no impairment of property and equipment exists at June 30, 2014 and 2013.



Intangible Property



On June 29, 2010 the Company acquired the assets of Trimax
Wireless Systems, Inc., including licenses and trademarks.  The purchase price was allocated first to the identifiable
assets received, allocating the remaining costs to the intellectual property.  The valuation considered future cash flows
of the operating intangible assets acquired.  The valuation of the intellectual property was limited to the acquisition
price, less the fair market value of identifiable assets.  The acquisition carrying value of the intellectual property
was $6,329,342.  Intellectual property has an estimated useful life of 15 years.



On May, 2011 the Company completed the acquisition of controlling
interest (70%) in Lockwood Technology Corporation, in exchange for stock and certain considerations (cash and warrants). The shares
were issued at the fair market value at the date of the transaction ($1,650,000) and warrants were valued using an option price
model ($477,900). The total purchase price, net of cash, notes receivable, and net assets acquired was $1,956,158. The Company
recognized an immediate impairment in the amount of $641,008 in consideration of its analysis of future discounted cash flows and
industry multiples of the acquired Company, resulting in net intangible assets of $1,315,150. Management’s allocation of
the purchase price was based on our assessment of the fair market value of the assets acquired, in accordance with Accounting Standard
Codification, Topic 805. Fixed assets and other tangible assets were evaluated for market value. There were no identifiable assets
that had any significant appreciation or impairment; therefore those assets have been brought over at the historical basis, net
of depreciation. The analysis of the intangible values purchased were allocated to the Lockwood customer list (30% or $394,550)
and the developed software and licensing technology (70% or $920,600).



Capitalized Software Development Costs



The Company capitalizes software development costs, under
which certain software development costs incurred subsequent to the establishment of technological feasibility have been capitalized
and are being amortized over the estimated lives of the related products. Capitalization of computer software costs is discontinued
when the computer software product is available to be sold, leased, or otherwise marketed.



Amortization begins when the product is available for release
and sold to customers. Software development costs will be amortized based on the estimated economic life of the product, anticipated
to be 10 years.



Impairment of Long-Lived
Assets



Periodically, the Company assesses the recoverability of
the Company’s intangible assets, consisting of the Trimax acquired intellectual property, OptiCon Network Manager software
and its trademark, and record an impairment loss to the extent that the carrying amounts of the assets exceed its fair value.  Based
upon management's most recent analysis, the Company believes that no impairment of the Company’s tangible or intangible assets
exist at June 30, 2014 and 2013, as reported. Certain impairments have been recorded to reflect the net realizable value of the
associated assets, based on fair value (inventory) or discounted cash







flows (goodwill and intangibles).





Revenue Recognition



The Company is principally in the business of providing solutions
for a secure intelligent energy platform that incorporates our secure wireless technology.  Contracts include multiple
revenue components, comprised of our software licensing, hardware platforms, installation, training and maintenance.  In
accordance with ASC 605-25 Multiple-Element Arrangements, revenue from licensing the software will be recognized upon installation
and acceptance of the software by customers.  When a software sales arrangement includes rights to customer support,
the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year.  Revenue
from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.



Revenue associated with software sales to distributors is
recognized, net of discounts, when the Company has performed substantially all its obligations under the arrangement.  Until
such time as substantially all obligations under the arrangement are met, software sales are recognized as deferred revenue.  Costs
and expenses associated with deferred revenue are also deferred.  When software sales arrangements include a commitment
to provide training and/or other services or materials, the Company estimates and records the expected costs of these training
and/or other services and/or materials.



Stock Based Compensation



The Company issues restricted stock to consultants for various
services. Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable.  The value of the common stock is measured at the earlier
of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii)
the date at which the counterparty's performance is complete.  The Company recognized consulting expenses and a corresponding
increase to additional paid-in-capital related to stock issued for services. Stock compensation for the periods presented
were issued to consultants for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized
compensation associated with these transactions.



Shipping Costs



The Company includes shipping costs and freight-in costs
in cost of goods sold.



Advertising Costs



The costs of advertising are expensed as incurred. Advertising
expenses are included in the Company’s operating expenses.  Advertising expense was $0 and $0 for the years ended
June 30, 2014 and 2013, respectively



Research and Development



The Company expenses research and development costs when
incurred. Indirect costs related to research and developments are allocated based on percentage usage to the research and
development.



Income Taxes



The Company accounts for income taxes under the liability
method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities
at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which
the deferred tax assets and liabilities are expected to be settled or realized.





Earnings (Loss) Per Share



Basic EPS is calculated by dividing the loss available to
common shareholders by the weighted average number of common shares outstanding during each period.  Diluted EPS is similarly
calculated, except that the denominator includes common shares that may be issued subject to existing rights with dilutive potential,
except when their inclusion would be anti-dilutive.



Based on an estimated current value of the Company’s
stock being equal to or less than the exercise price of the warrants, none of the shares assumed issued upon conversion of the
warrants, nor any of the stock assumed issued under the Company's 2004 Non statutory Stock Option Plan, are included in the computation
of fully diluted loss per share, since their inclusion would be anti-dilutive.  Convertible preferred shares have been
included in the dilutive computation, as if they would have been converted at the end of the period.



















|                                    |  | June 30,  2014 |               |  | June 30, 2013 |  
|----------------------------------- |  | -------------- | ------------- |  | ------------- | -
|Earnings (Loss) per share:          |  |                |               |  |               |  
|Net Loss                            |  | $              | (2,211,551)   |  |               | $
|                                    |  |                |               |  |               |  
|Common shares                       |  |                | 110,592,793   |  |               |  
|Common share equivalents            |  |                | 915,415,206   |  |               |  
|Dilutive common shares              |  |                | 1,026,007,999 |  |               |  
|                                    |  |                |               |  |               |  
|Earnings (loss) per share, basic    |  | $              | (0.02)        |  |               | $
|Earnings (loss) per share, dilutive |  | $              | (0.00)        |  |               | $





Impact of Recently Issued Accounting Pronouncements



The Company reviews new accounting standards as issued.
No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the
date of these financial statements that were considered significant by management were evaluated for the potential effect on these
consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect
on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated
financial statements because of the retro-active application of any accounting pronouncements issued subsequent to June 30, 2014
through the date these financial statements were issued.

