UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________



FORM 10-K

______________



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



For the fiscal year ended June 30, 2011



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



For the transition period from ______________ to
______________



Commission File 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.)



|6365 53 rd Street No., Pinellas Park, FL |  | 33781     
|---------------------------------------- |  | ----------
|(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. Yes √  No 



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 ofregistrant’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.    √



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



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



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



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 second fiscal quarter,
June 30, 2008: N/A.



Number of the issuer’s Common Stock outstanding as of October 13,
2011:  11,963,325



Documents incorporated by reference: None.



Transitional Small Business Disclosure Format (Check One): Yes    No



























INFRAX SYSTEMS, INC

Annual Report on Form 10-K

For the Fiscal Year Ended June 30, 2011



INDEX



|           |                                                                                                              | Page
        Number
|---------- | ------------------------------------------------------------------------------------------------------------ | -------------------
|PART  I    |                                                                                                              |                    
|Item 1.    | Business                                                                                                     | 3                  
|Item 1A.   | Risk Factors                                                                                                 | 14                 
|Item 1B.   | Unresolved Staff Comments                                                                                    | 17                 
|Item 2.    | Properties                                                                                                   | 17                 
|Item 3.    | Legal Proceedings                                                                                            | 17                 
|Item 4.    | Submission of Matters to a Vote of Security Holders                                                          | 17                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|PART  II   |                                                                                                              |                    
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 18                 
|Item 6.    | Selected Financial Data                                                                                      | 19                 
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 20                 
|Item 8.    | Financial Statements and Supplementary Data                                                                  | 26                 
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         | 54                 
|Item 9A.   | Controls and Procedures                                                                                      | 54                 
|Item 9A(T) | Controls and Procedures                                                                                      | 54                 
|Item 9B.   | Other Information.                                                                                           | 55                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|PART  III  |                                                                                                              |                    
|Item 10.   | Directors, Executive Officers and Corporate Governance                                                       | 55                 
|Item 11.   | Executive Compensation                                                                                       | 57                 
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               | 60                 
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence                                    | 61                 
|Item 14.   | Principal Accountant Fees and Services                                                                       | 61                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|PART  IV   |                                                                                                              |                    
|Item 15.   | Exhibits and Financial Statement Schedules                                                                   | 62                 
|           |                                                                                                              |                    
|           |                                                                                                              |                    
|Signatures |                                                                                                              | 63                 







- 2 -











Forward-Looking Statements



This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including, without
limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expects,”
“anticipates,” “intends,” “believes,” “estimates” or
similar language, and among other things:  (i) events that may occur in the future, (ii) implementation of our business
model; development and marketing of our products and services and (iii) prospects for revenues and profitability.  All
forward-looking statements included in this document are based on information available to us on the date hereof.  We
caution investors that our business and financial performance and the matters described in these forward-looking statements are
subject to substantial risks and uncertainties.  Because of these risks and uncertainties, some of which may not be currently
ascertainable and many of which are beyond our control, actual results could differ materially from those projected in the forward-looking
statements. Deviations between actual future events and our estimates and assumptions could lead to results that are materially
different from those expressed in or implied by the forward looking statements. We do not intend to update these forward looking
statements to reflect actual future events.



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 6365 53rd St. N, Pinellas Park,
FL 33781 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.



|● | We were incorporated in Nevada on October 22, 2004.                                                                                                                                                                                                                                                                                                                                                                                      
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|● | J. Marshall Batton, Jeffrey A. Hoke, Jacques Laurin and Douglass W. Wright were our founders and original stockholders, each then owning twenty-five percent of our common stock.                                                                                                                                                                                                                                                        
|● | On July 29, 2005, FutureTech Capital LLC, a company entirely owned by SamTalari, acquired eighty percent of our common stock as a result of our acquisition of the Opticon Network Manager software (see below) from FutureTech and the stock ownership of each of our founders was reduced to five percent.                                                                                                                             
|● | Also on July 29, 2005, following our acquisition of the Opticon Network Manager software, FutureTech and our founders exchanged all of our issued and outstanding common stock for an aggregate of sixty-six percent of FutureWorld Energy, Inc., (formerly Isys Medical) issued and outstanding common and all of its preferred stock; and, as a result of the exchange, we became a wholly owned subsidiary of FutureWorld Energy, Inc.
|● | Before the exchange of our shares for FutureWorld Energy Inc.’s shares, Mr. Talari legally and beneficially owned eighty-eight percent of FutureWorld Energy Inc.’s common stock and beneficially owned through FutureTech eighty percent of our common stock.                                                                                                                                                                           
|● | After the exchange, our founders each owned directly four percent of FutureWorld Energy Inc.’s common stock and Mr. Talari, directly and indirectly, owned eighty percent of FutureWorld Energy Inc.’s common stock.                                                                                                                                                                                                                     
|● | On April 4, 2006, we consolidated (reverse split) our issued and outstanding common stock by a factor of 0.30107143.                                                                                                                                                                                                                                                                                                                     
|● | In connection with FutureWorld Energy Inc.’s announcement
        to spin off OptiCon Systems, our Board of Directors approved a stock dividend of 99,118 of our common stock payable to our sole
        shareholder, FutureWorld Energy, Inc.                                                                                                                                                                                          



|● | On July 31, 2007, Mr. Batton and Mr. Wright, our founders, accepted 35,000 shares of our common stock in lieu of deferred compensation and in cancellation their respective, non-expiring rights under their employment agreements to maintain their individual ownership of our common stock to a level of four percent of our issued and outstanding shares.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|● | On August 31, 2007, FutureWorld Energy, Inc. paid a stock dividend to its stockholders consisting of 100% of our outstanding common.  As of this date, we ceased being a subsidiary of FutureWorld Energy, Inc.                                                                                                                                               
|● | On June 10, 2008, we consolidated (reverse split) our issued and outstanding common stock by a factor of 0.05 (1 for 20).  Statement of all share amounts, whether before of after June 10, 2008 in this annual report have been adjusted for the share consolidation.                                                                                        
|● | On May 13, 2009, Mr. Talari converted the principal amount and accrued interest of one convertible note, and the accrued interest and a portion of the principal amount of a second note into 50,000,000 shares of our common stock respectively.  After these conversions, Mr. Talari legally and beneficially owned eighty-four percent of our common stock.
|● | On August 11, 2009, we organized Infrax Systems SA (Pty) Ltd., a South African company, as a wholly owned subsidiary, to penetrate the South Africa fiber optic telecommunication market.                                                                                                                                                                     
|● | On August 12, 2009, we organized PowerCon Energy Systems, Inc., a Nevada corporation, as a wholly owned subsidiary to develop, market and distribute software, based on the R4 architecture, to the power industry.                                                                                                                                           
|● | 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.                                                                                                                                              









- 3 -











Before our acquisition of the Opticon Network Manager software, both FutureWorld
Energy, Inc. (formerly Isys Medical) and FutureTech were under the direct, common control of Mr. Talari. Prior to our acquisition
of the Opticon Network Manager software, Mr. Talari did not have a controlling interest in  us. With that acquisition,
however, we also came under Mr. Talari’s indirect control. Although Mr. Talari may be deemed to have determined or had a
controlling influence on the terms of the exchange of stock between our stockholders and FutureWorld Energy, Inc., because he owned
(a) all the stock of FutureTech which was our then eighty-percent stockholder and (b) eighty-eight percent of FutureWorld Energy
Inc.’s common stock, Mr. Talari did not control the decision of our founders who owned twenty percent of our common stock
and who have advised us they made independent, individual decisions to enter into the exchange of their stock in us for FutureWorld
Energy Inc. common stock. The Company’s investment in FutureWorld Energy, Inc.’s common stock was distributed to Infrax’s
stockholders of record, effective June 2010.



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.







- 4 -

















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.





- 5 -













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 $15.2 billion in 2009 and is forecasted to increase to $39.4
billion by 2014.





INFRAX Solution



IMAGE OMITTED











- 6 -















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



- Network Transport and Management,



- Secure Smart Sensors and Devices (i.e. Smart Meters, and



- Threat Detection, Grid Optimization and Security.



SIEPTM - The Complete Solution to Secure
the Grid

Infrax Systems has developed a series of interrelated
operational management, communications, and grid security related products and services, under one platform (SIEP), that together
enable a comprehensive and unified solution for communications and applications management of the Smart Grid. Each product meets
a specific need in the spectrum of controls necessary to effectively manage a Smart Grid and together they will offer unparalleled
security and data management.



Secure Network Interface Card (SNIC)

The Infrax SNIC is the next generation of grid security
products. SNIC addresses the Advanced Metering Infrastructure requirements of electric utilities worldwide and provides the highest
level of meter security available to date. The 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 utilities control center using standards based communications technology called GridMesh.



GridMesh

Infrax’s revolutionary
wireless smart meter mesh platform solves what has been the biggest challenge faced by utilities, connecting each home to the Smart
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 Utilitiesand Telco’s
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/E1s 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.



