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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K

(Mark One)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year endedOctober 31, 2012

[   ]TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from[   ] to
[   ]

Commission file number 001-34297

ON4 COMMUNICATIONS, INC.(Exact name of registrant as specified in its charter)

|Delaware                                         | 98-0540536                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

|Suite 102  628 West 12th Avenue, Vancouver,
      British Columbia, Canada | V5Z 1M8   
|--------------------------------------------------------------------------- | ----------
|(Address of principal executive offices)                                    | (Zip Code)

Registrants telephone number, including area code: (480)
525-4361

Securities registered pursuant to Section 12(b) of the Act:

|Title of Each Class | Name of Each Exchange On Which Registered
|------------------- | -----------------------------------------
|N/A                 | N/A                                      

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.0001 par value(Title of
class)

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

Yes [  
]          No [X]

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

Yes [  
]          No [X]

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

Yes [  
]          No [X]

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Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-K (§229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).

Yes [X]          No
[   ]

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

[   ]

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting compa[ny. See definition 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   | [   ] | Smaller reporting company | [X]  

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

Yes [  
]          No [X]

The aggregate market value of Common Stock held by non-affiliates of the Registrant on April 30, 2012 was $4,460,713 based on a $0.0655 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.

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

|191,999,434 common
      shares as of February 11, 2013.
|--------------------------------------------------------

DOCUMENTS INCORPORATED BY REFERENCE

None.

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Table of Contents

|Item
      1.  | Business                                                                                                                 | 4 
|-------------- | ------------------------------------------------------------------------------------------------------------------------ | --
|Item
      1A. | Risk
      Factors                                                                                                       | 8 
|Item
      1B. | Unresolved
      Staff Comments                                                                                          | 11
|Item
      2.  | Properties                                                                                                               | 11
|Item
      3.  | Legal
      Proceedings                                                                                                  | 11
|Item
      4.  | Mine
      Safety Disclosures                                                                                            | 12
|Item
      5.  | Market
      for Registrants Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities | 12
|Item
      6.  | Selected
      Financial Data                                                                                            | 14
|Item
      7.  | Managements
      Discussion and Analysis of Financial Condition and Results of Operations                              | 14
|Item
      7A. | Quantitative
      and Qualitative Disclosures About Market Risk                                                         | 20
|Item
      8.  | Financial
      Statements and Supplementary Data                                                                        | 20
|Item
      9.  | Changes
      in and Disagreements With Accountants on Accounting and Financial
      Disclosure                         | 20
|Item
      9A. | Controls
      and Procedures                                                                                            | 20
|Item
      9B. | Other
      Information                                                                                                  | 21
|Item
      10. | Directors,
      Executive Officers and Corporate Governance                                                             | 21
|Item
      11. | Executive
      Compensation                                                                                             | 24
|Item
      12. | Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters               | 26
|Item
      13. | Certain
      Relationships and Related Transactions, and Director Independence                                          | 28
|Item
      14. | Principal
      Accounting Fees and Services                                                                             | 29
|Item
      15. | Exhibits,
      Financial Statement Schedules                                                                            | 29

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PART I

|Item 1. | Business
|------- | --------

This annual report contains forward-looking statements. These
statements relate to future events or our future financial performance. In some
cases, you can identify forward-looking statements by terminology such as may,
should, expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

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

Our financial statements are stated in United States Dollars
(US$) and are prepared in accordance with United States Generally Accepted
Accounting Principles.

In this annual report, unless otherwise specified, all dollar
amounts are expressed in United States dollars and all references to common
shares refer to the common shares in our capital stock.

As used in this annual report, the terms we, us, our and
our company refer to On4 Communications, Inc., and, unless otherwise
indicated.

Corporate Overview

We were incorporated as a Delaware company on June 4, 2001
under the name Sound Revolution Inc. On July 2, 2009 we changed our name to On4
Communications, Inc. Our address is Suite 102  628 West 12thAvenue,
Vancouver, British Columbia, Canada V5Z 1M8. Our telephone number is (480)
525-4361.

On June 10, 2008, our company effected a 1 for 42 reverse stock
split of the outstanding shares of common stock our company and also increased
the number of authorized share capital of our company from 100,000,000 to
110,000,000 shares. 100,000,000 shares out the total authorized capital shall be
common stock and 10,000,000 shall be preferred stock. On June 26, 2008, the
reverse stock split and the increase in our companys authorized capital came
into effect. As a result of the reverse split, the number of the outstanding
shares of common stock of our company was decreased from 10,854,629 shares to
258,444 shares of common stock.

On March 13, 2012, we received written consent from the board
of directors and the holders of 52.40% of our companys voting securities to
amend the Articles of Incorporation to increase our authorized capital.

On April 19, 2012, the Delaware Secretary of State accepted for
filing of a Certificate of Amendment, wherein, we amended our Articles of
Incorporation to increase the authorized number of shares of our common stock
from 100,000,000 to 200,000,000 shares of common stock, par value of $0.0001 per
share, effective April 20, 2012. Our preferred stock remained unchanged.

On November 1, 2012, our company received written consent from
the board of directors and the holders of 78.72% of our companys voting
securities to amend the Articles of Incorporation to increase our authorized
capital.

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On November 30, 2012, the Delaware Secretary of State accepted for filing of a Certificate of Amendment, wherein, our company amended its Articles of Incorporation to increase the authorized number of shares of our common stock from 210,000,000 to
630,000,000 shares, with a par value of $0.0001, which consists of 600,000,000 shares of common stock and 30,000,000 shares of preferred stock.

Our common stock is quoted on Over-the-Counter Bulletin Board under the symbol ONCI.

Corporate History

On March 12, 2009, we entered into a merger agreement with On4 Communications, Inc., a private Arizona company incorporated on June 5, 2006 (On4). We subsequently amended this agreement on April 7, 2009, and on May 1, 2009 we completed
the merger with On4, with us as the surviving entity. Upon the completion of the merger, we had three wholly-owned subsidiaries: (i) Charity Tunes Inc., a Delaware company incorporated on June 27, 2005 for the purpose of operating a website for the
distribution of music online; (ii) Sound Revolution Recordings Inc., a British Columbia, Canada company incorporated on June 20, 2001 for the purpose of carrying on music marketing services in British Columbia; and (iii) PetsMobility Inc., a
Delaware company incorporated on March 23, 2006 for the purpose of operating the website www.petsmo.com and related business.

On April 29, 2010 we sold our interest in PetsMobility, excluding certain specific assets, to On4 Communications Inc., a private Canadian company and our shareholder (On4 Canada) pursuant to an asset purchase agreement in exchange for
On4 Canada returning 2,000,000 shares of our common stock to our treasury for cancellation. On October 29, 2010 we amended the asset purchase agreement to clarify certain terms of the purchase and sale.

On March 16, 2011 we sold our interest in Charity Tunes and Sound Revolution to Empire Success, LLC, a private Nevada limited liability company, in exchange for $15,000 and 6,300 shares of Empires common stock. As a result, we currently
have no subsidiaries.

On November 3, 2011 we entered into a binding letter of intent (LOI) to acquire 100% of the issued and outstanding shares of NetCents Systems Ltd., a private Alberta corporation engaged in the development and implementation of a unique
and secure electronic payment system for online merchants and consumers. The LOI provides for a period of due diligence which will lead to a formal agreement whereby we will acquire 100% of the issued and outstanding capital of NetCents. Clayton
Moore, an officer and director of our company, and Ryan Madson, an officer of our company, are shareholders of NetCents and Mr. Moore is the president and director of Net Cents.

On November 4, 2011, Clayton Moore was appointed as a director, president and chief executive officer of our company, Steven Allmen was appointed a director, Ryan Madson was appointed chief operating officer, Tom Locke was appointed as a director,
chief financial officer, secretary and treasurer, and John Kaczmarowski was appointed chief technical officer.

On December 15, 2011, we entered into a share exchange agreement with NetCents and the selling shareholders of NetCents. Pursuant to the terms of the share exchange agreement, our company and NetCents agreed to engage in a share exchange which, if
completed, would result in NetCents becoming a wholly owned subsidiary of our company. The share exchange has not been completed as of the date of this Annual Report and is subject to completion of due diligence by the parties, and to the following
material terms and conditions:

|1. | We will issue 2 shares of our common stock from treasury for every 1 share of NetCents stock issued and outstanding on the date of closing;                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                          
|2. | NetCents will have no more than 16,245,421 shares of its common stock issued and outstanding on the closing date of the Share Exchange Agreement. Additional issuances must be authorized by our company;

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|3. | NetCents will have delivered to our company audited financial statements for its last two fiscal years and any applicable interim period ended no more than 35 days before the closing of the share exchange agreement, prepared in
accordance with United States GAAP and audited by an independent auditor registered with the Public Company Accounting Oversight Board in the United States; and
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                     
|4. | NetCents will file all required documentation with the Province of Alberta to effect the share exchange.                                                                                                                                                                                                                                                                                            

Also on December 15, 2011, NetCents received the approval for the share exchange agreement and the share exchange transaction from holders of approximately 76% of its voting securities through written resolution in lieu of holding a meeting.

On December 28, 2011, we entered into a convertible promissory note agreement with for $47,500. Pursuant to the terms of the agreement, the loan is unsecured, bears interest at 8% per annum, and is due on September 30, 2012. Furthermore, the
note is convertible into shares of common stock at a variable conversion price equal to 51% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice.

On February 13, 2012, we entered into a convertible promissory note agreement with Asher Enterprises, Inc. pursuant to which we received debt financing of$32,500. Pursuant to the agreement, the loan is convertible into shares of common stock at
a variable conversion price equal to the lower of 51% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice. The loan bears interest at 8% per year and the
principal amount and any interest thereon was due on November 15, 2012. During the year ended October 31, 2012, we issued 8,667,027 shares of common stock for the conversion of $32,500 plus accrued interest of $1,300.

On March 21, 2012, we entered into a second convertible promissory note agreement with Asher pursuant to which we received debt financing of $42,500. Pursuant to the agreement, the loan is convertible at a variable conversion price equal to the
lower of 51% of the average of the lowest two closing bid prices for the common stock during the 100 trading days prior to the date of the conversion notice. The loan bears interest at 8% per year and the principal amount and any interest thereon
are due on December 26, 2012. During the year ended October 31, 2012, we issued 18,978,704 shares of common stock for the conversion of $42,500 plus accrued interest of $1,700.

On May 4, 2012, we amended the terms of our convertible promissory note agreements with Asher dated December 28, 2011 and February 13, 2012, respectively. Pursuant to the amendments, the promissory notes shall be convertible at an average of the
lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice to an average of the two lowest closing bid prices for the common stock during the 100 trading days prior to the date of the
conversion notice. During the year ended October 31, 2012, we issued 7,510,081 shares of common stock for the conversion of $47,500 plus accrued interest of $1,900.

On May 8, 2012, we entered into a third convertible promissory note agreement with Asher pursuant to which we received debt financing in the amount of $32,500. Pursuant to the agreement, the loan is convertible 180 days after issuance into
shares of common stock at a variable conversion price equal to the lower of 51% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice. The loan bears interest
at 8% per year and the principal amount and any interest thereon are due on February 11, 2013.

Effective July 23, 2012, Tom Locke resigned as chief financial officer, secretary, treasurer and as a director of our company. His resignation was not the result of any disagreements with our company regarding its operations, policies, practices or
otherwise.

Concurrently with Mr. Lockes resignation, we appointed Mr. Ryan Madson, our chief operating officer, as secretary, treasurer, chief marketing officer, and as a director of our company, effective as of July 23, 2012.

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On August 7, 2012, we entered into a convertible promissory note agreement with Asher for $32,500. Pursuant to the agreement, the loan is convertible at a variable conversion price equal to 51% of the average of the lowest three closing bid
prices for the common stock during the 20 trading days prior to the date of the conversion notice. The loan bears interest at 5% per year and the principal amount and any interest thereon are due on May 9, 2013.