3.           Going
Concern



As of June 30, 2014, the Company has a working capital deficit
and has incurred a loss from operations and recurring losses since its inception resulting in a significant accumulated deficit.  As
of June 30, 2014, the Company had negative working capital in excess of $2,500,000, and approximately $547 in cash with which to
satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going
concern. The Company depends upon capital to be derived from future financing activities such as loans from its officers and directors,
subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance
that the Company will be successful in raising such capital. The key factors that are not within the Company's control and that
may have a direct bearing on operating results include, but are not limited to, acceptance of the Company’s business plan,
the ability to raise capital in the future, to continue receiving funding from its officers, directors and shareholders, the ability
to expand its customer base, and the ability to hire key employees to grow the business. There may be other risks and circumstances
that management may be unable to predict.





4.           Property
and Equipment



Property and equipment consists of the following:



|                              |  | June 30,  2014 |         |  | June 30, 2013 |  
|----------------------------- |  | -------------- | ------- |  | ------------- | -
|Office and computer equipment |  | $              | 120,636 |  |               | $
|Furniture and fixtures        |  |                | 54,703  |  |               |  
|Computer software             |  |                | 5,468   |  |               |  
|                              |  |                | 180,807 |  |               |  
|Accumulated depreciation      |  |                | 139,469 |  |               |  
|                              |  | $              | 41,338  |  |               | $



For the years ended June 30, 2014 and 2013 the total depreciation
expense charged to operations totaled $33,124 and 34,578, respectively.



5.           Intangible
Assets and Goodwill



Intangible assets consist of the following:





















|                                        |  | June 30,  2014 |           |  | June 30, 2013 |  
|--------------------------------------- |  | -------------- | --------- |  | ------------- | -
|Opticon fiber optic management software |  | $              | 189,862   |  |               | $
|Trademarks                              |  |                | 1,000     |  |               |  
|TriMax  intellectual property           |  |                | 6,329,342 |  |               |  
|TriMax software                         |  |                | 180,020   |  |               |  
|Lockwood customer list                  |  |                | 394,550   |  |               |  
|Lockwood licensing and technology       |  |                | 920,600   |  |               |  
|                                        |  |                | 8,015,374 |  |               |  
|Accumulated amortization                |  |                | 6,201,411 |  |               |  
|                                        |  | $              | 1,813,963 |  |               | $



For the years ended June 30, 2014 and 2013 the total amortization
expense charged to operations totaled $1,813,963 and $1,628,878, respectively.



Future amortization of intangible property is expected as
follows:



|For the year ended June 30,: |  |   |          
|---------------------------- |  | - | ---------
|2015                         |  |   | 1,389,881
|2016                         |  |   | 209,837  
|2017                         |  |   | 25,718   
|thereafter                   |  |   | 188,527  
|                             |  | $ | 1,813,963





During the years ended June 30, 2014 and 2013, the Company
did not allocate any direct labor costs, and indirect costs and expenses to this effort.  The capitalized software costs
are amortized when the software is actually sold to customers.  Amortization is provided based on the number of software
units sold relative to the number of expected to be sold during the software’s economic life.  At June 30, 2014
and 2013 amortization expense was $0 and $0, respectively.





TriMax intellectual property



On June 29, 2010 the Company acquired the assets of Trimax
Wireless Systems, Inc., including licenses and trademarks.  The purchase price was allocated first to the identifiable
assets received, allocating the remaining costs to the intellectual property.  The valuation considered future cash flows
of the operating intangible assets acquired.  The valuation of the intellectual property was limited to the acquisition
price (valuation of stock consideration and note payable), less the fair market value of identifiable assets.  The shares
issued in exchange for the acquired property were valued at the fair market value of the equivalent common stock as of the date
of closing.  The acquisition carrying value assigned to the intellectual property was $6,329,342. At June 30, 2014 and
2013 amortization expense was $1,287,324 and $1,287,324, respectively.



TriMax software



Software development costs, in the amount of $180,020, were
acquired in the Trimax acquisition.  The proprietary software was an identified asset of the acquisition and valued at
cost.  The capitalized software is available for sale and is to be amortized over a 5 year period. At June 30, 2014 and
2013 amortization expense was $25,717 and $25,717, respectively.



Lockwood Technology Corporation



On June 30, 2011 the Company completed the acquisition of
controlling interest in Lockwood Technology Corporation, a leading RFID software and hardware solutions provider, from Daedalus
Capital, LLC. Infrax Systems acquired 70% interest in exchange for stock and certain considerations, including a $50,000 note receivable
(due in 180 days) from the sellers to Infrax and $112,000 in cash received by Infrax at closing. Additionally, warrants were issued
for the purpose of possible future investment capital, to be received by Infrax. Shares were issued at the fair market value at
the date of the transaction ($1,650,000). The agreement included warrants for the purchase of 660,000 (post reverse split) common
shares at an exercise price of $5.00 (split adjusted, for a term of 3 years. The warrants are callable by Infrax at certain fair
market values of the common stock. Warrants were valued at $477,900 using an option price model (assumptions used in calculation:
volatility 400%; risk free rate 1.02%; dividend rate 0%). The total purchase price, net of cash, notes receivable, and net assets
acquired was $1,956,158 and was allocated to goodwill. The







Company recognized an immediate impairment in the amount
of $641,008 in consideration of its analysis of future discounted cash flows and industry multiples of the acquired Company, resulting
in a net intangible assets of $1,315,150. Infrax also plans to utilize their expertise in future smart grid deployment projects.
Management’s allocation of the purchase price was based on our assessment of the fair market value of the assets acquired,
in accordance with Accounting Standard Codification, Topic 805. Fixed assets and other tangible assets were evaluated for market
value. There were no identifiable assets that had any significant appreciation or impairment; therefore those assets have been
brought over at the historical basis, net of depreciation. The analysis of the intangible values purchased were allocated to the
Lockwood customer list (30% or $394,550) and the developed software and licensing technology (70% or $920,600).