AssetTracker

The Infrax
Asset Tracker solution provides for complete inventory management of utility Smart 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.





What Our Technology Does







INFRAX is a pioneer designer, developer, systems integrator
and manufacturer of turnkey secure solutions for the utility industry. We are a provider of unique secure, cost-efficient solutions
that provide everything required to bring the utility’s technological platform into the 21st. century. Our SIEPTM platform
provides: 1) Network Transport and Management (secure 2 way communications), 2) Secure Smart Devices (Smart Meters), and 3) Asset
management, Grid Optimization and Security, all in an integrated state-of-the-art Smart Grid solution that truly provides our customers
with end to end grid management capability.



We believe our Secure Integrated Platform will facilitate
and hasten the deployment of Smart Grid technology among resource constrained small and mid-sized utilities. INFRAX’ advantage
comes from our advanced patented technologies, which provide a highly secure, reliable platform that allows two-way communication
with our Secure Intelligent Endpoint Devices for Advanced Metering Infrastructure and Substations applications.



Based on our review of the Smart Grid related products against which the
Secure Intelligent Energy Platform now competes, we believe that none of them provide the required encryption and threat detection
capabilities required to secure the energy grid.



The Utility industry’s aggressive deployment
of Advanced Metering Infrastructure (AMI) and data management devices has led to the accelerated reliance on fiber optic communications
to many of the key substations. However, the existing utility networks cannot provide the security, reliability and connectivity
to extend the reach to the consumer locations.



Today’s evolution of Smart Grid design and implementations
actually began several years prior to the current initiatives. The same applies to the products designed by most of the major players
including Itron, Silver Spring and GridPoint. Although the current security initiatives and elected officials have good intentions,
they have missed the window of opportunity to truly integrate security from the beginning by several years. Similar to the credit
card industry, banking, health care, and most other industries that conduct business online, the next electrical infrastructure
will need to feature security as an add-on that is applied after the Smart Grid is implemented.





- 7 -















Recently discovered vulnerabilities in smart meters
have been identified that could allow an attacker to obtain complete control of the meters. Specifically, an attacker could exploit
these vulnerabilities to turn off electricity to hundreds of thousands of homes. Thus, an attacker could execute a wide-scale Denial
of Service (“DoS”) attack against homes and businesses.





The Advantage of Our Technology



By entering the market without the burden of legacy
products and technology, Infrax is able to focus on future technologies and will be poised to provide advanced solutions for companies
that are yet to deploy AMI and harden previously installed networks and devices.



While the current use of RF technology is inherently
less reliable, Infrax is focused on using highly encrypted data over secure tunnels using a variety of communications medium including
WiFi, Cellular or other public communication media. Infrax's secure smart grid platform incorporates a communications transport
known as GridMeshTM, and a device and data security management tool known as GRiM. Secure management of the "last mile"
backhaul is necessary for utilities to implement Smart Grid applications such as AMI, and substation and distribution automation.





Infrax is 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. The SNIC will be offered in a variety of configurations, all equipped with standards based encryption
with robust authentication schemes.







- 8 -











Data traffic passing through 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 creates an impenetrable barrier against
cyber-attacks.





We believe that our Secure Intelligent Energy Platform
will give us a competitive advantage in the emerging and evolving Smart Grid environment.  By utilizing our solution,
Utilities can secure their networks and prolong the lifecycle of previously deployed components by eliminating the security concerns
that would necessitate replacement.



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.





- 9 -









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.







- 10 -













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.



Contracts and Agreements



In July 2010, we signed an agreement with Tampa Electric Company (TECO)
to provide a wireless network interconnecting multiple substation facilities.



In August 2010, we received an order from USKS to deliver and install the
next phase of the wireless network in Abuja, Nigeria. This phase will include WiMax/LTE capability.



In January 2011, we received an order to provide a wireless public safety
network in Hamilton, Bermuda.



In June 2011, we received an additional order to provide wireless communications
to the Bermuda Dockyards.



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.







- 11 -











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 not yet filed patent applications for our Smart Grid products, but
intend to do so as development progresses. We do hold 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.







- 12 -













Lockwood Technology Corporation (acquired controlling interest 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 softwares provide:



|· | 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
to be filed)



We will file for global patent for our Security and Network Interface Card
after the successful completion of the field trials in 2011.



GridMesh (Intellectual Property Rights to be filed)



We will file for global patent for our GridMesh technology after the successful
completion of the field trials in 2011.







- 13 -











Competitive Landscape



We face strong competition from traditional grid optimization
providers, both larger and smaller than us. We compete in four distinct market sectors:



| | · | advanced metering,
| | - | ------------------



| | · | networking and communications,
| | - | ------------------------------



| | · | 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 Activity



·Silver Spring Networks

oDeveloped Smart Energy Platform with NIC for GE meters and end to end management.

oHave won several utility contracts for AMI deployment mainly through PG&E.

oFiled S-1 to IPO on July 7, 2011.

oAnticipated to be priced at $15.00/share = Market Cap of @ $2B.

oAnticipated IPO date to be October. 2011, upon SEC effectiveness notice.

oAnticipated Price per Revenue of 30.

oShares currently traded off market @ sharespost.com @ $10 per share.

oHighly anticipated IPO, will create a strong indicator to the whole industry
.. Many other Smart Grid related companies to follow suit like eMeters & GridCom.



·Ambient Corporation (AMBT)

oStarted in 1996.

oHistorically products were Broadband over Power Line (BPL) based.

oX-Series of communications nodes utilize 802.11 Wi-Fi communications.

oPrimary customer is Duke Energy.

oReverse Split effective July 20, 2011. Stock price trading up post reverse.
Uplist to NASDAQ effective 8/3/2011.







Our Employees



At the date of this annual report, we have seven (7) full-time and
four part-time employees. The majority of employees work out of our offices in Pinellas Park. 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.





- 14 -













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.





- 15 -













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 caus 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.





- 16 -













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 three
year lease, beginning May 1, 2010 at a rent of $2,756 per month. We entered into this 3-year commercial lease agreement in Pinellas
Park, Florida with Accu Centre. Our lease provides us with approximately 4,100 square feet of: reception area, nine offices, eight
cubicles, a lab/production area, kitchenette and two 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 did not terminate any legal
proceedings during the fourth quarter of our 2011 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 2011 fiscal year.







- 17 -











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 2010*                      |  |           |  |           | 
|Fourth Quarter Ended June 30, 2010     |  | $   16.00 |  | $   2.00  | 
|Third Quarter Ended March 31, 2010     |  | $  22.50  |  | $   5.60  | 
|Second Quarter Ended December 31, 2009 |  | $ 42.50   |  | $   10.05 | 
|First Quarter Ended September 30, 2009 |  | $   62.50 |  | $   25.00 | 
|                                       |  |           |  |           | 
|Fiscal Year 2011*                      |  |           |  |           | 
|Fourth Quarter Ended June 30, 2011     |  | $   3.05  |  | $   .80   | 
|Third Quarter Ended March 31, 2011     |  | $   6.00  |  | $   2.25  | 
|Second Quarter Ended December 31, 2010 |  | $   4.85  |  | $   2.50  | 
|First Quarter Ended September 30, 2010 |  | $   12.00 |  | $   1.40  | 



* 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 October 13, 2011 we had 65 shareholders of record and
approximately 4, 352 beneficial shareholders, and we had 2,835,417,440 (5,670,835 post reverse split) 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.





- 18 -















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



The following table sets forth information about our unregistered sales
of securities during the three months ended June 30, 2011.



|Date     | Title of Security | Amount     | Purchaser    |     | Price       | Exemption   
|-------- | ----------------- | ---------- | ------------ | --- | ----------- | ------------
|6/3/2011 | Common            | 70,000,000 | Richared Dea | (1) | Acquisition | Section 4(2)
|6/3/2011 | Common            | 70,000,000 | Eric Littman | (1) | Acquisition | Section 4(2)
|         |                   |            |              |     |             |             
|         |                   |            |              |     |             |             
|         |                   |            |              |     |             |             
|         |                   |            |              |     |             |             
|         |                   |            |              |     |             |             
|         |                   |            |              |     |             |             



We did not pay and no one acting on our behalf or to our knowledge paid
any commissions or other compensation with respect to the sale of any of the shares listed in the tables above.



| | (1) | Mr. Richard Dea  and Littman have been issued shares in connection with the acquisition of Lockwood Technology, Inc.
| | --- | --------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                     
| |     |                                                                                                                     





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.”