On September 10, 2012, we entered into a convertible promissory note agreement with Asher for $25,000. The proceeds were received on October 1, 2012. Pursuant to the terms of the agreement, the loan is unsecured, bears interest at 8% per annum,
and is convertible into shares of our common stock at any time at a variable conversion price equal to 50% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion
notice. The principal amount of the loan and any interest thereon are due on October 1, 2013

On September 10, 2012, we entered into a convertible promissory note agreement with Asher for $60,000. Pursuant to the terms of the agreement, the loan is unsecured, bears interest at 8% per annum, and is due on September 10, 2013. Furthermore,
the note is convertible into shares of our companys common stock at any time at a variable conversion price equal to 55% of the average of the lowest closing bid prices for the common stock during the 5 trading days prior to the date of the
conversion notice. During the year ended October 31, 2012, we issued 17,681,232 shares of common stock for the conversion of $40,000 of the note.

On November 8, 2012, we entered into a convertible promissory note agreement with Asher for $20,000. Pursuant to the agreement, the loan is convertible at a variable conversion price equal to 50% of the average of the lowest three closing bid prices for the common stock during the 20 trading days prior to the date of the conversion notice. The loan bears interest at 5% per year and the principal amount and any interest thereon are due on November 5, 2013.

On December 3, 2012, we entered into a convertible promissory note agreement with Asher for $32,500. Pursuant to the agreement, the loan is convertible 180 days after issuance into shares of common stock at a variable conversion price equal to 51% of the average of the lowest two closing bid prices for the common stock during the 20 trading days prior to the date of the conversion notice. The loan bears interest at 8% per year and the principal amount and any interest thereon are due on September 5, 2013.

Subsequent to October 31, 2012, we issued 65,614,900 shares of common stock upon the conversion of the convertible notes with Asher dated May 8, 2012, September 10, 2012, and November 8, 2012 and 5,445,000 shares of common stock upon the conversion
of the convertible note with Panache dated November 5, 2012.

Our Current Business

We are a development stage company, providing wireless communications services to telecommunication companies, consumers and businesses. Our platform comprises global positioning system (GPS) device management, location-based services
(LBS) capabilities, and the broadcasting of proprietary and non-proprietary content. LBS is a term used to describe the delivery of information and entertainment content to consumers with mobile devices based on the geographical position
of the mobile device. We intend to deliver LBS via two-way communication tracking devices with applications that are able to track people, pets, assets and inventory. Our solution platform integrates various location-aware devises, such as GPS
receivers, and transmits data to a range of devices, including Web browsers, instant messengers, short message service/mail, and mobile phones.

Subsidiaries

As at the year ended October 31, 2012, we do not have any subsidiaries.

Research and Development Expenditures

We have incurred $Nil in research and development expenditures over the last two fiscal years.

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Employees

As of October 31, 2012, are only employees are our directors
and officers. We plan to hire additional employees when circumstances warrant.

REPORTS TO SECURITY HOLDERS

We are required to file annual, quarterly and current reports,
proxy statements and other information with the Securities and Exchange
Commission and our filings are available to the public over the internet at the
Securities and Exchange Commissions website at http://www.sec.gov. The public
may read and copy any materials filed by us with the Securities and Exchange
Commission at the Securities and Exchange Commissions Public Reference Room at
100 F Street N.E. Washington D.C. 20549. The public may obtain information on
the operation of the Public Reference Room by calling the Securities and
Exchange Commission at 1-800-732-0330. The SEC also maintains an Internet site
that contains reports, proxy and formation statements, and other information
regarding issuers that file electronically with the SEC, at http://www.sec.gov.

|Item 1A. | Risk Factors
|-------- | ------------

Risks Related to Our Business

We have a history of losses and no revenues, which raise
substantial doubt about our ability to continue as a going concern.

From inception to October 31, 2012, we have incurred aggregate
net losses of $14,313,275. We can offer no assurance that we will ever operate
profitably or that we will generate positive cash flow in the future. In
addition, our operating results in the future may be subject to significant
fluctuations due to many factors not within our control, such as the
unpredictability of when customers will order products, the size of customers
orders, the demand for our products, and the level of competition and general
economic conditions.

Our companys operations will be subject to all the risks
inherent in the establishment of a developing enterprise and the uncertainties
arising from the absence of a significant operating history. No assurance can be
given that we may be able to operate on a profitable basis.

Due to the nature of our business and the early stage of our
development, our securities must be considered highly speculative. We have not
realized a profit from our operations to date and there is little likelihood
that we will realize any profits in the short or medium term. Any profitability
in the future from our business will be dependent upon the successful
commercialization or licensing of our core products, which themselves are
subject to numerous risk factors as set forth below.

We expect to continue to incur development costs and operating
costs. Consequently, we expect to incur operating losses and negative cash flows
until our products gain market acceptance sufficient to generate a commercially
viable and sustainable level of sales, and/or additional products are developed
and commercially released and sales of such products made so that we are
operating in a profitable manner. Our history of losses and no revenues raise
substantial doubt about our ability to continue as a going concern.

We have had negative cash flows from operations since
inception. We will require significant additional financing, the availability of
which cannot be assured, and if our company is unable to obtain such financing,
our business may fail.

To date, we have had negative cash flows from operations and
have depended on sales of our equity securities and debt financing to meet our
cash requirements. We may continue to have negative cash flows. We have
estimated that we will require approximately 1,400,000 to carry out our business
plan for the next twelve months. There is no assurance that actual cash
requirements will not exceed our estimates. We will require additional financing
to
finance working capital and pay for operating expenses and capital requirements until we achieve a positive cash flow.

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Our ability to market and sell our advertising services will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, we will not be able to fully develop our business. Specifically, we will
need to raise additional funds to:

- support our planned growth and carry out our business plan;
- hire top quality personnel for all areas of our business; and
- address competing technological and market developments.

We may not be able to obtain additional equity or debt financing on acceptable terms as required. Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements. Any
additional equity financing may involve substantial dilution to our then existing shareholders. If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies,
respond to changing business or economic conditions, withstand adverse operating results and compete effectively. More importantly, if we are unable to raise further financing when required, we may be forced to scale down our operations and our
ability to generate revenues may be negatively affected.

We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.

We have no history of revenues from operations and have no significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Accordingly, we must be considered in the
development stage. Our success is significantly dependent on a successful commercialization of our advertising services. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties
arising from the absence of a significant operating history. We may be unable to develop a successful advertising service or achieve commercial acceptance of our advertising services or operate on a profitable basis. We are in the development stage
and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their
investment in our company.

If we fail to effectively manage the growth of our company and the commercialization of our advertising services, our future business results could be harmed and our managerial and operational resources may be strained.

As we proceed with the commercialization of our advertising services and the expansion of our marketing and commercialization efforts, we expect to experience significant growth in the scope and complexity of our business. We will need to add staff
to market our services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We anticipate that we will be required to hire a broad range of additional personnel in order to successfully advance our
operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary
to effectively service and manage our potential business, or the failure to manage growth effectively, could have a material adverse effect on our business and financial condition.

Because we face intense competition from larger and better-established companies that have more resources than we do, we may be unable to implement our business plan or increase our revenues.

The market for our advertising services is intensely competitive and highly fragmented. Many of these competitors may have longer operating histories, greater financial, technical and marketing resources, and enjoy existing name recognition and
customer bases. New competitors may emerge and rapidly acquire significant market share. In addition, new services and technologies likely will increase the competitive pressures we face. Competitors may be able to respond more quickly to
technological change, competitive pressures, or changes in consumer demand. As a result of their advantages, our competitors may be able to limit or curtail our ability to compete successfully.

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In addition, many of our large competitors may offer customers a broader or superior range of services and technologies. Some of our competitors may conduct more extensive promotional activities and offer lower commercialization and licensing costs
to customers than we do, which could allow them to gain greater market share or prevent us from establishing and increasing our market share. Increased competition may result in significant price competition, reduced profit margins or loss of market
share, any of which may have a material adverse effect on our ability to generate revenues and successfully operate our business. Our competitors may develop technologies superior to those that our company currently possess. In the future, we may
need to decrease our prices if our competitors lower their prices. Our competitors may be able to respond more quickly to new or changing opportunities, services, technologies and customer requirements. Such competition will potentially affect our
chances of achieving profitability, and ultimately affect our ability to continue as a going concern.

Our by-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.

Our by-laws contain provisions with respect to the indemnification of our officers and directors against all expenses, liability and loss (including attorneys fees, judgments, fines and amounts paid or to be paid in settlement) reasonably
incurred or suffered by him or her in connection with any action, suit or proceeding to which they were made parties by reason of his or her being or having been one of our directors or officers.

Risks Related to Our Common Stock

A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.

A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in
order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our
stock. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our
ability to develop new products and continue our current operations. As a result, our business may suffer and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough
funds through the sale of our common stock and we may be forced to go out of business.

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

We are authorized to issue up to 600,000,000 shares of common stock with a par value of $0.0001 per share and 30,000,000 preferred shares with no par value. Our board of directors may choose to issue some or all of such shares to acquire one or
more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares,
such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our company.

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

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

10

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FINRA sales practice requirements may also limit a
stockholders ability to buy and sell our stock.

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

|Item 1B. | Unresolved Staff Comments
|-------- | -------------------------

As a smaller reporting company, we are not required to
provide the information required by this Item.

|Item 2. | Properties
|------- | ----------

Our principal offices are located at Suite 1704  1188 West
Pender Street, Vancouver, British Columbia, Canada V6E 0A2. Our office space at
this location consists of approximately 600 square feet at the cost of $1,100
per month which is paid by NetCents. We believe that our office space and
facilities are sufficient to meet our present needs and do not anticipate any
difficulty securing alternative or additional space, as needed, on terms
acceptable to us.

|Item 3. | Legal Proceedings
|------- | -----------------

Other than as set out below, there are no proceedings in which
any of our directors, officers or affiliates, or any registered or beneficial
shareholder, is an adverse party or has a material interest adverse to our
company.

On May 10, 2011 Saks Tierney, P.A., filed a complaint against
our company in Maricopa County (Arizona) Superior Court seeking payment of
$17,504.47 in unpaid fees for legal services rendered, plus pre and
post-judgment interest at the rate of ten percent (10%) per annum; plus the Saks
Tierneys reasonable attorneys fees and costs. We did not respond to the
complaint and on June 23, 2011, Saks Tierney submitted an Application for entry
of Default. We became in default of the complaint on July 8, 2011 and, on
September 9, 2011, Saks Tierney entered a motion to take default judgment
against us. Further to our ongoing negotiations with Saks Tierney to arrange a
settlement of the unpaid legal fees, Saks Tierney filed a Notice of Dismissal to
dismiss the complaint on September 15, 2011.

11

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|Item 4. | Mine Safety Disclosures
|------- | -----------------------

Not applicable.

PART II

|Item 5. | Market for Registrants Common Equity,
      Related Stockholder Matters and Issuer Purchases of Equity
      Securities
|------- | ------------------------------------------------------------------------------------------------------------------------

In the United States, our common shares are quoted on the
Over-the-Counter Bulletin Board under the symbol ONCI. The following
quotations, obtained from Stockwatch, reflect the high and low bids for our
common shares based on inter-dealer prices, without retail mark-up, mark-down or
commission and may not represent actual transactions.

The high and low bid prices of our common stock for the periods
indicated below are as follows:

OTC Bulletin Board(1)Quarter Ended
    High
    LowOctober 31, 2012
    $0.0475
    $0.0035July 31, 2012
    $0.074
    $0.0099April 30, 2012
    $0.08
    $0.011January 31, 2012
    $0.75
    $0.004October 31, 2011
    $0.0129
    $0.0042July 31, 2011
    $0.007
    $0.004April 30, 2011
    $0.0115
    $0.005January 31, 2011
    $0.039
    $0.01October 31, 2010
    $0.074
    $0.02


(1) Over-the-counter market quotations reflect inter-dealer
prices without retail mark-up, mark-down or commission, and may not represent
actual transactions.