6.          
Accrued Expenses



Accrued expenses at June 30, 2014 and 2013 were as follows:



|                                      |  | June 30,  2014 |           |  | June 30, 2013 |  
|------------------------------------- |  | -------------- | --------- |  | ------------- | -
|Accrued salaries and related expenses |  | $              | 1,291,700 |  |               | $
|Accrued interest                      |  |                | 203,042   |  |               |  
|Accrued expenses                      |  |                | 95,018    |  |               |  
|                                      |  | $              | 1,589,760 |  |               | $



7.        Debt
Agreements



On June 29, 2010 the Company entered into an agreement with
the shareholders of Trimax Wireless, Inc. (“Trimax”) for the purchase of their business assets and technology for preferred
shares of the Company, the assumption of certain liabilities and a note payable, in the amount of $712,500.  The note
is interest bearing at 6% per annum until fully paid with a start period of 90 (September 29, 2010) days for the first payment.  The
Company  shall make interest-only payments on the first day of each month from the date of this Note until the earlier
of (a) receipt of Investment Funding as defined; or (b) 180 days from the date hereof ("Maturity Date") (December 29,
2010).  Principal plus all accrued and unpaid interest on such principal shall be due and payable on the Maturity Date.
As of the balance sheet date the Company is currently in default, as no payments have been made on this loan and is currently in
negotiations to extend terms. See note 14, legal matters.



The Company has a Master Note Agreement, as an unsecured
line of credit, from Mr. Sam Talari. The Master Note is for operational capital, in the amount of $350,000 and bears interest at
5% per annum. Mr. Talari has pledged additional funding for operating capital, up to $500,000 as evidenced by agreement. Subsequent
to the year end, Mr. Talari has pledged a total of $1 million dollars, under the same terms as the original Master Note.



8.           Related
Parties Disclosures



Employment Agreements



The following agreements are with Shareholders, Directors
and Members of the Board:



Sam Talari



Effective August 1, 2009, the Company entered
into a three-year employment agreement with Sam Talari, one of the Company’s directors.  The agreement was automatically
renewed for an additional one-year period, and subsequently renewed by the Board for an additional one-year period through July
31, 2014.  The Agreement provides for (a) a base salary of $15,000 per month, (b) a signing bonus equal to one month
salary, (c) four weeks’ vacation within one year of the starting date, and (d) all group insurance plans and other benefit
plans and programs made available to the Company’s management employees.



Mr Talari opted to waive the Infrax Systems salary
for the entire fiscal year ending 06/30/2014. He still does accrue a salary from Lookwood Technology Corporation.





John Verghese



On October 19, 2010, as amended January 1, 2010,
the Company entered into a three-year employment agreement with John Verghese as Director of Product Development, one of the Company’s
directors. The Agreement provides for (a) a base salary of $6,500 per month, (b) a signing bonus of $10,000, (c) three weeks’
vacation within one year of the starting date, and (d) all group insurance plans and other benefit plans and programs made available
to the Company’s management employees. Additionally Mr. Verghese has the option to purchase 360,000 shares of common stock
at $.025 per share, ratably vesting at the employment anniversary date. Mr. Verghese works part time since January 2014.









Terry Gardner



On April 2nd, 2012, the Company entered
into a three-year employment agreement with Terry Gardner as VP of Professional Services. The Agreement provides for (a) a base
salary of $10,000 per month, (b) a signing bonus of $30,000, (c) three weeks’ vacation within one year of the starting date,
and (d) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.
Additionally Mr. Gardner has the option to purchase 300,000 shares of common stock at $.04 per share, ratably vesting at the employment
anniversary date. Mr. Gardner works part-time since January 2014.





Karin Rohret



On January 2nd, 2010, the Company entered
into an employment agreement with Karin Rohret as part-time Controller. The Agreement provides for (a) a base salary of $1,101.67
per month, (b) a signing bonus of $20,000 by the way of Company’s common stock within 30 days of signing the agreement. Additionally
Ms. Rohret will be eligible to receive a grant of 600,000 shares of common stock at founder level with a par value of .001. Vesting
of the grant shall be at the rate of 200,000 shares on each anniversary from the signing of the agreement. The salary was adjusted
to $1,950 on January 2012 as the position required additional hours.





Other employment agreements exist with employees.  As
of June 30, 2014 and 2013, the accrued compensation under the employment agreements was $1,006,838 and $433,838, respectively.  These
amounts are included in the accrued expenses.





Line of Credit, Master Agreement



On September 1, 2005, Mr. Sam Talari, one of the Company’s
directors, agreed to make advances to the Company as an interim unsecured loan for operational capital up to a maximum of $350,000,
evidenced by a master promissory note, with interest at the rate of 5% per annum, based on amounts advanced from time to time,
payable annually.  Mr. Talari has pledged additional funding for operating capital, up to $500,000, under the same terms
as the original Master Note. Mr. Talari, from time to time, has converted advances and accrued interest in exchange for equity
shares. Mr. Talari continued making advances to the Company on the loan, of which $823,961 and $762,588 remains outstanding at
June 30, 2014 and 2013, respectively.



Accounts Payable



The Company relies on advances from the majority shareholder
and other key members.  Advances are normally in the form of a loan.   Payments are made on behalf of
the Company by these individuals and are treated as trade payables.  These amounts are considered liquid and if payment
is not made, may be formally converted in the form of a note.  The Company currently has an aggregate of $1,123 and $56,185
due to two individuals as of June 30, 2014 and 2013.



Stock Transactions



N/A



9.           Stock
Options and Warrants



On December 2, 2005, the Company granted two unrelated individuals
Series A Warrants to purchase 4 shares, at an adjusted average exercise price of $17,300, as adjusted for the reverse split.  All
of the Warrants expired on November 11, 2011.  All of the Warrants granted were non-qualified fixed price warrants.



|                       |  |             |         |  |         |  |         | Weighted Average |  | Remaining
|---------------------- |  | ----------- | ------- |  | ------- |  | ------- | ---------------- |  | ---------
|                       |  | Options     |         |  | Options |  |         | Intrinsic        |  |          
|                       |  | Outstanding |         |  | Vested  |  |         | Value            |  |          
|Options, June 30, 2012 |  |             | 4       |  |         |  | 4       |                  |  | $        
|Granted                |  |             | 660,000 |  |         |  | 660,000 |                  |  |          
|Exercised              |  |             | 660,000 |  |         |  | 660,000 |                  |  |          
|Forfeited              |  |             | 4       |  |         |  | 4       |                  |  |          
|Options, June 30, 2013 |  |             | -       |  |         |  | -       |                  |  |          
|Granted                |  |             | -       |  |         |  | -       |                  |  |          
|Exercised              |  |             | -       |  |         |  | -       |                  |  |          
|Forfeited              |  |             | -       |  |         |  | -       |                  |  |          
|Options, June 30, 2014 |  |             | -       |  |         |  | -       |                  |  |          