- 19 -













|                                                 |  | 2011 |            | 2010 |  
|------------------------------------------------ |  | ---- | ---------- | ---- | -
|                                                 |  |      |            |      |  
|Cash                                             |  | $    | 25,498     |      | $
|Current assets                                   |  |      | 152,998    |      |  
|Total Assets                                     |  |      | 7,049,266  |      |  
|                                                 |  |      |            |      |  
|Total current liabilities                        |  |      | 2,106,199  |      |  
|Total liabilities                                |  |      | 2,681,156  |      |  
|Total stockholders' equity                       |  |      | 4,368,110  |      |  
|                                                 |  |      |            |      |  
|Working Capital                                  |  |      | (1,953,201 | )    |  
|                                                 |  |      |            |      |  
|Net Cash (Used) Provided by Operating Activities |  |      | (592,774   | )    |  



|For the Year Ended June 30, |  | 2011 |            |   | 2010 |  
|--------------------------- |  | ---- | ---------- | - | ---- | -
|                            |  |      |            |   |      |  
|Revenues                    |  | $    | 518,388    |   |      | $
|Direct costs                |  |      | 87,327     |   |      |  
|Gross Profit                |  |      | 431,061    |   |      |  
|Operating expenses:         |  |      | 4,247,134  |   |      |  
|Net loss                    |  | $    | (3,884,305 | ) |      | $



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



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.



PLAN OF OPERATIONS



As more fully described in “LIQUIDITY AND CAPITAL RESOURCES”,
we had approximately $25,000 in cash at June 30, 2011, and extended in excess of the line of credit from Mr. Talari with which
to satisfy our future cash requirements. Mr. Talari has extended his support and is in the process to extend his support to a total
of $1 million. Our management believes our cash and majority shareholder commitment will support only limited activities for the
next twelve months. We are attempting to secure other sources of financing to develop our business plan, and to implement our sales
and marketing plan. We believe full implementation of our plan of operations, completion of development of the smart grid related
hardware and software, completion of pending acquisitions and the integration of the Lockwood will cost approximately $5 million.
We have no assurance we will be able to obtain additional funding to sustain even limited operations beyond twelve months based
on the available cash and balance of our line of credit with Mr. Talari. If we do not obtain additional funding, we may need to
cease operations until we do so and, in that event, may consider a sale of our technology. Our plan of operations set forth below
depends entirely upon obtaining additional funding.





- 20 -











We are currently in ongoing discussions, arrangements, understandings, commitments
or agreements for additional funding with two firms. In this endeavor, we will consider equity funding, either or both of a private
sale or a registered public offering of our common stock; however, it seems unlikely that we can obtain an underwriter. We will
consider a joint venture in which the joint venture partner provides funding to the enterprise. We will consider debt financing,
both unsecured and secured by a pledge of our technology. As noted previously, we our intermediary funding is provided through
our line of credit arrangement with Mr. Talari.



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.



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.





Additionally, during this stage we will continue to design and implement
wireless networks in developing countries in continuation of the former Trimax Wireless strategy. In parallel with this activity
we plan to continue to target wireless ISP’s and carriers, offering our current wireless voice and data communications products.



We may explore the opportunities to locate local and regionally based companies
in emerging markets with existing relationships with the key decision makers in Africa, and Middle East, that would be willing
establish strategic relationships in those markets and establishing their own Network Operating Centers to increase our visibility
and support our customers in those markets. We are considering the establishment of this concept as our business model for
countries in these emerging markets.



Product Research and Development



Our Smart Grid products are in the late stages
of development and we anticipate delivering prototype solutions to our targeted beta customers by the end of the 1stquarter of 2012. We have budgeted $1.8M for the completion of our hardware and software products. We do not have financial or other
resources to undertake this development. Without additional funding sufficient to cover this budgeted amount, we will 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.







- 21 -











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 .



RESULTS OF OPERATIONS



Comparison year ended June 30, 2011 to June 30, 2010



For the year ended June 30, 2011 and 2010, we incurred net losses of $3,884,305
and $986,710, respectively.   Losses consisted of $500,900 and $510,267 of stock based compensation for the years
ended June 30, 2011 and 2010, respectively.  Losses also include depreciation and amortization, non-cash expenses, in
the amount of $1,347,819 and $2,398 for the years ended June 30, 2011 and 2010, respectively. The increase was primarily due to
the amortization charges for intangible and tangible assets acquired from Trimax. Additionally, there were impairments and write
downs of certain assets, due to valuation assessments by management, incurring charges of approximately $892,000 in year 2011.
Compensation and consulting expenses increased approximately $653,000 for the comparative periods, due to the increase in full-time
equivalents and the full year operations of the Trimax acquisition, as well as a full year increase in employment agreement, both
in number of individuals under contract and annual amount. General and administrative increased approximately $327,000, while professional
fees decreased approximately $67,000.



LIQUIDITY AND CAPITAL RESOURCES



As of June 30, 2011, we had approximately $25,000 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 $592,774, which was primarily provided
from advances from our majority shareholder.







- 22 -











On September 6, 2005, we obtained a loan commitment from Mr. Talari,
one of our director and controlling person in the aggregate amount of $350,000, which was amended to $500,000, under a revolving
master promissory note, due on demand, with interest at the rate of five percent per annum. We have been receiving advances on
this note on an as needed basis and through June 30, 2011, we have received a total of $494,253 for the year ended June 30, 2011
and $574,957, net, since the inception of the commitment.  During the course of this agreement Mr. Talari has made a
number of conversions, reducing the note and accrued interest in exchange for our common stock.



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.  As part of
the agreement a promissory note, in the amount of $712,500 was entered.  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 We have not made our required
payments on this note.



On June 17, 2010 the Company entered into a Bridge Loan Agreement with Blue
Diamond Consulting, LLC (“Lender”).  The Company may be advanced up to $500,000, secured by the Company’s
common stock.  Advances may be requested in increments of $25,000 and bear interest of 8% per annum.   Advances
have repayment terms of six months from the date of the requested advance.  The Lender has the right, at their option,
to convert any amounts due, plus interest, into the Company’s common stock at a conversion rate, as defined, at 50% of the
closing bid price at the date of conversion request.  As of June 30, 2011, there have been no requested advances and
no amount is due to Lender.



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.





- 23 -















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, 2011 and 2010, which are contained in this filing,
the Company’s 2011 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.





- 24 -













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.



The Company has been approached as a potential target for acquisition. 
Preliminary discussions were brought to the attention of the Board of Directors.  Although negotiations have not advanced,
we believe that those discussions were validation of our technology.   Management and the Board of Directors are aware of
our position and potential of our technology and will consider any offer that increases shareholder value.



Management will only consider these options where it believes the result
would be to increase shareholder value while continuing the viability of the company.



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



Not Required.







- 25 -















Item 8.     Financial statements and supplementary data





Infrax Systems, Inc.

2011 Annual Report

Index to Financial Statements and Financial Statement
Schedules





|                                                           | Page
|---------------------------------------------------------- | ----
|                                                           |     
|Report of Independent Registered Public Accounting Firm    | 27  
|                                                           |     
|Consolidated Balance Sheets                                | 28  
|                                                           |     
|Consolidated Statements of Operations                      | 29  
|                                                           |     
|Consolidated Statements of Changes in Stockholders’ Equity | 30  
|                                                           |     
|Consolidated Statements of Cash Flows                      | 31  
|                                                           |     
|Notes to Consolidated Financial Statements                 | 32  
|                                                           |     

















- 26 -

















Randall N. Drake, CPA, P.A.

1981 Promenade Way

Clearwater, FL 33760

727.536.4863

Randall@RDrakeCPA.com

____________________________________________________________________

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM



To the Board of Directors and Stockholders of

Infrax Systems, Inc.

Pinellas Park, Florida



We have audited the accompanying consolidated balance sheet of Infrax Systems,
Inc as of June 30, 2011 and 2010 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of Infrax Systems, Inc. as of June 30, 2011
and 2010, and the results of its operations, changes in their stockholders' equity and its 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.



The consolidated financial statements of Infrax Systems, Inc.
as of June 30, 2010 and for the year then ended have been restated for the correction of a misstatement during the period. Additional
disclosures have been added to Note 13 regarding the issuance of common stock and preferred stock during the period.