Our shares are issued in registered form. Holladay Stock
Transfer, Inc., 2939 N 67th Place, Scottsdale, AZ 85251, is the registrar and
agent for our common and preferred shares.

On February 11, 2013, the shareholders list showed 70
registered shareholders, 191,999,434 common shares and no preferred shares
outstanding.

Dividend Policy

We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our current policy is to retain earnings, if any, for use in our
operations and in the development of our business. Our future dividend policy
will be determined from time to time by our board of directors.

12

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Recent Sales of Unregistered Securities; Use of Proceeds
from Registered Securities

During the year ended October 31, 2012, we issued 8,667,027
shares of common stock to Asher Enterprises, Inc. for the conversion of $32,500
plus accrued interest of $1,300 pursuant to the convertible dated February 13,
2012.

During the year ended October 31, 2012, we issued 18,978,704
shares of common stock to Asher Enterprises, Inc. for the conversion of $42,500
plus accrued interest of $1,700 pursuant to the convertible note dated March 22,
2012.

During the year ended October 31, 2012, we issued 7,510,081
shares of common stock to Asher Enterprises, Inc. for the conversion of $47,500
plus accrued interest of $1,900 pursuant to the convertible note dated December
28, 2011.

During the year ended October 31, 2012, we issued 17,681,232
shares of common stock to Asher Enterprises, Inc. for the conversion of $40,000
pursuant to the note dated September 10, 2012.

We did not sell any other equity securities which were not
registered under the Securities Act during the year ended October 31, 2012 that
were not otherwise disclosed on our quarterly reports on Form 10-Q or our
current reports on Form 8-K filed during the year ended October 31, 2012.

Subsequent to October 31, 2012, we issued 71,059,900 shares of
common stock to Asher Enterprises, Inc. upon the conversion of the convertible
notes with Asher dated May 8, 2012, September 10, 2012, and November 8, 2012 and
Panache dated November 5, 2012.

All securities issued to Asher Enterprises, Inc. were issued in
reliance on the exemption from registration contained in Rule 506 of Regulation
D of the Securities Act of 1933.

Equity Compensation Plan Information

We have no long-term incentive plans, other than the 2006
Non-Qualified Stock Option Plan described below.

2006 Non-Qualified Stock Option Plan

On September 18, 2006 our directors approved the adoption of
our 2006 Non-Qualified Stock Option Plan (amended October 10, 2006) which
permits our company to grant up to 1,500,000 options to acquire shares of common
stock, to directors, officers, employees and consultants of our company.

Equity Compensation Plan
      InformationPlan 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))Equity compensation plans approved by security holders
    Nil
    Nil
    NilEquity compensation plans not approved by security holders
    1,500,000
    Nil
    1,500,000Total
    1,500,000
    Nil
    1,500,000


13

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Purchase of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during our fourth quarter of our fiscal year ended October 31, 2012.

|Item 6. | Selected Financial Data
|------- | -----------------------

As a smaller reporting company, we are not required to
provide the information required by this Item.

|Item 7. | Managements Discussion and Analysis of
      Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------------

The following discussion should be read in conjunction with our
audited consolidated financial statements and the related notes for the years
ended October 31, 2012 and October 31, 2011 that appear elsewhere in this annual
report. The following discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to
those discussed below and elsewhere in this annual report, particularly in the
section entitled "Risk Factors" beginning on page 8 of this annual report.

Our audited consolidated financial statements are stated in
United States Dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.

Cash Requirements

For the next 12 months (beginning November 2012), we estimate
our planned expenses to be approximately $1,400,000, as summarized in the table
below:

|Description                         |  | Potential  |  |  | Estimated | 
|----------------------------------- |  | ---------- |  |  | --------- | 
|                                    |  | Completion |  |  | Expenses  | 
|                                    |  | Date       |  |  | ($)       | 
|General and administrative expenses |  | 12 months  |  |  | 250,000   | 
|Professional fees                   |  | 12 months  |  |  | 150,000   | 
|Unallocated working capital         |  | 12 months  |  |  | 100,000   | 
|Debt repayment                      |  | 12 months  |  |  | 900,000   | 
|Total                               |  |            |  |  | 1,400,000 | 

Based on our planned expenditures, we require additional funds
of approximately $1,400,000 to proceed with our business plan over the next 12
months (beginning November 2012). If we are not able to obtain additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our obligations as they become due. In
such event, we will be forced to scale down or perhaps even cease our
operations.

We believe that we will require additional funds to implement
our growth strategy. These funds may be raised through equity financing, debt
financing, or other sources, which may result in further dilution in the equity
ownership of our shares. There is no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on their
investment in our common stock. Further, we may continue to be unprofitable.

Purchase of Significant Equipment

We do not anticipate the purchase or sale of any plant or
significant equipment during the next 12 months.

14

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Going Concern

There may be some doubt about our ability to continue as a
going concern.

Our companys continuance as a going concern is dependent on
its Directors and principal stockholders in providing financial support in the
short term and receiving sufficient sublicense payments to discharge our
companys liabilities. In the event that these are not achieved, the assets may
not be realized or liabilities discharged at their carrying amounts, and
differences from the carrying amounts reported in these consolidated financial
statements could be material.

Off-Balance Sheet Arrangements

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

Inflation

The amounts presented in our financial statements do not
provide for the effect of inflation on our operations or financial position. The
net operating losses shown would be greater than reported if the effects of
inflation were reflected either by charging operations with amounts that
represent replacement costs or by using other inflation adjustments.

Results of Operations for the Years Ended October 31, 2012
and 2011

The following summary of our results of operations should be
read in conjunction with our audited consolidated financial statements for the
years ended October 31, 2012 and 2011.

Our operating results for the years ended October 31, 2012 and
2011 are summarized as follows:

|                                         |   | Year Ended  |  
|---------------------------------------- | - | ----------- | -
|                                         |   | October 31, |  
|                                         |   | 2012        |  
|Operating Expenses                       | $ | (190,531    | )
|Other Income (Expense)                   | $ | (716,870    | )
|Loss from Continuing
      Operations    | $ | (907,401    | )
|Gain (Loss) from discontinued operations | $ | Nil         |  
|Net Income (Loss)                        | $ | (907,401    | )

Expenses

Our operating expenses from continuing operations for the years
ended October 31, 2012 and 2011 are outlined in the table below:

|                                             |   | Year Ended  | 
|-------------------------------------------- | - | ----------- | 
|                                             |   | October 31, | 
|                                             |   | 2012        | 
|Amortization of property and
      equipment | $ | 241         | 
|Consulting fees                              | $ | 52,440      | 
|Foreign exchange (gain) loss                 | $ | 295         | 
|General and administrative                   | $ | 23,676      | 
|Impairment of assets                         | $ | 885         | 
|Management fees                              | $ | 44,175      | 
|Professional Fees                            | $ | 68,819      | 

15

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Equity Compensation

On September 18, 2006 our directors approved the adoption of
our 2006 Non-Qualified Stock Option Plan (amended on October 10, 2006) which
permits our company to grant up to 1,500,000 options to acquire shares of common
stock, to directors, officers, employees and consultants of our company. Other
than the aforementioned 2006 Option Plan, we do not have any other equity
compensation plans or arrangements.

Liquidity and Financial Condition

Working Capital

|                    |   | At October
      31, |   |   | Percentage |  
|------------------- | - | -------------------- | - | - | ---------- | -
|                    |   | 2012                 |   |   | 2011       |  
|Current Assets      | $ | 78,572               |   | $ | Nil        |  
|Current Liabilities | $ | 1,817,242            |   | $ | 1,546,877  |  
|Working Capital     | $ | (1,738,670           | ) | $ | (1,546,877 | )

Cash Flows

|                                                          |   | Year Ended  |  
|--------------------------------------------------------- | - | ----------- | -
|                                                          |   | October 31, |  
|                                                          |   | 2012        |  
|Net Cash Used in Operating
      Activities               | $ | (119,790    | )
|Net Cash Provided by Financing Activities                 | $ | 198,500     |  
|Net Cash Provided by (Used
      in) Investing Activities | $ | (78,202     | )
|Effect of Exchange Rate Changes                           | $ | (138        | )
|Increase (Decrease) in
      Cash during the Period       | $ | 370         |  

As of October 31, 2012, our company had working capital deficit
of $1,738,670, which is higher than the working capital deficit of $1,546,877 as
at October 31, 2011. This is due to the fact that our company received new debt
financing of $198,500 (net of financing costs) during the year from convertible
debentures which were used to pay ongoing development and operating costs
incurred by our company.

The increase in net cash used in operating activities was due
to the fact that our company did not raise any new equity or debt financing to
sustain a full year of operating activities.

During the year ended October 31, 2012, we used $78,202 in
investing activities relating to a loan receivable, compared with $15,000 raised
in investing activities during the year ended October 31, 2011 which was from
cash received from the disposition of our subsidiary.

During the year ended October 31, 2012 we had $198,500 in cash
provided by financing activities which consisted of $212,500 in proceeds from
notes payable offset by $14,000 for the repayment of notes payable. We did not
have any financing activities during the year ended October 31, 2011.

Contractual Obligations

As a smaller reporting company, we are not required to
provide tabular disclosure obligations.

16

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Critical Accounting Policies

Our financial statements are prepared in conformity with accounting principles generally accepted in the United States and are presented in US dollars, unless otherwise noted.

Use of Estimates

The preparation of financial statements in conformity with US generally accepted accounting principles requires 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. Our company regularly evaluates estimates and assumptions related to the useful life and recoverability of
long-lived assets, fair value of convertible debt, stock-based compensation, derivative liabilities and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and
various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by our company may differ materially and adversely from our companys estimates. To the extent there are material differences between the estimates and the actual results, future
results of operations will be affected.

Cash and Cash Equivalents

Our company considers all highly liquid instruments with maturity dates of three months or less at the time of issuance to be cash equivalents.

Property and Equipment

Property and equipment, consisting primarily of computer hardware and office equipment, is stated at cost and is amortized using the straight-line method over the estimated lives of the related assets of three and five years, respectively.

Impairment of Long-Lived Assets

In accordance with ASC 360, Property, Plant, and Equipment, our company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess
of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current
expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined
based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable
and exceeds fair value.

17

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Earnings Per Share

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

Stock-based Compensation

Our company records stock-based compensation in accordance with ASC 718, Compensation  Stock Based Compensationand ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

Foreign Currency Translation

Our companys functional currency and its reporting currency is the United States dollar and foreign currency transactions are primarily undertaken in Canadian dollars. Monetary balance sheet items expressed in foreign currencies are translated
into US dollars at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which
is translated on the same basis as the related asset. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.

Comprehensive Income/Loss

ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and our components in the consolidated financial statements. As at October 31, 2012 and 2011, our company had no items representing
comprehensive income/loss.

Income Taxes

Our company accounts for income taxes using the asset and liability method in accordance with ASC 740, Accounting for Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected
future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently
enacted tax rates and laws that will be in effect when the differences are expected to reverse. Our company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

Our company files federal income tax returns in the United States. Our company may be subject to a reassessment of federal taxes by tax authorities for a period of three years from the date of the original notice of assessment in respect of any
particular taxation year. In certain circumstances, the federal statute of limitations can reach beyond the standard three year period. The statute of limitations in the United States for income tax assessment varies from state to state. Tax
authorities have not audited any of our companys income tax returns.

Our company recognizes interest and penalties related to uncertain tax positions in tax expense. During the year ended October 31, 2012 and 2011, there were no charges for interest or penalties.

18

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Financial Instruments and Fair Value Measures

ASC 825 defines fair value as the price that would be received
from selling an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. In determining fair value
for assets and liabilities required or permitted to be recorded at fair value,
our company considers the principal or most advantageous market in which it
would transact and it considers assumptions that market participants would use
when pricing the asset or liability.