The following are the weighted average assumptions for the
options granted:



|Weighted Average:         |  |  |      
|------------------------- |  |  | -----
|Dividend rate             |  |  | 0.0  
|Risk-free interest rate   |  |  | 1.02 
|Expected lives (years)    |  |  | 5.0  
|Expected price volatility |  |  | 400.0
|Forfeiture Rate           |  |  | 0.0  





10.         Stock
Option Plan



On October 22, 2004, the Company adopted a 2004 Non-statutory
Stock Option Plan ( “Option Plan” ) for the benefit of its key employees (including officers and employee directors),
consultants and affiliates. The Option Plan is intended to provide those persons who have substantial responsibility for the management
and growth of the Company with additional incentives and an opportunity to obtain or increase their proprietary interest in the
Company, encouraging them to continue in employment.



On October 2, 2009, the Company adopted a 2009 Employees
and Consultants Stock Compensation Plan (“Stock Plan”) for the benefit of employees and consultants (including officers
and employee directors). The Stock Plan is intended to provide those persons who have substantial responsibility for the management
and growth of the Company with additional incentives and an opportunity to obtain or increase their proprietary interest in the
Company, encouraging them to continue in employment, and to pay independent consultants that perform services to the Company. The
Board of Directors authorized 10,000 shares (adjusted for reverse split) of the Company's common stock to be set aside, which may
be issued under the Stock Plan.



On July 2013, the Company adopted a 2013 Stock Incentive
Plan and Management Incentive Bonus Plan (“The Plan”) to advance the interests of the Company’s stockholders
by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions
to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended
to better align the interests of such persons with those of the Company’s stockholders. Management Incentive Bonus Plan (the
"Plan") is to advance the interests of Infrax Systems, Inc. (the “Company”) by providing Participants (defined
below) of the Company and its designated Subsidiaries (defined below) with additional incentive to promote the success of the business
and to increase their vested interest in the success of the business and the Company, and to encourage them to remain employees,
through the making of certain incentive cash bonus awards (the "Awards") linked to objectively determinable performance
goals. The Awards granted under the Plan are intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”). To the extent that any Award is subject to Section 409A, then the Plan as applied to that Award shall
be interpreted and administered so that it is consistent with such Code section. The Board of Directors authorized 10,000,000 shares
of the Company's common stock to be set aside, which may be issued under the Plan.



11.         Income
Taxes



Income tax benefit resulting from applying statutory rates
in jurisdictions in which the Company is taxed (Federal and State of Florida) differs from the income tax provision (benefit) in
our financial statements.  The following table reflects the reconciliation for the years ended June 30, 2014 and 2013:





|                                  |  | Year Ended June 30, |       
|--------------------------------- |  | ------------------- | ------
|                                  |  | 2014                |       
|Federal at federal statutory rate |  |                     | (34.0)
|State, net of federal deduction   |  |                     | (3.3) 
|Change in valuation allowance     |  |                     | 37.3‘ 
|Effective tax rate                |  |                     | 0.0’  





The income tax provision differs from the amount of tax determined
by applying the federal statutory rate as follows:



|                                            |  | Year Ended June 30, |          
|------------------------------------------- |  | ------------------- | ---------
|2014                                        |  |                     | 2013     
|                                            |  |                     |          
|Income tax benefit at statutory rate        |  | $                   | (824,909)
|Increase (decrease) in income taxes due to: |  |                     |          
|Change in valuation allowance               |  |                     | 824,909  



| |  | $ | - |  |  | $ | - | 
| |  | - | - |  |  | - | - | 











Net deferred tax assets and liabilities were comprised of
the following:



|                               |  | Year Ended June 30, |            
|------------------------------ |  | ------------------- | -----------
|                               |  | 2014                |            
|                               |  |                     |            
|Deferred tax asset (liability) |  |                     |            
|Net operating loss             |  |                     | 5,140,865  
|Valuation allowance            |  |                     | (5,140,865)
|                               |  |                     | -          





The Company has not recognized an income tax benefit for
its operating losses generated through June 30, 2014 or 2013 based on uncertainties concerning the Company’s ability to generate
taxable income in future periods.  The tax benefit is offset by a valuation allowance established against deferred tax
assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely
than not.  In future periods, tax benefits and related deferred tax assets will be recognized when management considers
realization of such amounts to be more likely than not.



For income tax purposes the Company has available a net operating
loss carry-forward of approximately $9,500,000 from inception to June 30, 2014, which will expire, unless used to offset future
federal taxable income beginning in 2024. The tax years for June 2010, 2011, 2012 and 2013 are open for examination by state and
federal agencies.



12.         Capital
Equity



The Company has issued convertible preferred shares. Shares
are convertible into the Company’s common stock, at the option of the holder, at the prescribed conversion rate. Conversions
are as follows:





|                    |  | Shares      |           |  | Conversion     | 
|------------------- |  | ----------- | --------- |  | -------------- | 
|                    |  | Outstanding |           |  | Rate to Common | 
|Preferred Series A  |  |             | 2,400,000 |  |                | 
|Preferred Series A1 |  |             | 8,889     |  |                | 
|Preferred Series A2 |  |             | 88,889    |  |                | 
|Preferred Series A3 |  |             | 25,846    |  |                | 
|Preferred Series B1 |  |             | 12,330    |  |                | 
|Preferred Series B2 |  |             | 1,210     |  |                | 
|                    |  |             | 2,537,164 |  |                | 



The above conversion rates are reported retroactive to the
reverse stock split.