/s/    Randall N. Drake, CPA, PA

Clearwater Florida

October 13, 2011







- 27 -









|Infrax Systems, Inc.                                                                                                                                                                                               |                                                          |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------- | -
|(Previously A Development Stage Enterprise)                                                                                                                                                                        |                                                          |  
|Consolidated Balance Sheets                                                                                                                                                                                        |                                                          |  
|                                                                                                                                                                                                                   |                                                          |  
|                                                                                                                                                                                                                   |                                                          |  
|Assets                                                                                                                                                                                                             |                                                          |  
|Current assets                                                                                                                                                                                                     |                                                          |  
|                                                                                                                                                                                                                   | Cash                                                     |  
|                                                                                                                                                                                                                   | Accounts receivable                                      |  
|                                                                                                                                                                                                                   | Inventory                                                |  
|                                                                                                                                                                                                                   | Loan receivable from affiliate                           |  
|                                                                                                                                                                                                                   | Note receivable                                          |  
|                                                                                                                                                                                                                   | Prepaid expenses                                         |  
|Total current assets                                                                                                                                                                                               |                                                          |  
|                                                                                                                                                                                                                   |                                                          |  
|Property & equipment, net of accumulated                                                                                                                                                                           |                                                          |  
|                                                                                                                                                                                                                   | depreciation of $45,807 and $11,229, respectively        |  
|                                                                                                                                                                                                                   |                                                          |  
|Intangible property, net of accumulated                                                                                                                                                                            |                                                          |  
|                                                                                                                                                                                                                   | amortization of  $1,314,775 and $1,329, respectively     |  
|Deposits                                                                                                                                                                                                           |                                                          |  
|Total Assets                                                                                                                                                                                                       |                                                          | $
|                                                                                                                                                                                                                   |                                                          |  
|Liabilities and Stockholders' Equity                                                                                                                                                                               |                                                          |  
|Current liabilities                                                                                                                                                                                                |                                                          |  
|                                                                                                                                                                                                                   | Accounts payable                                         |  
|                                                                                                                                                                                                                   | Accrued expenses                                         |  
|                                                                                                                                                                                                                   | Customer deposits and deferred revenue                   |  
|                                                                                                                                                                                                                   | Notes payable                                            |  
|                                                                                                                                                                                                                   | Loans and notes payable, related parties                 |  
|Total current liabilities                                                                                                                                                                                          |                                                          |  
|                                                                                                                                                                                                                   |                                                          |  
|Notes payable to Shareholder                                                                                                                                                                                       |                                                          |  
|Total liabilities                                                                                                                                                                                                  |                                                          |  
|                                                                                                                                                                                                                   |                                                          |  
|Stockholders' Equity                                                                                                                                                                                               |                                                          |  
|                                                                                                                                                                                                                   | Preferred Stock, 50,000,000 authorized, $.001 par value: |  
|                                                                                                                                                                                                                   | Series A Convertible: 5,000,000 shares designated;       |  
|                                                                                                                                                                                                                   | 385,702 and 0 issued and outstanding                     |  
|                                                                                                                                                                                                                   | Series B Convertible: 100,000,000 shares designated;     |  
|                                                                                                                                                                                                                   | 257,764 and 890,600 issued and outstanding               |  
|                                                                                                                                                                                                                   | Common Stock, $.001 par value,  5,000,000,000 shares     |  
|                                                                                                                                                                                                                   | authorized; 6,282,275 and 5,231,524 shares               |  
|                                                                                                                                                                                                                   | issued and outstanding, respectively *                   |  
|                                                                                                                                                                                                                   | Additional paid-in capital                               |  
|                                                                                                                                                                                                                   | Subscriptions (receivable) payable                       |  
|                                                                                                                                                                                                                   | Minority interest in subsidiary                          |  
|                                                                                                                                                                                                                   | Accumulated deficit                                      |  
|Total stockholders' equity                                                                                                                                                                                         |                                                          |  
|                                                                                                                                                                                                                   |                                                          |  
|Total Liabilities and Stockholders' Equity                                                                                                                                                                         |                                                          | $
|                                                                                                                                                                                                                   |                                                          |  
|* 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. |                                                         
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                  
|The accompanying notes are an integral part of these financial statements.                                                                                                                                         |                                                         













|Infrax Systems, Inc.                                                                                                                                                                                               |                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------------------
|(Previously A Development Stage Enterprise)                                                                                                                                                                        |                              
|Consolidated Statements of Operations                                                                                                                                                                              |                              
|                                                                                                                                                                                                                   |                              
|                                                                                                                                                                                                                   |                              
|                                                                                                                                                                                                                   |                              
|                                                                                                                                                                                                                   |                              
|Revenues                                                                                                                                                                                                           |                              
|Direct costs                                                                                                                                                                                                       |                              
|Gross Profit                                                                                                                                                                                                       |                              
|                                                                                                                                                                                                                   |                              
|Operating expenses:                                                                                                                                                                                                |                              
|                                                                                                                                                                                                                   | Salaries and benefits        
|                                                                                                                                                                                                                   | Consulting                   
|                                                                                                                                                                                                                   | Professional fees            
|                                                                                                                                                                                                                   | General and administrative   
|                                                                                                                                                                                                                   | Impairments and write-downs  
|                                                                                                                                                                                                                   | Amortization and depreciation
|                                                                                                                                                                                                                   | Total operating expenses     
|                                                                                                                                                                                                                   |                              
|Other income (expense):                                                                                                                                                                                            |                              
|                                                                                                                                                                                                                   | Interest expenses            
|                                                                                                                                                                                                                   | Equity losses of investee    
|                                                                                                                                                                                                                   | Miscellaneous                
|                                                                                                                                                                                                                   | Total other income (expense) 
|                                                                                                                                                                                                                   |                              
|Loss from operations before income taxes                                                                                                                                                                           |                              
|                                                                                                                                                                                                                   |                              
|Provision for income taxes                                                                                                                                                                                         |                              
|                                                                                                                                                                                                                   |                              
|                                                                                                                                                                                                                   |                              
|                                                                                                                                                                                                                   | Minority Interest            
|                                                                                                                                                                                                                   |                              
|Net loss                                                                                                                                                                                                           |                              
|                                                                                                                                                                                                                   |                              
|                                                                                                                                                                                                                   |                              
|Earnings (loss) per share:                                                                                                                                                                                         |                              
|                                                                                                                                                                                                                   | Basic and dilutive           
|                                                                                                                                                                                                                   |                              
|Weighted average shares outstanding                                                                                                                                                                                |                              
|                                                                                                                                                                                                                   | Basic and dilutive           
|                                                                                                                                                                                                                   |                              
|* 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. |                              
|                                                                                                                                                                                                                  
|                                                                                                                                                                                                                   |                              
|The accompanying notes are an integral part of these financial statements.                                                                                                                                         |                              



























|Infrax Systems, Inc.                                                       |                                                                  
|-------------------------------------------------------------------------- | -----------------------------------------------------------------
|(Previously A Development Stage Enterprise)                                |                                                                  
|Consolidated Statements of Cash Flows                                      |                                                                  
|                                                                           |                                                                  
|                                                                           |                                                                  
|                                                                           |                                                                  
|Cash Flows from Operating Activities:                                      |                                                                  
|                                                                           | Net loss                                                         
|                                                                           | Adjustment to reconcile Net Income to net                        
|                                                                           | cash provided by operations:                                     
|                                                                           | Depreciation and amortization                                    
|                                                                           | Issuance of stock in settlement of services                      
|                                                                           | Impairment of goodwill                                           
|                                                                           | Minority interest                                                
|                                                                           | Changes in assets and liabilities:                               
|                                                                           | Accounts receivable                                              
|                                                                           | Inventory                                                        
|                                                                           | Due from affiliate                                               
|                                                                           | Deferred contract costs                                          
|                                                                           | Prepaid and other                                                
|                                                                           | Accounts payable                                                 
|                                                                           | Accrued expenses                                                 
|                                                                           | Customer deposits and deferred revenue                           
|                                                                           | Net Cash (Used) in Provided by Operating Activities              
|                                                                           |                                                                  
|Cash Flows from Investing Activities:                                      |                                                                  
|                                                                           | Purchase of property and equipment                               
|                                                                           | Acquisition of assets, net                                       
|                                                                           | Decrease (increase) in other assets                              
|                                                                           | Net Cash (Used) in Investing Activities                          
|                                                                           |                                                                  
|Cash Flows from Financing Activities:                                      |                                                                  
|                                                                           | Proceeds from issuance of note payable                           
|                                                                           | Related party advances                                           
|                                                                           | Net Cash (Used) Provided by Financing Activities                 
|                                                                           |                                                                  
|                                                                           |                                                                  
|Net increase/decrease in Cash                                              |                                                                  
|Cash at beginning of period                                                |                                                                  
|Cash at end of period                                                      |                                                                  
|                                                                           |                                                                  
|                                                                           |                                                                  
|Supplemental cash flow information:                                        |                                                                  
|                                                                           | Interest paid                                                    
|                                                                           | Taxes paid                                                       
|                                                                           |                                                                  
|Supplemental Schedule of Noncash Investing and Financing Activities        |                                                                  
|                                                                           | Issuance of common stock in exchange of debt                     
|                                                                           | Issuance of common stock in exchange for accrued salaries        
|                                                                           | Investment in affiliate by transfer of software                  
|                                                                           | Conversion of convertible debentures into common stock           
|                                                                           | Stock issued for assets acquired                                 
|                                                                           | Promissory note issued (receivable) for the acquisition of assets
|                                                                           |                                                                  
|The accompanying notes are an integral part of these financial statements. |                                                                  
|                                                                           |                                                                  