Fair Value Hierarchy

ASC 825 establishes a fair value hierarchy that requires an
entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. A financial instruments
categorization within the fair value hierarchy is based upon the lowest level of
input that is significant to the fair value measurement. ASC 825 establishes
three levels of inputs that may be used to measure fair value.

Level 1 applies to assets and liabilities for which there are
quoted prices in active markets for identical assets or liabilities. Valuations
are based on quoted prices that are readily and regularly available in an active
market and do not entail a significant degree of judgment.

Level 2 applies to assets and liabilities for which there are
other than Level 1 observable inputs such as quoted prices for similar assets or
liabilities in active markets, quoted prices for identical assets or liabilities
in markets with insufficient volume or infrequent transactions (less active
markets), or model-derived valuations in which significant inputs are observable
or can be derived principally from, or corroborated by, observable market data.
Level 2 instruments require more management judgment and subjectivity as
compared to Level 1 instruments. For instance: determining which instruments are
most similar to the instrument being priced requires management to identify a
sample of similar securities based on the coupon rates, maturity, issuer, credit
rating and instrument type, and subjectively select an individual security or
multiple securities that are deemed most similar to the security being priced;
and determining whether a market is considered active requires management
judgment.

Level 3 applies to assets and liabilities for which there are
unobservable inputs to the valuation methodology that are significant to the
measurement of the fair value of the assets or liabilities. The determination of
fair value for Level 3 instruments requires the most management judgment and
subjectivity.

Pursuant to ASC 825, the fair value of cash is determined based
on Level 1 inputs, which consists of quoted prices in active markets for
identical assets. Derivative liabilities are valued based on Level 2 inputs,
consisting of quoted prices in less active markets. Our company believes that
the recorded values of all of the other financial instruments approximate their
current fair values because of their nature and respective relatively short
maturity dates or durations.

Assets and liabilities measured at fair value on a recurring
basis were presented on our companys balance sheet as at October 31, 2012 and
2011 as follows:

|                       |  | Fair Value Measurements
      Using |  |  |                   |   |  |              | 
|---------------------- |  | ----------------------------------- |  |  | ----------------- | - |  | ------------ | 
|                       |  | Quoted prices in                    |  |  |                   |   |  |              | 
|                       |  | active markets                      |  |  |                   |   |  | Significant  | 
|                       |  | for identical                       |  |  | Significant other |   |  | unobservable | 
|                       |  | instruments                         |  |  | observable inputs |   |  | inputs       | 
|                       |  | (Level 1)                           |  |  | (Level 2)         |   |  | (Level 3)    | 
|                       |  | $                                   |  |  | $                 |   |  | $            | 
|Cash                   |  | 370                                 |  |  |                  |   |  |             | 
|Derivative liabilities |  |                                    |  |  | (103,747          | ) |  |             | 
|                       |  | 370                                 |  |  | (103,747          | ) |  |             | 

19

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The fair values of other financial instruments, which include
loan receivable, accounts payable and accrued liabilities, accrued interest
payable, amounts due to related parties, notes payable and convertible notes
payable approximate their current fair values because of their nature and
respective maturity dates or durations.

Recent Accounting Pronouncements

Our company has implemented all new accounting pronouncements
that are in effect and that may impact its financial statements and does not
believe that there are any other new accounting pronouncements that have been
issued that might have a material impact on its financial statements.

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

As a smaller reporting company, we are not required to
provide the information required by this Item.

|Item 8. | Financial Statements and Supplementary
      Data
|------- | -------------------------------------------------

20

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ON4 COMMUNICATIONS INC.

Financial Statements

Years Ended October 31, 2012 and 2011

(Expressed in US dollars)

21

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of On4
Communications Inc. (A Development Stage Company)

We have audited the accompanying balance sheets of On4
Communications Inc. (A Development Stage Company) as of October 31, 2012 and
2011, and the related statements of operations, stockholders deficit, and cash
flows for the years then ended and accumulated from June 5, 2006 (Date of
Inception) to October 31, 2012. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of the Company
as of October 31, 2012 and 2011, and the results of its operations and its cash
flows for the years then ended and accumulated from June 5, 2006 (Date of
Inception) to October 31, 2012, in conformity with accounting principles
generally accepted in the United States.

The accompanying financial statements have been prepared
assuming the Company will continue as a going concern. As discussed in Note 1 to
the financial statements, the Company has not generated significant revenue, has
a working capital deficit, and has incurred operating losses since inception.
These factors raise substantial doubt about the Companys ability to continue as
a going concern. Managements plans in regard to these matters are also
discussed in Note 1 to the financial statements. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

/s/ SATURNA GROUP CHARTERED ACCOUNTANTS LLPVancouver, Canada February 12, 2013

F-1

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Balance Sheets (Expressed in US Dollars)

|                                                                                                                                          |  | October 31, |   |  | October 31, |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                                                                                                          |  | 2012        |   |  | 2011        |  
|                                                                                                                                          |  | $           |   |  | $           |  
|ASSETS                                                                                                                                    |  |             |   |  |             |  
|                                                                                                                                          |  |             |   |  |             |  
|Current Assets                                                                                                                            |  |             |   |  |             |  
|                                                                                                                                          |  |             |   |  |             |  
|Cash                                                                                                                                      |  | 370         |   |  |            |  
|Loan receivable (Note 4)                                                                                                                  |  | 78,202      |   |  |            |  
|                                                                                                                                          |  |             |   |  |             |  
|Total Current Assets                                                                                                                      |  | 78,572      |   |  |            |  
|                                                                                                                                          |  |             |   |  |             |  
|Deferred financing costs (Note 8)                                                                                                         |  | 3,877       |   |  |            |  
|Property and equipment (Note 5)                                                                                                           |  |            |   |  | 1,126       |  
|                                                                                                                                          |  |             |   |  |             |  
|Total Assets                                                                                                                              |  | 82,449      |   |  | 1,126       |  
|                                                                                                                                          |  |             |   |  |             |  
|LIABILITIES AND STOCKHOLDERS
      DEFICIT                                                                                               |  |             |   |  |             |  
|                                                                                                                                          |  |             |   |  |             |  
|Current Liabilities                                                                                                                       |  |             |   |  |             |  
|                                                                                                                                          |  |             |   |  |             |  
|Accounts payable
      and accrued liabilities                                                                                            |  | 647,951     |   |  | 772,481     |  
|Accrued interest payable                                                                                                                  |  | 329,692     |   |  | 223,915     |  
|Due to related
      parties (Note 6)                                                                                                     |  | 238,867     |   |  | 205,338     |  
|Notes payable (Note 7)                                                                                                                    |  | 431,370     |   |  | 345,143     |  
|Convertible
      notes payable, net of unamortized discount of $44,385 (Note 8)                                                          |  | 65,615      |   |  |            |  
|Derivative liabilities (Note 9)                                                                                                           |  | 103,747     |   |  |            |  
|                                                                                                                                          |  |             |   |  |             |  
|Total Liabilities                                                                                                                         |  | 1,817,242   |   |  | 1,546,877   |  
|                                                                                                                                          |  |             |   |  |             |  
|Nature of Operations and Continuance of
      Business (Note 1)                                                                           |  |             |   |  |             |  
|Commitments (Note 13)                                                                                                                     |  |             |   |  |             |  
|Subsequent Events (Note 16)                                                                                                               |  |             |   |  |             |  
|                                                                                                                                          |  |             |   |  |             |  
|Stockholders Deficit                                                                                                                     |  |             |   |  |             |  
|                                                                                                                                          |  |             |   |  |             |  
|Preferred stock: 30,000,000
      shares authorized, non-voting, no par value; No shares issued and
      outstanding                     |  |            |   |  |            |  
|                                                                                                                                          |  |             |   |  |             |  
|Common stock: 600,000,000
      shares authorized, $0.0001 par value; 120,939,534 shares issued and
      outstanding (2011  66,602,490) |  | 12,094      |   |  | 6,660       |  
|                                                                                                                                          |  |             |   |  |             |  
|Additional paid-in capital                                                                                                                |  | 12,579,860  |   |  | 11,866,935  |  
|                                                                                                                                          |  |             |   |  |             |  
|Common stock issuable                                                                                                                     |  | 70,000      |   |  | 70,000      |  
|                                                                                                                                          |  |             |   |  |             |  
|Deficit accumulated during the development stage                                                                                          |  | (14,396,747 | ) |  | (13,489,346 | )
|                                                                                                                                          |  |             |   |  |             |  
|Total Stockholders Deficit                                                                                                               |  | (1,734,793  | ) |  | (1,545,751  | )
|                                                                                                                                          |  |             |   |  |             |  
|Total Liabilities and Stockholders Deficit                                                                                               |  | 82,449      |   |  | 1,126       |  

(The accompanying notes are an integral part of these financial
statements)

F-2

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Statements of Operations (Expressed in US
Dollars)

|                                                                      |  |             |   |  |             |   |  | Accumulated From    |  
|--------------------------------------------------------------------- |  | ----------- | - |  | ----------- | - |  | ------------------- | -
|                                                                      |  | Year        |   |  | Year        |   |  | June 5, 2006        |  
|                                                                      |  | Ended       |   |  | Ended       |   |  | (Date of Inception) |  
|                                                                      |  | October 31, |   |  | October 31, |   |  | to October 31,      |  
|                                                                      |  | 2012        |   |  | 2011        |   |  | 2012                |  
|                                                                      |  | $           |   |  | $           |   |  | $                   |  
|                                                                      |  |             |   |  |             |   |  |                     |  
|Revenue                                                               |  |            |   |  |            |   |  |                    |  
|                                                                      |  |             |   |  |             |   |  |                     |  
|Operating Expenses                                                    |  |             |   |  |             |   |  |                     |  
|                                                                      |  |             |   |  |             |   |  |                     |  
|Advertising and
      marketing                                       |  |            |   |  |            |   |  | 182,182             |  
|Amortization of intangible
      assets                               |  |            |   |  |            |   |  | 18,138              |  
|Amortization of
      property and equipment                          |  | 241         |   |  | 966         |   |  | 32,677              |  
|Consulting fees                                                       |  | 52,440      |   |  | 1,500       |   |  | 2,168,706           |  
|Foreign exchange
      loss                                           |  | 295         |   |  | 4,902       |   |  | 254,802             |  
|General and administrative                                            |  | 23,676      |   |  | 35,074      |   |  | 1,114,004           |  
|Impairment of
      goodwill                                          |  |            |   |  |            |   |  | 3,274,109           |  
|Impairment of assets (Note 5)                                         |  | 885         |   |  |            |   |  | 2,220,609           |  
|Management fees
      (Note 6)                                        |  | 44,175      |   |  |            |   |  | 1,206,771           |  
|Payroll                                                               |  |            |   |  |            |   |  | 29,516              |  
|Professional
      fees                                               |  | 68,819      |   |  | 65,796      |   |  | 746,963             |  
|Research and development                                              |  |            |   |  |            |   |  | 318,360             |  
|Total Operating Expenses                                              |  | 190,531     |   |  | 108,238     |   |  | 11,566,837          |  
|                                                                      |  |             |   |  |             |   |  |                     |  
|Operating Loss                                                        |  | (190,531    | ) |  | (108,238    | ) |  | (11,566,837         | )
|                                                                      |  |             |   |  |             |   |  |                     |  
|Other Income (Expense)                                                |  |             |   |  |             |   |  |                     |  
|Accretion of discounts on convertible
      notes payable (Note 8)    |  | (163,115    | ) |  |            |   |  | (238,115            | )
|Amortization of
      deferred financing costs                        |  | (10,123     | ) |  |            |   |  | (10,123             | )
|Gain on settlement of debt                                            |  |            |   |  | 160,358     |   |  | 807,352             |  
|Interest and other
      income                                       |  |            |   |  |            |   |  | 181,682             |  
|Interest expense                                                      |  | (145,176    | ) |  | (116,414    | ) |  | (768,814            | )
|Loss on change in fair
      value of derivative liabilities (Note 9) |  | (398,456    | ) |  |            |   |  | (398,456            | )
|Write-off of note receivable                                          |  |            |   |  |            |   |  | (1,114,182          | )
|Total Other Income (Expense)                                          |  | (716,870    | ) |  | 43,944      |   |  | (1,540,656          | )
|Loss
      from Continuing Operations                                 |  | (907,401    | ) |  | (64,294     | ) |  | (13,107,493         | )
|Discontinued Operations (Note
      3)                                |  |             |   |  |             |   |  |                     |  
|Loss from discontinued
      operations                               |  |            |   |  | (8,085      | ) |  | (1,282,616          | )
|Gain on disposal of discontinued operations                           |  |            |   |  | 76,834      |   |  | 76,834              |  
|Loss
      from Discontinued Operations                               |  |            |   |  | 68,749      |   |  | (1,205,782          | )
|Net Income (Loss)                                                     |  | (907,401    | ) |  | 4,455       |   |  | (14,313,275         | )
|                                                                      |  |             |   |  |             |   |  |                     |  
|Net Loss Per Share  Basic
      and Diluted                          |  |             |   |  |             |   |  |                     |  
|Continuing operations                                                 |  | (0.01       | ) |  |            |   |  |                     |  
|Discontinued operations                                               |  |            |   |  |            |   |  |                     |  
|                                                                      |  |             |   |  |             |   |  |                     |  
|Weighted Average Shares Outstanding                                   |  | 72,260,000  |   |  | 66,602,490  |   |  |                     |  