13.         Commitments
and Contingencies



Lease/Rental Agreements



Our executive office is now located in an office complex
under annual five year lease, beginning June 1, 2012 at a rent starting at $3,315 per month and escalating to $4,765 per month.
We entered into this 5-year commercial lease agreement in St. Petersburg, Florida with Kalyvas Group II, LLC. Our lease provides
us with approximately 4,100 square feet of: reception area, nine offices, a lab/production area, inventory room, server room, kitchenette
and one conference rooms.  We believe the facilities are adequate for our operational needs.  We may require
additional offices in the event we obtain funding and acquire additional customers.

Rent expense for the years ended June 30, 2014 and 2013 amounted
to $41,349 and $42,900, respectively.







Foreign Currency Translation



The balance sheets of the Company's foreign subsidiaries
are translated at period-end rates of exchange, and the statements of earnings are translated at the weighted-average exchange
rate for the period. Gains or losses resulting from translating foreign currency financial statements are included in accumulated
other comprehensive income (loss) in the consolidated statements of







stockholders' equity and comprehensive income. At June 30,
2014 and 2013 no foreign currency translation was conducted due to the immaterial nature of its subsidiary’s balance sheet.



Legal Matters



From time to time the Company may be a party to litigation
matters involving claims against the Company.  Management believes that there are no current matters that would have a material
effect on the Company’s consolidated financial position or results of operations as of June 30, 2014 and 2013.



During the year ended June 30, 2012, Trimax Wireless filed
a complaint relating to the unpaid balance of the Promissory Note executed with the acquisition of Trimax Wireless. The Company
has filed a motion to dismiss such action which is set for hearing. The note is unsecured, however, if holders prevail, they may
be entitled to legal cost, in addition to payments per the term of the agreement. The Company believes that it has sufficient affirmative
defenses to this complaint and does not believe that it will have a material effect on the Company. Currently the company is in
the process of requesting dismissal of the suit.



During the year ended June 30, 2012, The Company filed a
Federal lawsuit against Lockwood Worldwide and its owners, current and previous management in the UNITED STATES DISTRICT COURT,
SOUTHERN DISTRICT OF FLORIDA. We are requesting an award of compensatory damages, an award of treble damages pursuant to the provisions
of RICO and other applicable federal and state statutes and an award of punitive damages in the full amount by the jury against
each of the Defendants. As Plaintiff, we have suffered damages as a result thereof, an amount in excess of $4,350,000.00. We are
asking for a total damages up to 4 times the amount of loss or close to $16M. As of the filing of this 10/K, we have had success
in freezing their operational account and all funds associated with that account.



UPDATE: The district court referred Defendants' motion to
dismiss for a report & recommendation on the disposition of Defendants' motion. On August 22, 2014, the Magistrate Judge entered
his report & recommendation denying Defendants' motion to dismiss the civil RICO case against the RICO Defendants. We are now
in the process of the final trial date.



14.         Subsequent
Events



Infrax Systems entered into a Technical Information License
Agreement (TIL) with Itron, the leading manufacturer of smart meters. The license agreement allows Infrax to design its Secure
Network Interface Card (SNIC) and communications module for inclusion in Itron Centron I & Centron II meters. We worked closely
with Itron during this process to ensure that we are fully compliant and the results to date have all met ITRON’s criteria.
As of the filing of this 10/K, Infrax is in the process of certification of its flagship product with ANSI and Itron. FCC and ANSI
certifications are complete, as of this filing, and the Company is waiting for relevant documentation and certification number.
ITRON will be the next stop in finalization of certification process in which we hope to achieve shortly after the filing of this
10/K.



While we have also been in discussions with several other
global meter manufacturers regarding the inclusion of the SNIC and GridMesh into their AMI meters, we believe that ITRON’s
dominant market position and the strength of our relationship will drive the results required to meet our business objectives.



We are providing intellectual properties and technologies
relating to IoT (Internet of Things) to companies for use to other industries. We have extended our platform, SNIC, to deliver
secure M2M (machine to machine) communication and Sensor technology as we believe the market for IoT will dwarf our current industry
niche.



Item 9.  Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure



On August 13, 2010 the Board of Directors engaged DKM Certified
Public Accountants of Clearwater Florida as our independent registered accounting firm. There have been no disagreements with our
independent registered audit firm.



Item 9A.  Controls and Procedures.



Not applicable.



Item 9A(T).  Controls and Procedures



Disclosure Controls



As of June 30, 2014 we carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15. This evaluation was
done under the supervision and with the participation of our management, including our President and Chief Financial Officer. Based
on this evaluation of our disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15e), our President and Chief
Financial Officer have concluded that as of June 30, 2014 such disclosure controls and procedures were not effective.











Report on Internal Controls



Our management is responsible for establishing and maintaining
adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide
reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles
generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that
in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance
that transactions are recorded as necessary for preparation of our financial statements; provide reasonable assurance that receipts
and expenditures of company assets are made in accordance with management authorization; and provide reasonable assurance that
unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would
be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not
intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.



Pursuant to Rule 13a-15d of the Exchange Act, management
conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal
Control - Integrated Framework (1992) and Internal Control Over Financial Reporting Guidance for Smaller Public Companies (2006),
issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on this evaluation, management
concluded that our internal control over financial reporting was not effective as of June 30, 2014.



|· | We do not have adequate personnel and other resources to assure that significant and complex transactions are timely analyzed and reviewed.                                                                                                                                                                                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|· | We have limited personnel and financial resources available to plan, develop, and implement disclosure and procedure controls and other procedures that are designed to ensure that information required to be disclosed in our periodic reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.
|· | Our limited financial resources restrict our employment adequate personnel needed and desirable to separate the various receiving, recording, reviewing and oversight functions for the exercise effective control over financial reporting.                                                                                                                                                                                              
|· | Our limited resources restrict our ability to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is accumulated and communicated to management to allow timely decisions regarding required disclosure.                                                                                                                                                                                



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



Changes in Controls and Procedures



There were no significant changes made in our internal controls
over financial reporting during the year ended June 30, 2014 that have materially affected or are reasonably likely to materially
affect these controls. Thus, no corrective actions with regard to significant deficiencies or material weaknesses were necessary.



Limitations on the Effectiveness of Internal Control



Our management, including the President, does not expect
that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud
and material errors. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent
limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, 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. Additionally, controls can be circumvented by
the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design
of any system of internal control is also based in part upon 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. Over time,
controls may become inadequate because of changes in circumstances, and/or the degree of compliance with the policies and procedures
may deteriorate. Because of the inherent limitations in a cost-effective internal control system, financial reporting misstatements
due to error or fraud may occur and not be detected on a timely basis.