|Infrax
    Systems, Inc.                                                                                                                                                                                                   |                                                  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------
|(Previously
    A Development Stage Enterprise)                                                                                                                                                                            |                                                  
|Consolidated
    Statement of Stockholders' Equity                                                                                                                                                                         |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           |                                                  
|Balance
    at June 30, 2009                                                                                                                                                                                               |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           | Stock
    for services                           
|                                                                                                                                                                                                                           | Conversion
    of promissory note                
|                                                                                                                                                                                                                           | Conversion
    of accrued officers salaries      
|                                                                                                                                                                                                                           | Conversion
    of accrued officers salaries      
|                                                                                                                                                                                                                           | Officer
    bonus                                
|                                                                                                                                                                                                                           | Acquisition
    of Trimax Wireless, Inc.         
|                                                                                                                                                                                                                           | Conversion
    of preferred A to common          
|                                                                                                                                                                                                                           | Conversion
    of preferred A-1 to common        
|                                                                                                                                                                                                                           | Conversion
    of preferred A-2 to common        
|                                                                                                                                                                                                                           | Conversion
    of preferred B to common          
|                                                                                                                                                                                                                           | Adjustment
    of accrued salaries               
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           | Net
    loss                                     
|                                                                                                                                                                                                                           |                                                  
|Balance
    at June 30, 2010                                                                                                                                                                                               |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           | Issuance
    of shares in exchange for:          
|                                                                                                                                                                                                                           | Shares issued for services                       
|                                                                                                                                                                                                                           | Shares for services                              
|                                                                                                                                                                                                                           | Shares for services                              
|                                                                                                                                                                                                                           | Conversion of salaries payable                   
|                                                                                                                                                                                                                           | Compensation settlement                          
|                                                                                                                                                                                                                           | Conversion of debt                               
|                                                                                                                                                                                                                           | Conversion of debt                               
|                                                                                                                                                                                                                           | Conversion of debt                               
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           | Acquisition
    of Lockwood Technologies, Inc.   
|                                                                                                                                                                                                                           | Acquisition,
    warrants issued upon acquisition
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           | Conversion
    of preferred B to common          
|                                                                                                                                                                                                                           | Conversion
    of Preferred B shates to common   
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           | Net
    loss                                     
|                                                                                                                                                                                                                           |                                                  
|Balance
    at June 30, 2011                                                                                                                                                                                               |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           |                                                  
|                                                                                                                                                                                                                           |                                                  
|*
    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. |                                                  
|                                                                                                                                                                                                                          
|                                                                                                                                                                                                                           |                                                  
|The
    accompanying notes are an integral part of these financial statements.                                                                                                                                             |                                                  















Infrax Systems, Inc.

(A Development Stage Enterprise)

Notes to Consolidated Financial Statements

For the Years Ended June 30, 2011 and 2010



1.           History
of the Company and Nature of the Business



History of the Company



Infrax Systems, Inc. (formerly OptiCon Systems, Inc.) ( “ the
Company ”, “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.) through 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, 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. through a related company, FutureTech Capital, LLC.    In October 2009, the Company began
developing smart grid energy related products.



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.



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 OptiCon Network Manager. Furthering
our development towards becoming a leader in the emerging smart-grid industry, 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.





- 33 -











Principles of Consolidation



The consolidated financial statements include the accounts and operations
of Infrax Systems, Inc., and its wholly owned subsidiary, Infrax Systems SA (Pty) Ltd. and Lockwood Technology Corporation, 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.



Deconsolidation of a Subsidiary



On August 12, 2009, the Company organized PowerCon Energy Systems, Inc.,
a Nevada corporation, as a wholly owned subsidiary with the transfer of the R-4PC software architecture in exchange for 3,000,000
shares of PowerCon’s common stock.  On October 8, 2009, PowerCon issued Mr. Sam Talari, one of the Company’s
directors, 16,000,000 shares of PowerCon in connection with a private placement, at which time PowerCon ceased being a wholly-owned
subsidiary.



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.





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In September 2006, the Financial Accounting Standards Board (FASB) introduced
a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities.  The
Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact
of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “ Fair Value Measurements and Disclosures
” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability
(an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market
participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market
participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s
own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable
inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices
in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three
levels of the fair value hierarchy are described below:



| | · | Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
| | · | Level 3 - Inputs that are both significant to the fair value measurement and unobservable.                                                                                                                                                                                                                                                                                                                                                                                                                                                             



Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of June 30, 2011. 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, 2011 and 2010, 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 deposit, 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.





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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, 2011 and 2010.



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 a 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, 2011 and 2010, 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, whenthe Companyhas 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 a 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.



- 36 -









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 $92,553 and $3,049for the years
ended June 30, 2011 and 2010, 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,  2011            |  | June 30, 2010            
|----------------------------------- |  | ------------------------- |  | -------------------------
|Earnings (Loss) per share:          |  |                           |  |                          
|Net Loss                            |  | $             (3,884,305) |  | $               (986,710)
|                                    |  |                           |  |                          
|Common shares                       |  | 5,807,756                 |  | 372,718                  
|Common share equivalents            |  | 1,523,674                 |  | 8,349                    
|Dilutive common shares              |  | 7,331,429                 |  | 381,067                  
|                                    |  |                           |  |                          
|Earnings (loss) per share, basic    |  | $                  (0.67) |  | $                  (2.65)
|Earnings (loss) per share, dilutive |  | $                  (0.53) |  | $                  (2.59)







- 37 -













Impact of Recently Issued Accounting Pronouncements



In December 2010, the FASB issued ASU 2010-28, “Intangibles
— Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or
Negative Carrying Amounts.”  For reporting units with zero or negative carrying amounts, if it is more likely than
not that a goodwill impairment exists, ASU 2010-28 requires performance of an additional test to determine whether goodwill has
been impaired and to calculate the amount of impairment. In determining whether it is more likely than not that goodwill impairment
exists, an entity should consider whether there are any adverse qualitative factors indicating that impairment may exist.  ASU
2010-28 is effective for fiscal years and interim periods within those years beginning after December 15, 2010.  The
Company adopted ASU 2009-28 during FY 2011 and the impact of adopting ASU 2010-28 was considered in our evaluation for goodwill
impairment at our annual impairment testing date in considering existence and recognition of potential impairment.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations
(Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations.  ASU 2010-29 specifies that
for material business combinations when comparative financial statements are presented, revenue and earnings of the combined entity
should be disclosed as though the business combination had occurred as of the beginning of the comparable prior annual reporting
period.  ASU 2010-29 also expands the supplemental pro forma disclosures to include a description of the nature and amount
of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro
forma revenue and earnings. ASU 2010-29 is effective prospectively for business combinations with an acquisition date on or after
the beginning of the first annual reporting period after December 15, 2010.  The Company adopted this standard in
2011, and has included proforma projections for current year acquisitions requiring combination.

Except for rules and interpretive releases of the SEC under authority
of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards CodificationTM (“ASC”)
is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. Management has reviewed
the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future
consolidated financial statements.

3.             Going
Concern



As of June 30, 2011, 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, 2011, the Company had negative working capital in excess of $1.9 million, and approximately $25,000 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,  2011             |  | June 30, 2010           
|----------------------------- |  | -------------------------- |  | ------------------------
|Office and computer equipment |  | $                  180,518 |  | $                137,129
|Furniture and fixtures        |  | 52,990                     |  | 51,883                  
|Computer software             |  | 5,468                      |  | 5,468                   
|                              |  | 238,976                    |  | 194,480                 
|Accumulated depreciation      |  | 45,807                     |  | 11,229                  
|                              |  | $                  193,169 |  | $               183,251 



For the years ended June 30, 2011 and 2010 the total depreciation expense
charged to operations totaled $34,578 and $1,975, respectively.





- 38 -

















5.            Intangible
Assets and Goodwill



Intangible assets consist of the following:

|                                        |  | June 30,  2011            |  | June 30, 2010          
|--------------------------------------- |  | ------------------------- |  | -----------------------
|Opticon fiber optic management software |  | $                 189,862 |  | $               189,862
|Trademarks                              |  | 1,000                     |  | 1,000                  
|TriMax  intellectual property           |  | 6,329,342                 |  | 6,329,342              
|TriMax software                         |  | 180,020                   |  | 180,020                
|Lockwood customer list                  |  | 364,550                   |  | --                     
|Lockwood licensing and technology       |  | 920,600                   |  | --                     
|                                        |  | 8,015,374                 |  | 6,700,224              
|Accumulated amortization                |  | 1,314,775                 |  | 1,329                  
|                                        |  | $               6,700,599 |  | $             6,698,895



For the years ended June 30, 2011 and 2010 the total amortization expense
charged to operations totaled $1,313,241 and $423, respectively.