(The accompanying notes are an integral part of these financial
statements)

F-3

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Statements of Stockholders Equity (Deficit)
For the Period from June 5, 2006 (Date of Inception) to October 31, 2012

|                                                                         |  |                 |  |  |              |  |  |            |  |  |               |   |  |             |  |  |            |   |  | Deficit     |   |  |            |  
|------------------------------------------------------------------------ |  | --------------- |  |  | ------------ |  |  | ---------- |  |  | ------------- | - |  | ----------- |  |  | ---------- | - |  | ----------- | - |  | ---------- | -
|                                                                         |  |                 |  |  |              |  |  |            |  |  |               |   |  |             |  |  |            |   |  | Accumulated |   |  |            |  
|                                                                         |  |                 |  |  |              |  |  |            |  |  |               |   |  | Additional  |  |  | Share      |   |  | During the  |   |  |            |  
|                                                                         |  | Preferred Stock |  |  | Common Stock |  |  | Paid-in    |  |  | Subscriptions |   |  | Development |  |  |            |  
|                                                                         |  | Shares          |  |  | Amount       |  |  | Shares     |  |  | Amount        |   |  | Capital     |  |  | Receivable |   |  | Stage       |   |  | Total      |  
|                                                                         |  | #               |  |  | $            |  |  | #          |  |  | $             |   |  | $           |  |  | $          |   |  | $           |   |  | $          |  
|Balance, June
      5, 2006 (Date of Inception)                          |  |                |  |  |             |  |  |           |  |  |              |   |  |            |  |  |           |   |  |            |   |  |           |  
|Issuance of common stock for
      cash at $0.0001 per share             |  |                |  |  |             |  |  | 10,000,000 |  |  | 1,000         |   |  |            |  |  | (1,000     | ) |  |            |   |  |           |  
|Issuance of
      common stock for cash at $0.07 per share               |  |                |  |  |             |  |  | 10,000,000 |  |  | 700,000       |   |  |            |  |  | (25,000    | ) |  |            |   |  | 675,000    |  
|Net loss for the period                                                  |  |                 |  |  |              |  |  |           |  |  |              |   |  |            |  |  |           |   |  | (282,206    | ) |  | (282,206   | )
|Balance,
      October 31, 2006                                          |  |                |  |  |             |  |  | 20,000,000 |  |  | 701,000       |   |  |            |  |  | (26,000    | ) |  | (282,206    | ) |  | 392,794    |  
|Issuance of 2,000,000 Series A
      Preferred Shares at $0.50 per share |  | 2,000,000       |  |  | 1,000,000    |  |  |           |  |  |              |   |  |            |  |  |           |   |  |            |   |  | 1,000,000  |  
|Stock
      subscriptions received                                       |  |                |  |  |             |  |  |           |  |  |              |   |  |            |  |  | 25,120     |   |  |            |   |  | 25,120     |  
|Issuance of common stock at
      $0.50 per share                        |  |                |  |  |             |  |  | 500,000    |  |  | 250,000       |   |  |            |  |  |           |   |  |            |   |  | 250,000    |  
|Issuance of
      common stock to subsidiary                             |  |                |  |  |             |  |  | 1          |  |  |              |   |  |            |  |  |           |   |  |            |   |  |           |  
|Fair value of share purchase
      warrants issued                       |  |                |  |  |             |  |  |           |  |  |              |   |  | 497,980     |  |  |           |   |  |            |   |  | 497,980    |  
|Fair value of
      stock options granted                                |  |                |  |  |             |  |  |           |  |  |              |   |  | 108,710     |  |  |           |   |  |            |   |  | 108,710    |  
|Cumulative preferred dividends                                           |  |                |  |  |             |  |  |           |  |  |              |   |  |            |  |  |           |   |  | (48,472     | ) |  | (48,472    | )
|Net loss for the year                                                    |  |                 |  |  |              |  |  |           |  |  |              |   |  |            |  |  |           |   |  | (2,183,150  | ) |  | (2,183,150 | )
|Balance, October 31, 2007                                                |  | 2,000,000       |  |  | 1,000,000    |  |  | 20,500,001 |  |  | 951,000       |   |  | 606,690     |  |  | (880       | ) |  | (2,513,828  | ) |  | 42,982     |  
|Issuance of
      common stock at $0.50 per share                        |  |                |  |  |             |  |  | 3,021,200  |  |  | 1,516,000     |   |  |            |  |  |           |   |  |            |   |  | 1,516,000  |  
|Stock subscriptions received                                             |  |                |  |  |             |  |  |           |  |  |              |   |  |            |  |  | 880        |   |  |            |   |  | 880        |  
|Share issuance
      costs                                               |  |                |  |  |             |  |  |           |  |  | (78,015       | ) |  |            |  |  |           |   |  |            |   |  | (78,015    | )
|Fair value of share purchase
      warrants issued                       |  |                |  |  |             |  |  |           |  |  |              |   |  | 29,350      |  |  |           |   |  |            |   |  | 29,350     |  
|Fair value of
      stock options granted                                |  |                |  |  |             |  |  |           |  |  |              |   |  | 102,960     |  |  |           |   |  |            |   |  | 102,960    |  
|Cumulative preferred dividends                                           |  |                |  |  |             |  |  |           |  |  |              |   |  |            |  |  |           |   |  | (35,000     | ) |  | (35,000    | )
|Net loss for the year                                                    |  |                |  |  |             |  |  |           |  |  |              |   |  |            |  |  |           |   |  | (3,115,418  | ) |  | (3,115,418 | )
|Balance, October 31, 2008                                                |  | 2,000,000       |  |  | 1,000,000    |  |  | 23,521,201 |  |  | 2,388,985     |   |  | 739,000     |  |  |           |   |  | (5,664,246  | ) |  | (1,536,261 | )

(The accompanying notes are an integral part of these financial
statements)

F-4

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Statements of Stockholders Equity (Deficit)
For the Period from June 5, 2006 (Date of Inception) to October 31, 2012

|                                                                         |  |                 |   |   |              |   |  |             |   |  |            |   |  |             |   |  |          |  |  | Deficit     |   |  |            |  
|------------------------------------------------------------------------ |  | --------------- | - | - | ------------ | - |  | ----------- | - |  | ---------- | - |  | ----------- | - |  | -------- |  |  | ----------- | - |  | ---------- | -
|                                                                         |  |                 |   |   |              |   |  |             |   |  |            |   |  |             |   |  |          |  |  | Accumulated |   |  |            |  
|                                                                         |  |                 |   |   |              |   |  |             |   |  |            |   |  | Additional  |   |  | Common   |  |  | During the  |   |  |            |  
|                                                                         |  | Preferred Stock |   |   | Common Stock |   |  | Paid-in     |   |  | Stock      |   |  | Development |   |  |          | 
|                                                                         |  | Shares          |   |   | Amount       |   |  | Shares      |   |  | Amount     |   |  | Capital     |   |  | Issuable |  |  | Stage       |   |  | Total      |  
|                                                                         |  | #               |   | $ |              |   |  | #           |   |  | $          |   |  | $           |   |  | $        |  |  | $           |   |  | $          |  
|Balance,
      October 31, 2008                                          |  | 2,000,000       |   |   | 1,000,000    |   |  | 23,521,201  |   |  | 2,388,985  |   |  | 739,000     |   |  |         |  |  | (5,664,246  | ) |  | (1,536,261 | )
|Issuance of common stock for
      services at $0.50 per share           |  |                |   |   |             |   |  | 100,000     |   |  | 50,000     |   |  |            |   |  |         |  |  |            |   |  | 50,000     |  
|Stock-based
      compensation                                           |  |                |   |   |             |   |  |            |   |  |           |   |  | 94,539      |   |  |         |  |  |            |   |  | 94,539     |  
|Common shares issued upon
      conversion of preferred stock            |  | (2,000,000      | ) |   | (1,000,000   | ) |  | 4,000,000   |   |  | 1,000,000  |   |  |            |   |  |         |  |  |            |   |  |           |  
|Common shares issued upon conversion of
      preferred dividend payable |  |                |   |   |             |   |  | 333,888     |   |  | 83,472     |   |  |            |   |  |         |  |  |            |   |  | 83,472     |  
|Balance, May 1, 2009 before
      recapitalization                       |  |                |   |   |             |   |  | 27,955,089  |   |  | 3,522,457  |   |  | 833,539     |   |  |         |  |  | (5,664,246  | ) |  | (1,308,250 | )
|May 1, 2009
      Recapitalization Transactions                          |  |                 |   |   |              |   |  |             |   |  |            |   |  |             |   |  |          |  |  |             |   |  |            |  
|Shares acquired by
      legal parent                                    |  |                |   |   |             |   |  | (27,955,089 | ) |  |           |   |  |            |   |  |         |  |  |            |   |  |           |  
|Shares of Sound Revolution Inc.                                          |  |                |   |   |             |   |  | 68,258,478  |   |  |           |   |  |            |   |  |         |  |  |            |   |  |           |  
|Shares issued
      to shareholders of On4 Communications Inc.           |  |                |   |   |             |   |  | 27,955,089  |   |  | 2,796      |   |  | 2,658,893   |   |  |         |  |  |            |   |  | 2,661,689  |  
|To record par
      value adjustment                                     |  |                |   |   |             |   |  |            |   |  | (3,515,632 | ) |  | 3,515,632   |   |  |         |  |  |            |   |  |           |  
|Stock subscriptions received                                             |  |                |   |   |             |   |  | 661,410     |   |  | 66         |   |  | 132,216     |   |  |         |  |  |            |   |  | 132,282    |  
|Share issuance
      costs                                               |  |                |   |   |             |   |  |            |   |  |           |   |  | (8,000      | ) |  |         |  |  |            |   |  | (8,000     | )
|Issuance of common stock for
      acquisition                           |  |                |   |   |             |   |  | 3,000,000   |   |  | 300        |   |  | 2,129,700   |   |  |         |  |  |            |   |  | 2,130,000  |  
|Common stock
      issuable for services                                 |  |                |   |   |             |   |  |            |   |  |           |   |  |            |   |  | 70,000   |  |  |            |   |  | 70,000     |  
|Net loss for the year                                                    |  |                |   |   |             |   |  |            |   |  |           |   |  |            |   |  |         |  |  | (5,420,719  | ) |  | (5,420,719 | )
|Balance,
      October 31, 2009                                          |  |                |   |   |             |   |  | 99,874,977  |   |  | 9,987      |   |  | 9,261,980   |   |  | 70,000   |  |  | (11,084,965 | ) |  | (1,742,998 | )
|Beneficial conversion feature                                            |  |                |   |   |             |   |  |            |   |  |           |   |  | 75,000      |   |  |         |  |  |            |   |  | 75,000     |  
|Shares issued
      upon conversion of notes                             |  |                |   |   |             |   |  | 3,400,472   |   |  | 340        |   |  | 169,684     |   |  |         |  |  |            |   |  | 170,024    |  
|Shares issued upon settlement
      of related party debt                |  |                |   |   |             |   |  | 14,950,972  |   |  | 1,495      |   |  | 1,643,667   |   |  |         |  |  |            |   |  | 1,645,162  |  
|Cancellation of
      shares                                             |  |                |   |   |             |   |  | (54,223,931 | ) |  | (5,422     | ) |  | 5,422       |   |  |         |  |  |            |   |  |           |  
|Shares issued for services                                               |  |                |   |   |             |   |  | 2,600,000   |   |  | 260        |   |  | 407,740     |   |  |         |  |  |            |   |  | 408,000    |  
|Fair value of
      stock options granted                                |  |                |   |   |             |   |  |            |   |  |           |   |  | 307,133     |   |  |         |  |  |            |   |  | 307,133    |  
|Net loss for the year                                                    |  |                |   |   |             |   |  |            |   |  |           |   |  |            |   |  |         |  |  | (2,408,836  | ) |  | (2,408,836 | )
|Balance,
      October 31, 2010                                          |  |                |   |   |             |   |  | 66,602,490  |   |  | 6,660      |   |  | 11,870,626  |   |  | 70,000   |  |  | (13,493,801 | ) |  | (1,546,515 | )
|Stock-based compensation                                                 |  |                |   |   |             |   |  |            |   |  |           |   |  | (3,691      | ) |  |         |  |  |            |   |  | (3,691     | )
|Net income for the year                                                  |  |                |   |   |             |   |  |            |   |  |           |   |  |            |   |  |         |  |  | 4,455       |   |  | 4,455      |  
|Balance, October 31, 2011                                                |  |                |   |   |             |   |  | 66,602,490  |   |  | 6,660      |   |  | 11,866,935  |   |  | 70,000   |  |  | (13,489,346 | ) |  | (1,545,751 | )