Item 9B.  Other Information









Not applicable.



PART III

Item 10.  Directors, Executive Officers and Corporate
Governance



The following table identifies our directors and executive
officers, their ages, the positions each holds and, if a director, the first year he became a director.



|Name             |  | Age |  | Position (s) |  | Director since
|---------------- |  | --- |  | ------------ |  | --------------
|                 |  |     |  |              |  |               
|Sam Talari       |  | 50  |  | Chairman     |  | 2004          
|Malcolm F. Walsh |  | 64  |  | Director     |  | 2009          
|Paul Aiello      |  | 53  |  | Director     |  | 2010          



Sam Talari



Mr. Talari has been one of our directors since 2004.  Mr.
Talari became our Chairman on June 1, 2008, and our Acting Chief Executive Officer on November 21, 2008.  Mr. Talari’s
employment during the five year period prior to this annual report, and for certain years before that period, is as follows:



|● | 1994 – 1999 – Mr. Talari ran Compusite Corporation, one of the first Internet solutions providers in the nation to offer large spectrum of value added services to companies seeking greater presence on the Internet. He assisted Compusite to grow from no revenue to a multi-million dollar company.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | 1999 to Present – Mr. Talari founded FutureWorld Energy, Inc., (formerly Isys Medical, Inc.) and serves since inception as one of FutureWorld Energy’s directors. FutureWorld Energy is a diversified energy holding company, owning and seeking disrupted technologies in the renewable and alternative energy industry globally.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|● | 2001 to Present – Mr. Talari founded and manages FutureTech, a venture capital firm that invests in high technology start up enterprises.
|- | -----------------------------------------------------------------------------------------------------------------------------------------



Mr. Talari attended the University of New Hampshire, where
he studied computer science and mathematics. He earned a bachelor’s degree from the University of Massachusetts at Lowell
in computer science, engineering and mathematics and took master studies in finance.



Malcolm F. Walsh



Malcolm F. Welch, Co-Chairman of the Board,  is
an accomplished information technology executive who brings over 35 years of experience and a thorough understanding of the processes
and a related technology issues to be faced in developing, deploying and managing IT organizations dedicated to delivering services
in high performance environments.



As Chief Technology Officer (CTO) for Aetna Insurance he
was directly responsible for an $850 million technology budget as well as leading a technology staff of 500 people. In addition,
he was responsible for promoting, encouraging and implementing company-wide IT privacy and security policy formulation, IT services
strategy/structure and all Enterprise Architecture.



Prior to Aetna, he was Senior Vice President of technology
consulting at Comdisco, Inc. In previous roles, he has worked in many different corporate environments from start-ups to large
multi-national firms. At start-up USConnect Inc., he expanded the organization from its original six (6) firms to a constituency
of 32 firms in the US, Canada and South America, giving USConnect the broadest geographic coverage of any national micro/network
integration firm.



The large corporate time included positions at Allied–Signal/Bunker
Ramo Corporation, Honeywell Information Systems and National Semiconductor/Data Terminal Systems, Inc. In addition, Mr. Welch served
as Chief Systems Programmer for the U.S. Army Command & Control Support Detachment.



Mr. Welch’s senior management
experience has covered a broad diversity of business, management, technology and consulting skills. He possesses in-depth industry
experience in Financial Services, Insurance, Telecommunications, and HealthCare. His senior management positions have covered business
development, strategic planning, product management and product development.



Mr. Welch holds a dual Bachelor of Science degree in computer
sciences and mathematics from the University of Illinois.



Paul J. Aiello



Mr. Aiello served as our President and Chief Executive Officer
from October 19, 2009 to March 2012. Mr. Aiello also serves as a







Director. Mr. Aiello has over 25 years of executive experience
in the telecommunications and technology industry.



| | · | December 2005 to September 2009 – Mr. Aiello served as COO of GoVertical, a technology design and deployment company.                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | July 2002 to November 2006 – Mr. Aiello served as Vice President of Sales and Business Operations for Progress Telecom, a major telecommunications carrier.                                                                                                                
| | · | 1994 – 2002 _ Mr. Aiello served in a variety of executive positions for The Williams Companies communications units (WilTel, Williams Communications, etc) including Vice President of Global Sales, Vice President of Strategic & Government Accounts and General Manager.



Mr. Aiello earned a Bachelor of Arts degree in Political
Science from the State University of New York at Albany in 1981.



Section 16(a) Beneficial Ownership Reporting Compliance.



No person who at any time during the fiscal year, was a director,
officer, beneficial owner of more than ten percent of our common stock has furnished to us Forms 3, 4 and 5, and amendments thereto,
or filed such reports and amendments with the U.S. Securities and Exchange Commission, during our 2013 or 2014 fiscal year.



Code of Ethics.



On July 1, 2005, we adopted the Code of Ethics governing
all employees, officers and directors.  During the year ended June 30, 2014, no amendments to or waivers of the provisions
of the Code of Ethics were made with respect to any of our directors or executive officers.  We will provide a copy of
the Code of Ethics to shareholders without charge upon written request to Mr. Sam Talari, Chief Executive Officer, 3637 4th
Street North, Suite 330, St. Petersburg, FL 33781.  We have posted our Code of Ethics on our website http://www.infraxinc.com/about-us/investor-relations/,
and will disclose future amendments to, or waivers from, the Code of Ethics on our website within four business days following
the date of such amendment or waiver.



Audit committee.



We do not have an audit committee.



Procedures for stockholders to nominate directors.



We have not adopted any procedures whereby stockholders may
nominate persons for election as directors.



Item 11.  Executive Compensation



COMPENSATION DISCUSSION AND ANALYSIS



Overview



The goal of our named executive officer compensation program
is the same as our goal for operating the company—to create long-term value for our shareowners. Toward this goal, we have
designed and implemented our compensation programs for our named executives to reward them for leadership excellence, to align
their interests with those of our shareowners and to encourage them to remain with the company for long and productive careers.
Most of our compensation elements simultaneously fulfill one or more of our performance, alignment and retention objectives. These
elements consist of salary, bonus, and equity incentive compensation. In deciding on the type and amount of compensation for each
executive, we focus on both current pay and the opportunity for future compensation. We combine the compensation elements for each
executive in a manner we believe optimizes the executive’s contribution to the company.