Future amortization of intangible property is expected as follows:



|For the year ended June 30,: |   |          
|---------------------------- | - | ---------
|2012                         | $ | 1,647,863
|2013                         |   | 1,647,863
|2014                         |   | 1,647,663
|2015                         |   | 1,647,663
|2016                         |   | 109,547  
|thereafter                   |   | --       
|                             | $ | 6,700,599





Opticon fiber optic management software



The Company purchased all rights, titles and interest in the Opticon fiber
optic management software on July 26, 2005, from FutureTech, LLC. in exchange for common stock.  The agreement became
effective upon FutureTech purchasing the acquired assets from Corning Cable Systems, LLC in exchange for $100,000 in cash.  The
Company recorded the common stock at the transferor’s historical cost basis determined under generally accepted accounting
principles.



On July 26, 2005, the Company purchased the OptiCon Network Manager software
system which consisted of version R3 and R4.  At the time of the purchase, the software system was out of date and had
to be updated and integrated with other current business software systems, before it could be distributed to customers.  The
development of R3 software system was completed during the quarter ended December 31, 2006, and is available for distribution to
customers. In September 2010 a transfer of 50% of the R3 license was returned to FutureTech, LLC at a carrying cost value of $22,250.



During the years ended June 30, 2011 and 2010, 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, 2011 and 2010 amortization
expense was $200 and $423, 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, 2011 and 2010 amortization expense
was $1,287,324 and $0, respectively.



- 39 -









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, 2011 and 2010 amortization
expense was $25,717 and $0, respectively.



Lockwood Technology Corporation



On May, 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, 2011 and 2010 were as follows:



|                     |  | June 30,  2011        |  | June 30, 2010        
|-------------------- |  | --------------------- |  | ---------------------
|Accrued salaries     |  | $             528,795 |  | $             278,034
|Accrued consulting   |  | 137,118               |  | 125,118              
|Accrued professional |  | 125,000               |  | 47,000               
|Accrued interest     |  | 80,338                |  | 24,649               
|Accrued expenses     |  | 17,857                |  | 4,166                
|                     |  | $             889,108 |  | $             478,967



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 issued a demand note to an unrelated party, with an unpaid balance
in the amount of $6,000, with an annual interest rate of 18%. There are no repayment terms. As of June 30, 2011 accrued interest,
since inception, is $4,719.



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.



On June 17, 2010 the Company entered into a Bridge Loan Agreement with Blue
Diamond Consulting, LLC (“Lender”).  The Company may be advanced up to $500,000, secured by the Company’s
common stock.  Advances may be requested in increments of $25,000 and bear interest of 8% per annum.   Advances
have repayment terms of six months from the date of the requested advance.  The Lender has the right, at their option,
to convert any amounts due, plus interest, into the Company’s common stock at a conversion rate, as defined, at 50% of the
closing bid price at the date of conversion request.  As of June 30, 2011, there have been no requested advances and
no amount is due to Lender.







- 40 -















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, 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.



Paul J. Aiello



On October 19, 2010, as amended January 1, 2010, the Company
entered into a three-year employment agreement with Paul Aiello, one of the Company’s directors.  The Agreement
provides for (a) a base salary of $12,000 per month, (b) a signing bonus of $10,000, (c) four week 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. Aiello has the option to purchase 15,000,000 shares of common stock at $.02 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  December 31, 2010 ; (e) two week 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.



Other employment agreements exist with employees.  As of June
30, 2011 and 2010, the accrued compensation under the employment agreements was $450,225 and $189,989, respectively.



Line of Credit, Master Agreement



On September 6, 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 ($105,000 and $45,000
for the years ended June 30, 2011 and 2010, respectively). Mr. Talari continued making advances to the Company on the loan, of
which $574,957 and $185,704 remains outstanding at June 30, 2011 and 2010, respectively.  In addition, the Company has
accrued interest on this loan in the amount of $30,235 and $5,390 at June 30, 2011 and 2010, respectively.



Loan from Related Parties



During the year ended June 30, 2008, FutureWorld Energy, Inc. (formerly
Isys Medical), OptiCon’s former parent company, paid expenses on behalf of the Company and made cash advances.  Most
of these expenses were paid, and the advances made, by FutureWorld Energy at the time OptiCon was still a subsidiary, and are included
in Loan & Note Payable – Related Parties on the balance sheet. At June 30, 2011 and 2010, the amount owed to FutureWorld
Energy on this promissory note was $7,802 and $7,802 respectively, and has accrued interest of $2.517 and $655, respectively.



- 41 -









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 individual 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 $56,185 and $180,505 due
to two individuals as of June 30, 2011 and 2010.



Stock Transactions



On October 3, 2009, the Company agreed to split a portion of the existing
debt balance on the Master Note, described above, into two (2) $25,000 convertible notes, with interest at the rate of 5% per annum,
and convertible into shares of the Company’s common stock at 40% discount to the 5-day average bid price per share.  Mr.
Talari assigned these notes to Eventus Capital, Inc., an unrelated company, for business unrelated to the Company.  On
February 9, 2010 and March 25, 2010 respectively, the Company agreed to the conversion of these notes by Eventus Capital into 1,860,119
and 5,000,000 shares respectively of the Company’s restricted common stock.



On January 15, 2010, the Company agreed to issue Mr. Talari 1,500,000 shares
of the Company’s common stock in exchange for the cancellation of $45,000 of accrued salary owed to Mr. Talari.  The
number of shares issued was determined based on the market price of $.03 per share on January 15, 2010.  The Board agreed
to issue these shares from shares previously authorized under the Company’s 2009 Employees and Consultants Stock Compensation
Plan.



The amounts and terms of the above transactions may not necessarily be indicative
of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.



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 $17300, as adjusted for the reverse split.  All
of the Warrants expire on November 11, 2011.  All of the Warrants granted were non-qualified fixed price warrants.

|                       |  |             |  |         |  | Weighted Average |  | Remaining 
|---------------------- |  | ----------- |  | ------- |  | ---------------- |  | ----------
|                       |  | Options     |  | Options |  | Intrinsic        |  | Exercise  
|                       |  | Outstanding |  | Vested  |  | Value            |  | Price     
|Options, June 30, 2009 |  | 4           |  | 4       |  | $17,300.00       |  | $17,300.00
|Granted                |  | -           |  | -       |  |                  |  |           
|Exercised              |  | -           |  | -       |  |                  |  |           
|Forfeited              |  | -           |  | -       |  |                  |  |           
|Options, June 30, 2010 |  | 4           |  | 4       |  |                  |  |           
|Granted                |  | 660,000     |  | 660,000 |  | 477,900          |  | 3,300,000 
|Exercised              |  | -           |  | -       |  |                  |  |           
|Forfeited              |  | -           |  | -       |  |                  |  |           
|Options, June 30, 2011 |  | 660,004     |  | 660,004 |  |                  |  |           



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%  







- 42 -













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.



The Board of Directors authorized 120 shares of the Company's common stock
to be set aside (adjusted for reverse split), which may be issued under the Option Plan.  As of June 30, 2011 and 2010,
no shares have yet been issued under the Option Plan.



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 November 24, 2009, the Company filed a registration statement on Form
S-8 with the Securities and Exchange Commission registering the 10,000 shares (S-8 shares) (adjusted for reverse split) under the
Stock Plan.  As of June 30, 2011, all shares have been issued.



On May 12, 2010 the Company’s Board of Directors authorized an additional
10,000 shares of common stock (adjusted for reverse split) available under the Employees and Consultants Stock Compensation Plan,
to pay for services from employees and consultants.  The Company may file a registration statement on Form S-8 in the
future.



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, 2011 and 2010:



|                                  |  | Year Ended June 30, |       
|--------------------------------- |  | ------------------- | ------
|                                  |  | 2011                |       
|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’  



There is no current or deferred income tax expense or benefit allocated
to continuing operations for the years ended June 30, 2011 and 200 9 or for the period October 22, 2004 (date of inception) through
June 30, 2011.



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



|                                            |  | Year Ended
        June 30, 2010 |            |   | Year Ended June 30, 2009 |  
|------------------------------------------- |  | -------------------------------- | ---------- | - | ------------------------ | -
|                                            |  |                                  |            |   |                          |  
|Income tax benefit at statutory rate        |  | $                                | (1,461,700 | ) |                          | $
|Increase (decrease) in income taxes due to: |  |                                  |            |   |                          |  
|Change in valuation allowance               |  |                                  | 1,461,700  |   |                          |  
|                                            |  | $                                | -          |   |                          | $









- 43 -









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





|                                            |  | For the Year Ended
|------------------------------------------- |  | ------------------
|                                            |  | June 30, 2011     
|Deferred tax asset (liability), current:    |  |                   
|Accounts receivable                         |  | 8,300             
|Accrued salaries                            |  | 199,000           
|Accrued consulting                          |  | 51,600            
|Accrued professional                        |  | 47,000            
|Accrued interest                            |  | 30,200            
|Accrued expenses                            |  | 6,700             
|Deferred revenue                            |  | -                 
|Valuation allowance                         |  | (342,800)         
|                                            |  | -                 
|                                            |  |                   
|Deferred tax asset (liability), non-current |  |                   
|Net operating loss                          |  | 1,142,900         
|Property and equipment                      |  | (24,000)          
|Valuation allowance                         |  | (1,118,900)       
|                                            |  | -                 



The Company has not recognized an income tax benefit for its operating losses
generated through June 30, 2011 or 2010 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 $5,081,000 from inception to June 30, 2011, which will expire, unless used to offset future federal taxable income
beginning in 2024.