(The accompanying notes are an integral part of these financial
statements)

F-5

---

ON4 COMMUNICATIONS INC. (A Development Stage
Company) Statements of Stockholders Equity (Deficit) For the Period
from June 5, 2006 (Date of Inception) to October 31, 2012

|                                                                           |  |                 |  |  |              |  |  |             |  |  |        |  |  |             |  |  |          |  |  | Deficit     |   |  |            |  
|-------------------------------------------------------------------------- |  | --------------- |  |  | ------------ |  |  | ----------- |  |  | ------ |  |  | ----------- |  |  | -------- |  |  | ----------- | - |  | ---------- | -
|                                                                           |  |                 |  |  |              |  |  |             |  |  |        |  |  |             |  |  |          |  |  | Accumulated |   |  |            |  
|                                                                           |  |                 |  |  |              |  |  |             |  |  |        |  |  | Additional  |  |  | Common   |  |  | During the  |   |  |            |  
|                                                                           |  | Preferred Stock |  |  | Common Stock |  |  | Paid-in     |  |  | Stock  |  |  | Development |  |  |          | 
|                                                                           |  | Shares          |  |  | Amount       |  |  | Shares      |  |  | Amount |  |  | Capital     |  |  | Issuable |  |  | Stage       |   |  | Total      |  
|                                                                           |  | #               |  |  | $            |  |  | #           |  |  | $      |  |  | $           |  |  | $        |  |  | $           |   |  | $          |  
|                                                                           |  |                 |  |  |              |  |  |             |  |  |        |  |  |             |  |  |          |  |  |             |   |  |            |  
|Balance, October 31, 2011                                                  |  |                |  |  |             |  |  | 66,602,490  |  |  | 6,660  |  |  | 11,866,935  |  |  | 70,000   |  |  | (13,489,346 | ) |  | (1,545,751 | )
|Shares issued for services                                                 |  |                |  |  |             |  |  | 1,500,000   |  |  | 150    |  |  | 48,600      |  |  |         |  |  |            |   |  | 48,750     |  
|Shares issued upon conversion
      of notes payable                       |  |                |  |  |             |  |  | 52,837,044  |  |  | 5,284  |  |  | 162,116     |  |  |         |  |  |            |   |  | 167,400    |  
|Derivative liabilities relating to notes
      payable converted to shares |  |                |  |  |             |  |  |            |  |  |       |  |  | 502,209     |  |  |         |  |  |            |   |  | 502,209    |  
|Net loss for the year                                                      |  |                |  |  |             |  |  |            |  |  |       |  |  |            |  |  |         |  |  | (907,401    | ) |  | (907,401   | )
|Balance, October 31, 2012                                                  |  |                |  |  |             |  |  | 120,939,534 |  |  | 12,094 |  |  | 12,579,860  |  |  | 70,000   |  |  | (14,396,747 | ) |  | (1,734,793 | )

(The accompanying notes are an integral part of these financial
statements)

F-6

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Statements of Cash Flows (Expressed in US
Dollars)

|                                                                                  |  |             |   |  |             |   |  | Accumulated From    |  
|--------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | - |  | ------------------- | -
|                                                                                  |  | Year        |   |  | Year        |   |  | June 5, 2006        |  
|                                                                                  |  | Ended       |   |  | Ended       |   |  | (Date of Inception) |  
|                                                                                  |  | October 31, |   |  | October 31, |   |  | to October 31,      |  
|                                                                                  |  | 2012        |   |  | 2011        |   |  | 2012                |  
|                                                                                  |  | $           |   |  | $           |   |  | $                   |  
|                                                                                  |  |             |   |  |             |   |  |                     |  
|Operating Activities                                                              |  |             |   |  |             |   |  |                     |  
|Net loss from continuing
      operations                                         |  | (907,401    | ) |  | (64,294     | ) |  | (13,107,493         | )
|Adjustments to
      reconcile net loss to net cash used in operating activities: |  |             |   |  |             |   |  |                     |  
|Accretion of
      discounts on convertible notes payable                         |  | 163,115     |   |  |            |   |  | 238,115             |  
|Amortization of property and equipment                                            |  | 241         |   |  | 966         |   |  | 32,677              |  
|Amortization of
      intangible assets                                           |  |            |   |  |            |   |  | 18,138              |  
|Amortization of deferred financing costs                                          |  | 10,123      |   |  |            |   |  | 10,123              |  
|Gain on settlement
      of debt                                                  |  |            |   |  | (160,358    | ) |  | (807,352            | )
|Impairment of goodwill                                                            |  |            |   |  |            |   |  | 3,274,109           |  
|Impairment of
      assets                                                        |  | 885         |   |  |            |   |  | 2,220,609           |  
|Issuance of notes payable for services and penalties                              |  |            |   |  |            |   |  | 90,402              |  
|Issuance of shares
      for services                                             |  | 48,750      |   |  |            |   |  | 576,750             |  
|Loss on change in fair value of derivative liabilities                            |  | 398,456     |   |  |            |   |  | 398,456             |  
|Stock-based
      compensation                                                    |  |            |   |  | (3,691      | ) |  | 1,136,981           |  
|Write-off of notes receivable                                                     |  |            |   |  |            |   |  | 1,114,182           |  
|Changes in operating assets and
      liabilities:                                |  |             |   |  |             |   |  |                     |  
|Accounts receivable                                                               |  |            |   |  |            |   |  | (5,431              | )
|Prepaid expenses
      and deposits                                               |  |            |   |  |            |   |  | (10,678             | )
|Accounts payable and accrued liabilities                                          |  | 21,835      |   |  | 40,714      |   |  | 835,556             |  
|Accrued interest
      payable                                                    |  | 110,677     |   |  | 85,401      |   |  | 553,863             |  
|Due to related parties                                                            |  | 33,529      |   |  | 78,704      |   |  | 634,869             |  
|Net
      Cash Used In Operating Activities                                       |  | (119,790    | ) |  | (22,558     | ) |  | (2,796,124          | )
|                                                                                  |  |             |   |  |             |   |  |                     |  
|Investing Activities                                                              |  |             |   |  |             |   |  |                     |  
|Acquisition of
      intangible assets                                            |  |            |   |  |            |   |  | (182,687            | )
|Cash acquired in reverse merger                                                   |  |            |   |  |            |   |  | 1,523               |  
|Cash from
      disposition of subsidiary                                         |  |            |   |  | 15,000      |   |  | 15,709              |  
|Loan receivable                                                                   |  | (78,202     | ) |  |            |   |  | (78,202             | )
|Acquisition of
      property and equipment                                       |  |            |   |  |            |   |  | (33,562             | )
|Advances for note receivable                                                      |  |            |   |  |            |   |  | (1,114,182          | )
|Net Cash Provided By (Used In) Investing Activities                               |  | (78,202     | ) |  | 15,000      |   |  | (1,391,401          | )
|                                                                                  |  |             |   |  |             |   |  |                     |  
|Financing Activities                                                              |  |             |   |  |             |   |  |                     |  
|Proceeds from issuance of common
      stock                                      |  |            |   |  |            |   |  | 1,821,267           |  
|Proceeds from
      issuance of preferred stock                                   |  |            |   |  |            |   |  | 1,000,000           |  
|Proceeds from notes payable and
      convertible notes payable                   |  | 212,500     |   |  |            |   |  | 939,522             |  
|Repayment of
      notes payable                                                  |  |            |   |  |            |   |  | (81,250             | )
|Payment of deferred financing
      costs                                         |  | (14,000     | ) |  |            |   |  | (14,000             | )
|Proceeds from
      related parties                                               |  |            |   |  |            |   |  | 561,935             |  
|Repayments to related parties                                                     |  |            |   |  |            |   |  | (84,780             | )
|Share issuance costs                                                              |  |            |   |  |            |   |  | (8,000              | )
|Net
      Cash Provided By Financing Activities                                   |  | 198,500     |   |  |            |   |  | 4,134,694           |  
|Effects of Exchange Rate Changes on Cash                                          |  | (138        | ) |  |            |   |  | 54,724              |  
|Discontinued Operations:                                                          |  |             |   |  |             |   |  |                     |  
|Operating
      activities                                                        |  |            |   |  |            |   |  | (119,701            | )
|Investing activities                                                              |  |            |   |  |            |   |  | (661,509            | )
|Financing activities                                                              |  |            |   |  |            |   |  | 779,687             |  
|Net
      Cash Used in Discontinued Operations                                    |  |            |   |  |            |   |  | (1,523              | )
|Increase (Decrease) in Cash                                                       |  | 370         |   |  | (7,558      | ) |  | 370                 |  
|Cash
      - Beginning of Period                                                  |  |            |   |  | 7,558       |   |  |                    |  
|Cash - End of Period                                                              |  | 370         |   |  |            |   |  | 370                 |  

Supplemental Disclosures (Note 14)

(The accompanying notes are an integral part of these financial
statements)