Compensation Objectives



Performance.  Our two executives’ who are
identified in the Summary Compensation Table, (whom we refer to as our named executives) have held different positions with increased
levels of responsibility over the period that they have served the Company. The amount of compensation for each named executive
reflects his management experience, performance and service.  A key element of compensation is equity incentive compensation
in the form of our common stock, and participation in our Non statutory Stock Option Plan, although no shares have been granted
to date.



We believe that the compensation of our executives should
reflect their success in attaining our key objectives. Our key objectives are currently: (i) attracting qualified individuals
to enhance our management team, (ii) establishing strategic business relationships, (iii) raising capital, and (iv) develop
our marketing plan. The key individual factors for each executive include but are not limited to: (i) the value of their skills
and capabilities, (ii) performance of their management responsibilities, (iii) whether that individuals is capable to
assuming greater responsibilities, (iv) leadership qualities, (v) tenure and career experience, (vi) current compensation
arrangements, (vii) long-term potential to enhance shareholder value, and (viii) contribution as a







member to our executive management team.



We allocate compensation between cash compensation and equity
based compensation. We provide cash compensation in the form of base salaries to meet competitive salary norms and reward performance
on an annual basis, if warranted. Base salary is designed to reward annual achievements and be commensurate with the executive’s
scope of responsibilities, demonstrated leadership abilities, and management experience and effectiveness. Our other elements of
compensation focus on motivating and challenging the executive to achieve superior, longer-term, sustained results. We provide
non-cash compensation in the form of equity incentive arrangements to retain and attract key individuals and to reward performance
against specific objectives and long-term strategic goals.



Alignment. We seek to align the interests of the named executives
with those of our investors by evaluating executive performance on the basis of key financial measurements which we believe closely
correlate to long-term shareowner value. A key element of compensation that aligns the interests of our executives with shareowners
is equity incentive compensation, and providing the executives the ability to convert a portion of their compensation into common
shares, both of which increases the executive’s stake in the Company.



Implementing Our Objectives



Base Compensation.  Base compensation amounts for
our executive officers are set pursuant to written agreements. When setting base salary, the Board reviews a number of factors,
including but not limited to executives of similar position, responsibility, experience, qualifications and performance, which
allows us to recruit and retain qualified executives.



Stock Option Grants. The Board of Directors has the authority
to select individuals who are to receive options under the Plan and to specify the terms and conditions of each option so granted
(incentive or nonqualified), the exercise price (which must be at least equal to the fair market value of the common stock on the
date of grant with respect to incentive stock options), the vesting provisions and the option term.



SUMMARY COMPENSATION TABLE



The following table sets forth the compensation we have paid
to (i) our current and former chief executive officers during the last fiscal year, (ii) our two most highly compensated other
executive offers who were executive officers at the end of the last fiscal year whose compensation exceeded $100,000 and (iii)
our two most highly compensated other executive officers who were not executive officers at the end of the last fiscal year whose
compensation exceeded $100,000.



|Name and principal position |  | Year |  | Salary |         |  | Bonus |  |     | Stock Award |  |  | All other compensation |  |  | Total |    
|--------------------------- |  | ---- |  | ------ | ------- |  | ----- |  | --- | ----------- |  |  | ---------------------- |  |  | ----- | ---
|                            |  |      |  |        |         |  |       |  |     |             |  |  |                        |  |  |       |    
|Sam Talari,                 |  | 2013 |  | $      | 180,000 |  |       |  | -0- |             |  |  | -0-                    |  |  |       | -0-
|Acting CEO & Co-Chairman    |  | 2012 |  | $      | 164,000 |  |       |  | -0- |             |  |  | -0-                    |  |  |       | -0-
|                            |  |      |  |        |         |  |       |  |     |             |  |  |                        |  |  |       |    
|Malcolm F. Welsh,           |  | 2013 |  | $      | 0       |  |       |  | -0- |             |  |  | -0-                    |  |  |       | -0-
|Co-Chairman                 |  |      |  | $      |         |  |       |  |     |             |  |  |                        |  |  |       |    
|                            |  |      |  |        |         |  |       |  |     |             |  |  |                        |  |  |       |    



Compensation is in the form of one or a combination of cash,
stock or as an unpaid accrual.





EMPLOYMENT AGREEMENTS



Sam Talari



Effective August 1, 2009, the Company entered
into a three-year employment agreement with Sam Talari, one of the Company’s directors. The agreement was automatically renewed
for an additional one-year period, and subsequently renewed by the Board for an additional one-year period through July 31, 2013.
The Agreement provides for (a) a base salary of $15,000 per month, (b) a signing bonus equal to one month salary, (c) four weeks’
vacation within one year of the starting date, and (d) all group insurance plans and other benefit plans and programs made available
to the Company’s management employees.





John Verghese



On October 19, 2010, as amended January 1, 2010,
the Company entered into a three-year employment agreement with John







Verghese as Director of Product Development, one
of the Company’s directors. The Agreement provides for (a) a base salary of $6,500 per month, (b) a signing bonus of $10,000,
(c) three weeks’ vacation within one year of the starting date, and (d) all group insurance plans and other benefit plans
and programs made available to the Company’s management employees. Additionally Mr. Verghese has the option to purchase 360,000
shares of common stock at $.025 per share, ratably vesting at the employment anniversary date.



Terry Gardner



On April 2nd, 2012, the Company entered
into a three-year employment agreement with Terry Gardner as VP of Professional Services. The Agreement provides for (a) a base
salary of $10,000 per month, (b) a signing bonus of $30,000, (c) three weeks’ vacation within one year of the starting date,
and (d) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.
Additionally Mr. Gardner has the option to purchase 300,000 shares of common stock at $.04 per share, ratably vesting at the employment
anniversary date.