13.	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  | 200,000     | 6.0           
|Preferred Series A1 | 52,425      | .4            
|Preferred Series A2 | 107,431     | 4.5           
|Preferred Series A3 | 25,846      | .8            
|Preferred Series B  | 257,764     | .6            
|                    | 643,466     |               



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





For the year June 30, 2010 the company had issued stock for services to
employees and consultants, in the amount of 15,672 shares valued at $246,225, the fair market value trading price at the date of
issuance. Additionally, the Company issued 181,868 preferred shares as a stock bonus to certain officers during the year ended
June 30, 2010, valued at $66,800. During the year June 30, 2011, the Company issued 179,700 shares, valued at $500,900.



Salaries accrued to employees and executives were converted into 1,017,034
(valued at $300,787) of preferred shares and 3,000 (valued at $15,925) common shares during the year June 30, 2010 and 143,850
common shares (valued at $255,000) during the year ended June 30, 2011.



Promissory notes were converted, 59,720 (valued at $73,000) and 207,500
(valued at $105,000) shares of common stock during the years ended June 30, 2010 and 2011, respectively.



The Company issued 2,500,000 preferred shares on May 28, 2010 for the acquisition
of Trimax Wireless, valued at $5,798,864. On May 8, 2011, the Company issued 178,000 shares of common stock (38,000 remains issuable
at year end and issued subsequent to year end), valued at $1,650,000, for the acquisition of the controlling interest of Lockwood
Technology.







During the year June 30, 2010, preferred shareholders converted 2,422,600
into common, at the above conversion rates, for 4,873,383 shares of common stock. During June 30, 2011 an additional 632,836 preferred
shares were converted into 379,701 common shares.



- 44 -











14.            Commitments
and Contingencies



Lease/Rental Agreements



On March 11, 2010, the Company entered into a lease with Accu Centre, an
unrelated party for executive offices and computer center in Pinellas Park, Florida. The lease is for a three year period, commencing
May 2010, with option to terminate the lease after one year, upon adequate notification (90 days).  Base rent is $2,756
per month, with annual cost increases.  The future annual minimum rental for each of the next three years is $33,075,
subject to 4% increases per year.



Rent expense for the years ended June 30, 2011 and 2010 amounted to $63,987
and $22,318, 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, 2011 and 2010 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, 2011 and 2010.



During the quarter 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.



15.	 Subsequent Events



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.



The Company has been approached as a potential target for acquisition. 
Preliminary discussions were brought to the attention of the Board of Directors.  Although negotiations have not advanced,
we believe that those discussions were validation of our technology.   Management and the Board of Directors are aware of
our position and potential of our technology and will consider any offer that increases shareholder value.



The Company's Board of Directors has agreed to reduce the issued and outstanding
shares by approximately 500,000,000 common shares held by related parties. The Company will reduce the issued and outstanding shares
by having several major shareholders exchange their common shares for preferred. As of the date of filing the reduction plan has
not been implemented, but has occur in the first quarter for year 2012.



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



- 45 -











16.	 Proforma Accounting for Lockwood
Technology Corporation Acquisition



Unaudited proforma financial information is provided as if the acquisition
occurred at the beginning of the fiscal year.  The financial information presents the combined companies to reflect a
full year activity as a consolidated company.



|Infrax Systems, Inc.                      
|------------------------------------------
|Unaudited Proforma Condensed Balance Sheet
|As of June 30, 2011                       
|                                          
|                                          
|Assets                                    
|Current assets                            
|                                          
|Property & equipment, net of accumulated  
|                                          
|                                          
|Intangible property, net of accumulated   
|                                          
|Goodwill                                  
|Non-current assets                        
|Total Assets                              
|                                          
|Liabilities and Stockholders' Equity      
|Current liabilities                       
|Notes payable                             
|Loans and notes payable, related parties  
|Notes payable to Shareholder              
|Total liabilities                         
|                                          
|Stockholders' Equity                      
|                                          
|                                          
|Total stockholders' deficit               
|                                          
|Total Liabilities and Stockholders' Equity
|                                          
|                                          
|                                          





|Infrax Systems, Inc.                                
|----------------------------------------------------
|Unaudited Proforma Condensed Statement of Operations
|For The Years Ended June 30, 2011                   
|                                                    
|                                                    
|                                                    
|Revenues                                            
|Direct costs                                        
|Gross Profit                                        
|                                                    
|Operating expenses:                                 
|Other income (expense), net                         
|                                                    
|Net loss                                            
|                                                    





- 46 -



















16.	 Restatement of Prior Year Financial
Statements



The prior year financial statements, June 30, 2010, have been restated for
the recording of preferred share conversion that occurred subsequent to the year end.



Preferred shares were converted to common shares, however, the share issuance
had not transacted until the subsequent period. The restatement



























|                            |                                                                                                                                          |           | As Originally |     |           |           |            
|--------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------------- | --- | --------- | --------- | -----------
|                            |                                                                                                                                          |           | Reported      |     | change    |           | Restated   
|Stockholders' Equity        |                                                                                                                                          |           |               |     |           |          
|                            | Preferred Stock, 50,000,000 authorized, $.001 par value:                                                                                 |           |               |     |           |           |            
|                            | Series A Convertible: 5,000,000 shares designated                                                                                        |           | 386           |     | -         |           | 386        
|                            | Series B Convertible: 100,000,000 shares designated                                                                                      |           | 258           | (a) | 632       |           | 890        
|                            | Common Stock, $.001 par value,  1,000,000,000 shares                                                                                     |           |               |     |           |           |            
|                            | authorized                                                                                                                               |           | 2,835,417     | (b) | (219,656) |           | 2,615,761  
|                            | Additional paid-in capital                                                                                                               |           | 5,634,506     | (b) | 219,024   |           | 5,853,530  
|                            | Subscriptions receivable                                                                                                                 |           | (350)         |     | -         |           | (350)      
|                            | Accumulated deficit during development stage                                                                                             |           | (3,212,049)   |     | -         |           | (3,212,049)
|Total stockholders' deficit |                                                                                                                                          | 5,258,168 |               | -   |           | 5,258,168
|                            |                                                                                                                                          |           |               |     |           |           |            
|                            |                                                                                                                                          |           |               |     |           |           |            
|(a)                         | Preferred shares issued were converted subsequent to the year end.  Shares have been re-classified to the proper period (June 30, 2011).
|(b)                         | Capital re-allocated, based on shares not converted in period.                                                                          

















The above restatement does not reflect the effects of the reverse stock
split.



The effect of the restatement only affected the stockholders’ equity
statement. There has been no changes to the Statement of Operations (effect on per share information was not affected, as the shares
were not outstanding during the period presented) or the Statement of Cash Flows. Therefore, those statements have not been included
in this footnote, as there has been no change to the originally reported amount.





















































- 47 -















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



On August 13, 2010 the Board of Directors engaged Randall N. Drake, CPA,
PA of Clearwater Florida as our independent registered accounting firm. There has been no disagreements with our independent registered
audit firm.



Item 9A.  Controls and Procedures.



Not applicable.



Item 9A(T).  Controls and Procedures



As of June 30, 2011 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, 2011 such disclosure controls and procedures were not effective.



|· | 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.                                                                                                                                                                                





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.



- 51 -













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, 2011.



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, 2011 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.



- 52 -

















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  |  | Co-Chairman                                      |  | 2004          
|Malcolm F. Walsh |  | 64  |  | Co-Chairman                                      |  | 2009          
|Paul J. Aiello   |  | 51  |  | President and Chief Executive Officer            |  | 2009          
|Peter Messineo   |  | 51  |  | Chief Accounting Officer, Secretary and 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.







- 53 -















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 has been our President and Chief Executive Officer since October
19, 2009. 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.





- 54 -















Peter Messineo



Mr. Messineo is a certified public accountant in Florida and New York and
is a registered public accountant with the Public Company Accounting Oversight Board (“PCAOB”).  Peter has
over 25 years of accounting experience in public accounting practice, consulting and private industry as Controller and CFO.



Public accounting experience has been with national (BDO Siedman, LLP) and
regional (Pender Newkirk & Co, LLP from 2004 through 2007) CPA firms servicing a broad based clientele including software,
manufacturing firms, distribution companies, and various service industry companies. Consulting experience has been with an international
consulting firm (Jefferson Wells International from 2007 through 2009) servicing multi-billion dollar clients, in the capacity
of financial support and reporting.  Since 2009 Peter has been serving multiple clients registered with the Securities
and Exchange Commission as a Board Member or in the capacity of compliance with quarterly and annual filings.  Peter
serves on a part-time basis, since his election on September 6, 2010.