Malcolm F. Welch



On October 6, 2009, the Company entered into a
one-year employment agreement with Malcolm F. Welch, one of the Company’s directors and Co-Chairman of the Board.  The
agreement is automatically extended for successive one one-year periods, unless previously terminated. The Agreement, as amended
effective January 1, 2010 provides for (a) a base salary of $2,000 per month; (b) eligibility to receive 375,000 shares of the
Company’s common stock based on the employee’s achievement of goals and objectives approved by the Board; (c) an option
to purchase 375,000 shares of the Company common stock at $0.025 per share to be granted over a 3 years based on the achievement
of goals and objectives established by the Board; (d) a bonus based on the level of funding the Company achieves through June 30,
2013 ; (e) two weeks’ vacation during first year of employment; and (f) all group insurance plans and other benefit plans
and programs made available to the Company’s management employees.



COMPENSATION OF DIRECTORS



Directors who are Company employees receive no additional
or special remuneration for serving as directors.  Presently, we do not provide compensation to outside directors.



OTHER INFORMATION REGARDING THE BOARD OF DIRECTORS



There are no family relationships between the directors or
executive officers.  All of the actions by the Board of Directors during the year were taken by consent resolutions and
written actions in lieu of meetings.



Item 12.  Security Ownership of Certain Beneficial
Owners and Management and Related Stockholder Matters



The following table sets forth the number of our shares of
common stock owned by:



|— | each of our directors and executive officers, at September 19, 2014;                                                                                                               
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|— | our directors and executive officers as a group, at September 19, 2014; and                                                                                                        
|— | other persons, including their addresses, and groups, if any, we have learned own or control more than five percent of our issued and outstanding common stock as of a recent date.



The address of our directors and executive officers is our
address. Except as noted in the following table, we are not aware of any other person or “group”, as defined
in the Regulation S-K, who owned five percent or more of our common stock at September 29, 2014.  We have no reason to
believe that each person identified in the table does not have sole voting and investment power over the shares he owns, except
as noted.



|Name                                              |  | Number of
        Shares (a) |            |  | Percent of Ownership | 
|------------------------------------------------- |  | ---------------------------- | ---------- |  | -------------------- | 
|                                                  |  |                              |            |  |                      | 
|Sam Talari (b)                                    |  |                              | 73,329,455 |  |                      | 
|Paul J. Aiello                                    |  |                              | 8,058,438  |  |                      | 
|Malcolm F. Welch                                  |  |                              | 274,127    |  |                      | 
|John Verghese                                     |  |                              | 6,121,200  |  |                      | 
|All directors and officers as a group (4 persons) |  |                              | 87,783,220 |  |                      | 

______________



(a) Shares stated reflect post reverse split.

(b) Mr. Talari owns shares beneficially, the legal ownership
being held by Talari Industries which is owned entirely by Mr. Talari.











STOCK OPTION PLAN



We have adopted a 2004 Non Statutory Stock Option Plan to
reward and provide incentives to our key employees, who may include our directors who are also employees and our officers, as well
as consultants and affiliates. The following table provides certain information about the plan.



|Plan category                                             |  | Number of securities to
        be issued upon exercise
        of outstanding options,
        warrants and rights |  | Weighted- average
        exercise price of
        outstanding options,
        warrants and rights |  | Number of securities
        remaining available for
        future issuance under
        equity compensation
        plans (excluding
        securities reflected
        in column (a) |     
|--------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ----
|                                                          |  | (a)                                                                                                                 |  | (b)                                                                                                  |  | (c)                                                                                                                                                                                        |     
|Equity compensation plan approved by security holders     |  | None                                                                                                                |  | Not applicable                                                                                       |  | None                                                                                                                                                                                       |     
|                                                          |  |                                                                                                                     |  |                                                                                                      |  |                                                                                                                                                                                            |     
|Equity compensation plan not approved by security holders |  | None                                                                                                                |  | Not applicable                                                                                       |  |                                                                                                                                                                                            | None
|                                                          |  |                                                                                                                     |  |                                                                                                      |  |                                                                                                                                                                                            |     



Item 13.  Certain Relationships and Related Transactions,
and Director Independence



During the fiscal years 2014 and 2013, we have not entered
into any transactions with our directors and executive officers, outside of normal employment transactions, or with their relatives
and entities they control.



We do not anticipate entering into any future transactions
with our directors, officers and affiliates.



There are no family relationships between the directors or
executive officers.



Item 14.  Principal Accountant Fees and Services



The following table sets forth amounts we have been billed
with respect to 2014 and 2013 for certain services provided by our independent accountants, Drake & Klein, PA. For the year
ended June 30, 2014, information includes fees charged by our prior auditors, Randall N. Drake, CPA, PA, which performed the reviews
of our financial statements through March 31, 2014 10Q:











|Service                                     |  | 2014 |        |  | 2013 |  
|------------------------------------------- |  | ---- | ------ |  | ---- | -
|Audit                                       |  | $    | 15,000 |  |      | $
|Review of unaudited financial statements    |  | $    | 6,000  |  |      | $
|Audit-related fees                          |  | $    | 0      |  |      | $
|Tax compliance, tax advice and tax planning |  | $    | 0      |  |      | $
|All other services                          |  | $    | 0      |  |      | $



























PART IV



Item 15.  Exhibits and Financial Statement Schedules



|(a)(1)   FINANCIAL STATEMENTS         
|--------------------------------------
|See index in Item 8                   
|                                      
|(a)(2)   FINANCIAL STATEMENT SCHEDULES
|None                                  
|                                      
|(a)(3)   OTHER EXHIBITS               
|                                      
|31.1                                  
|31.2                                  
|32.1                                  
|32.2                                  
|                                      
|                                      

* Previously filed



|(c)  FINANCIAL STATEMENT SCHEDULES:
|-----------------------------------
|                                   
|                                   
|                                   











SIGNATURES



Pursuant to the requirements of Section 13 or 15(d) 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.



| | Infrax Systems, Inc. | 
| | -------------------- | 
| |                      | 

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.





|Signature, Name and Position:                                             |  | Date:             
|------------------------------------------------------------------------- |  | ------------------
|                                                                          |  |                   
|                                                                          |  |                   
|/s/ Sam Talari                                                            |  | September 29, 2014
|Sam Talari,
        Principal Executive Officer                           |  |                   
|                                                                          |  |                   
|                                                                          |  |                   
|/s/ Sam Talari                                                            |  | September 29, 2014
|Principal Financial Officer and Principal Accounting Officer and Director |  |