Peter received his degree in accounting from Pace University in New York
in 1983and his Masters in Business Administration in Finance from Long Island University in 1998.



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 2009 or 2008 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, 2009, 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. Paul J. Aiello, Chief Executive Officer, 6365 53rd St. N, Pinellas
Park, 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.





- 55 -



















- 56 -











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 align 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.







- 57 -











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,
        Co-Chairman                                          |      | 2011 |                | $ 164,000  |  |       | -0- |             | -0- |                                | -0- |               
|                                                                         | 2010 |      | $ 164,000      |            |  | -0-   |     | -0-         |     | -0-                            |     | $   84,000    
|                                                                         | 2009 |      | $   84,000     |            |  | -0-   |     | -0-         |     | -0-                            |     | $   84,000    
|                                                                         |      |      |                |            |  |       |     |             |     |                                |     |               
|Malcolm F. Walsh,
        Co-Chairman                                    |      | 2011 |                | $   18,000 |  |       | -0- |             | -0- |                                | -0- |               
|                                                                         | 2010 |      | $   24,000     |            |  | -0-   |     | -0-         |     | -0-                            |     | $   24,000    
|                                                                         |      |      |                |            |  |       |     |             |     |                                |     |               
|                                                                         |      |      |                |            |  |       |     |             |     |                                |     |               
|Paul J. Aiello,
        President and Chief Executive Officer            |      | 2011 |                | $ 144,000  |  |       | -0- |             | -0- |                                | -0- |               
|                                                                         | 2010 |      | $ 119,000      |            |  | -0-   |     | -0-         |     | -0-                            |     | $119,000      
|                                                                         |      |      |                |            |  |       |     |             |     |                                |     |               
|                                                                         |      |      |                |            |  |       |     |             |     |                                |     |               
|Peter Messineo,
        Chief Accounting Officer, Secretary and Director |      | 2011 |                | $   24,000 |  |       | -0- |             | -0- |                                | -0- |               
|                                                                         | 2010 |      | $          -0- |            |  | -0-   |     | -0-         |     | -0-                            |     | $          -0-
|                                                                         |      |      |                |            |  |       |     |             |     |                                |     |               



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



- 58 -

















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.

Paul J. Aiello

On October 19, 2010, as amended January 1, 2010, the Company
entered into a three-year employment agreement with Paul Aiello, one of the Company’s directors. The Agreement provides for
(a) a base salary of $12,000 per month, (b) a signing bonus of $10,000, (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.
Additionally Mr. Aiello has the option to purchase 15,000,000 shares of common stock at $.02 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,
2011 ; (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.





- 59 -













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 16, 2011;                                                                                                               
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|— | our directors and executive officers as a group, at September 16, 2011; 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 16, 2011.  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)                                    |  |                              | 3.647.253 |  |                      | 
|Paul J. Aiello                                    |  |                              | 211,791   |  |                      | 
|Malcolm F. Welch                                  |  |                              | --        |  |                      | 
|Peter Messineo                                    |  |                              | 7,000     |  |                      | 
|                                                  |  |                              |           |  |                      | 
|All directors and officers as a group (4 persons) |  |                              | 3,866,045 |  |                      | 



______________



(a) Shares stated reflect post reverse split.

(b) Mr. Talari owns shares beneficially, the legal ownership being held
by Talari Industries and NeuWorld Communications, both companies being owned entirely by Mr. Talari.









- 60 -











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                                                                                       |  | 60,214                                                                                                                                                                                    





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



During the fiscal years 2011 and 2010, 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; except the following:



|· | On September 30, 2008, the Company agreed to convert accrued salaries of $189,000 and accrued vacation pay of $14,000 due to Sam Talari into a 5% convertible promissory note in the amount of $203,000 due June 30, 2009.  The note is convertible into shares of the Company’s common stock at a 50% discount to the lowest recorded year closing or $.005 per share.  The Company recorded a discount due to the beneficial conversion feature of the convertible note in the amount of $203,000, and a corresponding amortization of the discount in the same amount.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|· | On November 13, 2008, the Company agreed to split the $203,000 note into two (2) notes of $20,000 each, and one note of $163,000 under the same terms and conditions.  On November 18, 2008, the Company agreed to convert the two (2) notes of $20,000 into 8,000,000 shares of the Company’s common stock at $.005 per share.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|· | On May 13, 2009, the Company agreed to convert the principal amount of a $163,000 convertible promissory note dated September 30, 2008, plus accrued thereon of $5,292, and $78,694 principal amount of the $350,000 master promissory note with a balance of $99,583, plus accrued interest thereon of $3,014 due to Mr. Sam Talari, the Company’s acting Chief Executive Officer, into 50,000,000 shares of the Company’s common stock.  The convertible and the master promissory notes are convertible into shares of the Company’s common stock at 50% discount to the lowest recorded year closing price or $0.005.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





- 61 -













|· | On October 3, 2009, the Company agreed to split a portion of the existing debt balance on the Master Note, described above, into two (2) $25,000 convertible notes, with interest at the rate of 5% per annum, and convertible into shares of the Company’s common stock at 40% discount to the 5-day average bid price per share.  Mr. Talari assigned these notes to Eventus Capital, Inc., an unrelated company, for business unrelated to the Company.  On February 9, 2010 and March 25, 2010 respectively, the Company agreed to the conversion of these notes by Eventus Capital into 1,860,119 and 5,000,000 shares respectively of the Company’s restricted common stock.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|· | On January 15, 2010, the Company agreed to issue Mr. Talari 1,500,000 shares of the Company’s common stock in exchange for the cancellation of $45,000 of accrued salary owed to Mr. Talari.  The number of shares issued was determined based on the market price of $.03 per share on January 15, 2010.  The Board agreed to issue these shares from shares previously authorized under the Company’s 2009 Employees and Consultants Stock Compensation Plan.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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 2011 and 2010 for certain services provided by our independent accountants, Randall N. Drake, CPA, PA. For the year ended June
30, 2010, information includes fees charged by our prior auditors, KBL, LLP, CPAs/Meeks International, LLP (The firm of KBL, LLP,
CPAs was succeeded by Meeks International, LLP), which performed the reviews of our financial statements through March 31, 2010
10Q:



|Service                                     |  | 2011 |        |  | 2010 |  
|------------------------------------------- |  | ---- | ------ |  | ---- | -
|Audit                                       |  | $    | 12,500 |  |      | $
|Review of unaudited financial statements    |  | $    | 6,000  |  |      | $
|Audit-related fees                          |  | $    | 0      |  |      | $
|Tax compliance, tax advice and tax planning |  | $    | 0      |  |      | $
|All other services                          |  | $    | 0      |  |      | $











- 62 -















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:
|-----------------------------------
|                                   
|                                   
|                                   









- 63 -













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/ Paul J. Aiello                                                        |  | October 13, 2011
|Paul J. Aiello,
        Principal Executive Officer                       |  |                 
|                                                                          |  |                 
|                                                                          |  |                 
|/s/ Peter Messineo                                                        |  | October 13, 2011
|Principal Financial Officer and Principal Accounting Officer and Director |  |                 









- 64 -

















EXHIBIT 31.1

CERTIFICATION



CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934



I, Paul J. Aiello, certify that:



1.  I have reviewed this annual report on Form 10-K of Infrax
Systems, Inc for the year ended June 30, 2011;



2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;



3.  Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;



4.  The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:



a.  Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;



b.  Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;



c.  Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and



d.  Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and



5.  The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):



a.  All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and



b. Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal control over financial reporting.



Dated: October 13, 2011



/s/ Paul J. Aiello

Paul J. Aiello, Principal Executive Officer











EXHIBIT 31.2

CERTIFICATION



CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934



I, Peter Messineo, certify that:



1.  I have reviewed this annual report on Form 10-K of Infrax
Systems, Inc;



2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;



3.  Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;



4.  The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:



a.  Designed such disclosure controls and procedures,
or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;



b.  Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;



c.  Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and



d.  Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and



5.  The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):



a.  All significant deficiencies and material weaknesses
in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and



b.  Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's internal control over financial reporting.



Dated: October 13, 2009



/s/ Peter Messineo

Peter Messineo, Principal Financial Officer and

Principal Accounting Officer and Director







Exhibit 32.1



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of Opticon Systems, Inc; (the "Company")
on Form 10-K for the year ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Paul J. Aiello,  Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2001, that:



The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and



The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.



Dated: October 13, 2011







/s/ Paul J. Aiello

Paul J. Aiello,

Principal Executive Officer







Exhibit 32.2



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of Opticon Systems, Inc; (the "Company")
on Form 10-K for the year ended June 30, 2011, as filed with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Peter Messineo, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2001, that:



The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and



The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.



Dated: October 13, 2011







/s/ Peter Messineo

Peter Messineo, Principal Financial Officer and

Principal Accounting Officer and Director