F-7

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|1. | Nature of Operations and Continuance of
      Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Sound Revolution Inc. (the "Company"), was incorporated
      on June 4, 2001 under the laws of the State of Delaware and on October 2,
      2009 changed its name to On4 Communications, Inc. On May 1, 2009, the
      Company merged with On4 Communications, Inc. (On4), an Arizona
      corporation incorporated on June 5, 2006. Pursuant to the terms of the
      merger agreement, the Company acquired all assets and liabilities of On4
      by issuing new shares to all former shareholders of On4 on a 1-to-1 basis.
      The Company issued 27,955,089 common shares to the former shareholders of
      On4 and the merger was accounted for as a reverse merger using the
      purchase method of accounting, with the former shareholders of On4
      controlling 68% of the issued and outstanding common shares of the Company
      after the closing of the transaction. Accordingly, On4 was deemed to be
      the acquirer for accounting purposes and the financial statements are
      presented as a continuation of On4 and include the results of operations
      of On4 since incorporation on June 5, 2006, and the results of operations
      of the Company since the date of acquisition on May 1, 2009. On May 3,
      2012, the Companys shareholders approved a name change to NetCents
      Systems International Ltd., however, this has not been declared effective
      as of the date of issuance of these financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On4 is in the business of manufacturing two-way
      communication and location devices with applications that include tracking
      people, pets, assets, and inventory, among others. The Company had two
      wholly-owned subsidiaries: (i) Sound Revolution Recordings Inc., which was
      incorporated in British Columbia, Canada on June 20, 2001, for the purpose
      of carrying on music marketing services in British Columbia, and (ii)
      Charity Tunes Inc., which was incorporated in the State of Delaware on
      June 27, 2005, for the purpose of operating a website for the distribution
      of songs online. On March 16, 2011, the Company disposed its two wholly
      owned subsidiaries, Sound Revolution Recordings Inc., and Charity Tunes
      Inc., for consideration of $15,000 and 6,300 shares of the acquirers
      common stock. The Company is a Development Stage Company, as defined by
      Financial Accounting Standards Board (FASB) Accounting Standards
      Codification (ASC) 915, Development Stage Entities, and has not
      yet generated significant revenues from their intended business
      activities.                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | These financial statements have been prepared on a going
      concern basis, which implies that the Company will continue to realize its
      assets and discharge its liabilities in the normal course of business. The
      Company has not generated significant revenues since inception and is
      unlikely to generate significant revenue or earnings in the immediate or
      foreseeable future. As at October 31, 2012, the Company has not generated
      any revenues since inception, has a working capital deficiency of
      $1,738,670 and has an accumulated deficit of $14,396,747 since inception.
      The continuation of the Company as a going concern is dependent upon the
      continued financial support from its shareholders, the ability of the
      Company to obtain necessary equity financing to continue operations, and
      the attainment of profitable operations. These factors raise substantial
      doubt regarding the Companys ability to continue as a going concern.
      These financial statements do not include any adjustments to the
      recoverability and classification of recorded asset amounts and
      classification of liabilities that might be necessary should the Company
      be unable to continue as a going concern.                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company will need additional working capital to
      continue or to be successful in any future business activities. Therefore,
      continuation of the Company as a going concern is dependent upon obtaining
      the additional working capital necessary to accomplish its objective.
      Management plans to seek debt or equity financing, or a combination of
      both, to raise the necessary working capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2. | Summary of Significant Accounting
  Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | These financial statements are prepared in conformity
      with accounting principles generally accepted in the United States and are
      presented in US dollars, unless otherwise noted. The Companys fiscal year
      end is October 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The preparation of financial statements in conformity
      with US generally accepted accounting principles requires 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. The Company regularly evaluates
      estimates and assumptions related to the useful life and recoverability of
      long-lived assets, fair value of convertible notes payable, stock-based
      compensation, derivative liabilities, and deferred income tax asset
      valuation allowances. The Company bases its estimates and assumptions on
      current facts, historical experience and various other factors that it
      believes to be reasonable under the circumstances, the results of which
      form the basis for making judgments about the carrying values of assets
      and liabilities and the accrual of costs and expenses that are not readily
      apparent from other sources. The actual results experienced by the Company
      may differ materially and adversely from the Companys estimates. To the
      extent there are material differences between the estimates and the actual
      results, future results of operations will be
affected.                                                           

F-8

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|2. | Summary of Significant Accounting Principles(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company considers all highly liquid instruments with
      maturity dates of three months or less at the time of issuance to be cash
      equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Property and equipment, consists of office equipment, is
      stated at cost and is amortized using the straight-line method over the
      estimated lives of the related assets of five years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In accordance with ASC 360, Property, Plant, and
      Equipment, the Company tests long-lived assets or asset groups for
      recoverability when events or changes in circumstances indicate that their
      carrying amount may not be recoverable. Circumstances which could trigger
      a review include, but are not limited to: significant decreases in the
      market price of the asset; significant adverse changes in the business
      climate or legal factors; accumulation of costs significantly in excess of
      the amount originally expected for the acquisition or construction of the
      asset; current period cash flow or operating losses combined with a
      history of losses or a forecast of continuing losses associated with the
      use of the asset; and current expectation that the asset will more likely
      than not be sold or disposed significantly before the end of its estimated
      useful life. Recoverability is assessed based on the carrying amount of
      the asset and its fair value which is generally determined based on the
      sum of the undiscounted cash flows expected to result from the use and the
      eventual disposal of the asset, as well as specific appraisal in certain
      instances. An impairment loss is recognized when the carrying amount is
      not recoverable and exceeds fair value.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Research and Development Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Research and development costs are expensed as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Advertising Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company expenses advertising costs as incurred. For
      the years ended October 31, 2012 and 2011, advertising costs were
    $nil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company computes net loss per share in accordance
      with ASC 260, Earnings per Share,which requires presentation of
      both basic and diluted earnings per share (EPS) on the face of the
      statements of operations. Basic EPS is computed by dividing net loss
      available to common shareholders (numerator) by the weighted average
      number of shares outstanding (denominator) during the period. Diluted EPS
      gives effect to all dilutive potential common shares outstanding during
      the period using the treasury stock method and convertible preferred stock
      using the if-converted method. In computing diluted EPS, the average stock
      price for the period is used in determining the number of shares assumed
      to be purchased from the exercise of stock options or warrants. Diluted
      EPS excludes all dilutive potential shares if their effect is anti-
      dilutive.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company records stock-based compensation in
      accordance with ASC 718, Compensation  Stock Based Compensationand ASC 505-50 - Equity-Based Payments to Non-Employees. All
      transactions in which goods or services are the consideration received for
      the issuance of equity instruments are accounted for based on the fair
      value of the consideration received or the fair value of the equity
      instrument issued, whichever is more reliably measurable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Companys functional currency and its reporting
      currency is the United States dollar and foreign currency transactions are
      primarily undertaken in Canadian dollars. Monetary balance sheet items
      expressed in foreign currencies are translated into US dollars at the
      exchange rates in effect at the balance sheet date. Non-monetary assets
      and liabilities are translated at historical rates. Revenues and expenses
      are translated at average rates for the period, except for amortization,
      which is translated on the same basis as the related asset. Gains and
      losses arising on translation or settlement of foreign currency
      denominated transactions or balances are included in the determination of
      income.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Reclassification                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Certain financial statement items have been reclassified
      from prior year in order to conform to presentation standards for the
      current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-9

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|2. | Summary of Significant Accounting Principles(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Comprehensive Income                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | ASC 220, Comprehensive Income, establishes
      standards for the reporting and display of comprehensive loss and its
      components in the financial statements. As at October 31, 2012 and 2011,
      the Company had no items representing comprehensive income or
  loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company accounts for income taxes using the asset and
      liability method in accordance with ASC 740, Accounting for Income Taxes.
      The asset and liability method provides that deferred tax assets and
      liabilities are recognized for the expected future tax consequences of
      temporary differences between the financial reporting and tax bases of
      assets and liabilities, and for operating loss and tax credit
      carry-forwards. Deferred tax assets and liabilities are measured using the
      currently enacted tax rates and laws that will be in effect when the
      differences are expected to reverse. The Company records a valuation
      allowance to reduce deferred tax assets to the amount that is believed
      more likely than not to be realized.                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company files federal income tax returns in the
      United States. The Company may be subject to a reassessment of federal
      taxes by tax authorities for a period of three years from the date of the
      original notice of assessment in respect of any particular taxation year.
      In certain circumstances, the federal statute of limitations can reach
      beyond the standard three year period. The statute of limitations in the
      United States for income tax assessment varies from state to state. Tax
      authorities have not audited any of the Companys income tax
    returns.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company recognizes interest and penalties related to
      uncertain tax positions in tax expense. During the years ended October 31,
      2012 and 2011, there were no charges for interest or penalties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Financial Instruments and Fair Value
    Measures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | ASC 825 defines fair value as the price that would be
      received from selling an asset or paid to transfer a liability in an
      orderly transaction between market participants at the measurement date.
      In determining fair value for assets and liabilities required or permitted
      to be recorded at fair value, the Company considers the principal or most
      advantageous market in which it would transact and it considers
      assumptions that market participants would use when pricing the asset or
      liability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | ASC 825 establishes a fair value hierarchy that requires
      an entity to maximize the use of observable inputs and minimize the use of
      unobservable inputs when measuring fair value. A financial instruments
      categorization within the fair value hierarchy is based upon the lowest
      level of input that is significant to the fair value measurement. ASC 825
      establishes three levels of inputs that may be used to measure fair
      value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Level 1 applies to assets and liabilities for which there
      are quoted prices in active markets for identical assets or liabilities.
      Valuations are based on quoted prices that are readily and regularly
      available in an active market and do not entail a significant degree of
      judgment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Level 2 applies to assets and liabilities for which there
      are other than Level 1 observable inputs such as quoted prices for similar
      assets or liabilities in active markets, quoted prices for identical
      assets or liabilities in markets with insufficient volume or infrequent
      transactions (less active markets), or model-derived valuations in which
      significant inputs are observable or can be derived principally from, or
      corroborated by, observable market data. Level 2 instruments require more
      management judgment and subjectivity as compared to Level 1 instruments.
      For instance: determining which instruments are most similar to the
      instrument being priced requires management to identify a sample of
      similar securities based on the coupon rates, maturity, issuer, credit
      rating and instrument type, and subjectively select an individual security
      or multiple securities that are deemed most similar to the security being
      priced; and determining whether a market is considered active requires
      management judgment.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Level 3 applies to assets and liabilities for which there
      are unobservable inputs to the valuation methodology that are significant
      to the measurement of the fair value of the assets or liabilities. The
      determination of fair value for Level 3 instruments requires the most
      management judgment and subjectivity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Pursuant to ASC 825, the fair value of cash is determined
      based on Level 1 inputs, which consists of quoted prices in active
      markets for identical assets. Derivative liabilities are valued based on
      Level 2 inputs based on model-derived valuations in which significant
      inputs are observable or can be derived principally from, or corroborated
      by, observable market data. The Company believes that the recorded values
      of all of the other financial instruments approximate their current fair
      values because of their nature and respective relatively short maturity
      dates or durations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

F-10

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|2. | Summary of Significant Accounting Principles(continued)                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                
|   | Financial Instruments and Fair Value Measures(continued)                                                                                                       
|   |                                                                                                                                                                
|   | Assets and liabilities measured at fair value on a
      recurring basis were presented on the Companys balance sheet as at
      October 31, 2012 as follows:

| |                        |  | Fair Value Measurements Using |  |  |                   |  
| | ---------------------- |  | ----------------------------- |  |  | ----------------- | -
| |                        |  | Quoted prices in              |  |  |                   |  
| |                        |  | active markets for            |  |  |                   |  
| |                        |  | identical                     |  |  | Significant other |  
| |                        |  | instruments                   |  |  | observable inputs |  
| |                        |  | (Level 1)                     |  |  | (Level 2)         |  
| |                        |  | $                             |  |  | $                 |  
| |                        |  |                               |  |  |                   |  
| | Cash                   |  | 370                           |  |  |                  |  
| | Derivative liabilities |  |                              |  |  | (103,747          | )
| |                        |  |                               |  |  |                   |  
| |                        |  | 370                           |  |  | (103,747          | )

|   | The fair values of other financial instruments, which
      include loan receivable, accounts payable and accrued liabilities, accrued
      interest payable, amounts due to related parties, notes payable and
      convertible notes payable approximate their current fair values because of
      their nature and respective maturity dates or durations.                                                                                                                                                                                                                                                                                                               
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company has implemented all new accounting
      pronouncements that are in effect and that may impact its financial
      statements and does not believe that there are any other new accounting
      pronouncements that have been issued that might have a material impact on
      its financial statements.                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|3. | Discontinued Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Sound Revolution Recordings Inc. and Charity Tunes
      Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | On March 16, 2011, the Company disposed of its wholly
      owned subsidiaries, Sound Revolution Recordings Inc., and Charity Tunes
      Inc., for consideration of $15,000 and 6,300 shares of the acquirers
      common stock resulting in a gain on settlement of debt of $76,834. As a
      result of the Companys disposal of Sound Revolution Recordings Inc., and
      Charity Tunes Inc., all assets, liabilities, and expenses related to the
      former subsidiaries have been classified as discontinued operations. The
      results of Sound Revolution Recordings Inc., and Charity Tunes Inc.,
      discontinued operations are summarized as
follows:

| |                                              |  |             |  |  |             |   |  | Accumulated from    |  
| | -------------------------------------------- |  | ----------- |  |  | ----------- | - |  | ------------------- | -
| |                                              |  | Year        |  |  | Year        |   |  | June 5, 2006        |  
| |                                              |  | Ended       |  |  | Ended       |   |  | (Date of Inception) |  
| |                                              |  | October 31, |  |  | October 31, |   |  | To October 31,      |  
| |                                              |  | 2012        |  |  | 2011        |   |  | 2012                |  
| |                                              |  | $           |  |  | $           |   |  | $                   |  
| | Revenue                                      |  |            |  |  |            |   |  | 222,866             |  
| | Cost
      of sales                          |  |            |  |  |            |   |  | 97,230              |  
| | Gross margin                                 |  |            |  |  |            |   |  | 125,636             |  
| | Expenses                                     |  |            |  |  |            |   |  |                     |  
| | Advertising and
      marketing              |  |            |  |  |            |   |  | 9,298               |  
| | Amortization of property and
      equipment |  |            |  |  | 1,121       |   |  | 4,162               |  
| | Consulting fees                              |  |            |  |  | 5,534       |   |  | 15,218              |  
| | Foreign exchange loss                        |  |            |  |  | 1,430       |   |  | 6,025               |  
| | General and
      administrative             |  |            |  |  |            |   |  | 12,960              |  
| | Professional fees                            |  |            |  |  |            |   |  | 35,783              |  
| | Payroll                                      |  |            |  |  |            |   |  | 25,950              |  
| | Total Expenses                               |  |            |  |  | 8,085       |   |  | 109,396             |  
| | Operating Income (Loss)                      |  |            |  |  | (8,085      | ) |  | 16,240              |  
| | Other Income (Expenses)                      |  |             |  |  |             |   |  |                     |  
| | Gain on
      settlement of debt             |  |            |  |  |            |   |  | 4,442               |  
| | Interest expense                             |  |            |  |  |            |   |  | (121,782            | )
| | Net Loss from Discontinued
      Operations  |  |            |  |  | (8,085      | ) |  | (101,100            | )

F-11

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|4. | Loan Receivable                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                   
|   | On December 15, 2011, the Company entered into the share
      exchange agreement with NetCents Systems Ltd. (NetCents), as described
      in Note 13. As at October 31, 2012, the Company was owed $78,202 (2011 -
      $nil) for expenses paid on behalf of NetCents. The amount is unsecured,
      non-interest bearing and due on demand.
|   |                                                                                                                                                                                                                                                                                                                                                   
|5. | Property and Equipment                                                                                                                                                                                                                                                                                                                            

| |                  |  |        |  |  |              |  |  |            |  |  | October 31,  |  |  | October 31,  | 
| | ---------------- |  | ------ |  |  | ------------ |  |  | ---------- |  |  | ------------ |  |  | ------------ | 
| |                  |  |        |  |  |              |  |  |            |  |  | 2012         |  |  | 2011         | 
| |                  |  |        |  |  | Accumulated  |  |  |            |  |  | Net Carrying |  |  | Net Carrying | 
| |                  |  | Cost   |  |  | Amortization |  |  | Impairment |  |  | Value        |  |  | Value        | 
| |                  |  | $      |  |  | $            |  |  | $          |  |  | $            |  |  | $            | 
| | Office equipment |  | 26,036 |  |  | 25,151       |  |  | 885        |  |  |             |  |  | 1,126        | 

|   | During the year ended October 31, 2012, the Company
      recorded an impairment loss of $885 for office equipment no longer in
      use.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                           
|6. | Related Party Transactions                                                                                                                
|   |                                                                                                                                           
|   | a)                                                                                                                                        
|   |                                                                                                                                           
|   | b)                                                                                                                                        
|   |                                                                                                                                           
|   | c)                                                                                                                                        
|   |                                                                                                                                           
|   | d)                                                                                                                                        
|   |                                                                                                                                           
|7. | Notes Payable                                                                                                                             

| |                                                                                                       |  | 2012    |  |  | 2011    | 
| | ----------------------------------------------------------------------------------------------------- |  | ------- |  |  | ------- | 
| |                                                                                                       |  | $       |  |  | $       | 
| | Kestrel Gold Inc., unsecured,
      due interest at prime plus 2% per annum, and due on demand.       |  | 25,025  |  |  | 25,163  | 
| | Scottsdale Investment Corporation, unsecured,
      due interest at 12% per annum, and due on demand. |  | 319,980 |  |  | 319,980 | 
| | Gordon Jessop, unsecured, due interest at 5% per annum,
      and due on demand                       |  | 86,365  |  |  |        | 
| |                                                                                                       |  | 431,370 |  |  | 345,143 | 

|8. | Convertible Notes Payable
|-- | -------------------------
|   |                          
|   | a)                       
|   |                          
|   |                          

F-12

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|8. | Convertible Notes Payable(continued)
|-- | ------------------------------------
|   |                                     
|   | b)                                  
|   |                                     
|   |                                     
|   |                                     
|   | c)                                  
|   |                                     
|   |                                     
|   |                                     
|   | d)                                  
|   |                                     
|   |                                     
|   |                                     
|   | e)                                  
|   |                                     
|   |                                     
|   |                                     
|   | f)                                  
|   |                                     
|   |                                     

F-13

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|8. | Convertible Notes Payable(continued)                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                           
|   | g)                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                           
|9. | Derivative Liabilities                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                           
|   | The conversion options of the convertible notes payable,
      as disclosed in Note 8, are required to record a derivative at their
      estimated fair value on each balance sheet date with changes in fair value
      reflected in the statement of operations.                                                      
|   |                                                                                                                                                                                                                                                                                                                           
|   | The fair value of the derivative liabilities for the
      December 28, 2011, February 13, 2012, March 21, 2012 and September 10,
      2012 convertible notes were $234,103, $47,623, $214,081, $37,357 and
      $90,426 on vesting, respectively. The fair values as at October 31, 2012
      and 2011 are as follows:

| |                                                               |  | 2012    |  |  | 2011 | 
| | ------------------------------------------------------------- |  | ------- |  |  | ---- | 
| |                                                               |  | $       |  |  | $    | 
| |                                                               |  |         |  |  |      | 
| | $25,000 convertible debenture
      issued September 10, 2012 |  | 66,759  |  |  |     | 
| | $60,000 convertible debenture issued September 10, 2012       |  | 36,988  |  |  |     | 
| |                                                               |  |         |  |  |      | 
| |                                                               |  | 103,747 |  |  |     | 

During the year ended October 31, 2012,
the Company recorded a loss on the change in fair value of the derivative
liabilities of $398,456 (2011  $nil).

The Company uses the Black-Scholes
option pricing model to calculate the fair values of the derivative liabilities.
The following table shows the assumptions used in the calculations:

| |                                            |  |            |  |  | Risk-free |  |  | Expected |  |  | Expected | 
| | ------------------------------------------ |  | ---------- |  |  | --------- |  |  | -------- |  |  | -------- | 
| |                                            |  | Expected   |  |  | Interest  |  |  | Dividend |  |  | Life (in | 
| |                                            |  | Volatility |  |  | Rate      |  |  | Yield    |  |  | years)   | 
| | December 28, 2011
      convertible note:  |  |            |  |  |           |  |  |          |  |  |          | 
| | As at June 25, 2012 (date of vesting)      |  | 176%       |  |  | 0.93%     |  |  | 0%       |  |  | 0.27     | 
| | As at October 31, 2012                     |  |           |  |  |          |  |  |         |  |  |         | 
| |                                            |  |            |  |  |           |  |  |          |  |  |          | 
| | February 13, 2012
      convertible note:  |  |            |  |  |           |  |  |          |  |  |          | 
| | As at August 11, 2012 (date of vesting)    |  | 278%       |  |  | 1.02%     |  |  | 0%       |  |  | 0.26     | 
| | As at October 31, 2012                     |  |           |  |  |          |  |  |         |  |  |         | 
| |                                            |  |            |  |  |           |  |  |          |  |  |          | 
| | March 21, 2012 convertible
      note:     |  |            |  |  |           |  |  |          |  |  |          | 
| | As at September 18, 2012 (date of vesting) |  | 304%       |  |  | 1.00%     |  |  | 0%       |  |  | 0.27     | 
| | As at October 31, 2012                     |  |           |  |  |          |  |  |         |  |  |         | 
| |                                            |  |            |  |  |           |  |  |          |  |  |          | 
| | September 10, 2012
      convertible note  |  |            |  |  |           |  |  |          |  |  |          | 
| | As at October 1, 2012 (date of vesting)    |  | 300%       |  |  | 1.13%     |  |  | 0%       |  |  | 0.94     | 
| | As at October 31, 2012                     |  | 266%       |  |  | 1.04%     |  |  | 0%       |  |  | 0.86     | 
| |                                            |  |            |  |  |           |  |  |          |  |  |          | 
| | September 10, 2012
      convertible note  |  |            |  |  |           |  |  |          |  |  |          | 
| | As at September 10, 2012 (date of vesting) |  | 292%       |  |  | 1.13%     |  |  | 0%       |  |  | 1.00     | 
| | As at October 31, 2012                     |  | 266%       |  |  | 1.04%     |  |  | 0%       |  |  | 0.86     | 

F-14

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|10. | Common Stock                                                                   
|--- | -------------------------------------------------------------------------------
|    |                                                                                
|    | a)                                                                             
|    |                                                                                
|    | b)                                                                             
|    |                                                                                
|    | c)                                                                             
|    |                                                                                
|11. | Share Purchase Warrants                                                        
|    |                                                                                
|    | The following table summarizes the continuity of share
      purchase warrants:

| |                           |  |            |   |  | Weighted | 
| | ------------------------- |  | ---------- | - |  | -------- | 
| |                           |  |            |   |  | Average  | 
| |                           |  |            |   |  | Exercise | 
| |                           |  | Number of  |   |  | Price    | 
| |                           |  | Warrants   |   |  | $        | 
| | Balance, October 31, 2010 |  | 1,786,705  |   |  | 0.57     | 
| | Expired                   |  | (330,705   | ) |  | 0.90     | 
| | Balance, October 31, 2011 |  | 1,456,000  |   |  | 0.50     | 
| | Expired                   |  | (1,300,000 | ) |  | 0.50     | 
| | Balance, October 31, 2012 |  | 156,000    |   |  | 0.50     | 

As at October 31, 2012, the following
share purchase warrants were outstanding:

ExerciseNumber of
    
    PriceWarrants
    
    $
    
    
    Expiry Date156,000
    
    0.50
    
    
    February 28, 2013


|12. | Stock Options                                                     
|--- | ------------------------------------------------------------------
|    |                                                                   
|    | The following table summarizes stock option plan
      activities:

| |                                                |  |           |  |  | Weighted |  |  | Weighted         |  |  |           | 
| | ---------------------------------------------- |  | --------- |  |  | -------- |  |  | ---------------- |  |  | --------- | 
| |                                                |  |           |  |  | Average  |  |  | Average          |  |  | Aggregate | 
| |                                                |  |           |  |  | Exercise |  |  | Remaining        |  |  | Intrinsic | 
| |                                                |  | Number of |  |  | Price    |  |  | Contractual Life |  |  | Value     | 
| |                                                |  | Options   |  |  | $        |  |  | (years)          |  |  | $         | 
| |                                                |  |           |  |  |          |  |  |                  |  |  |           | 
| | Outstanding, October 31, 2010 , 2011, and 2012 |  | 2,625,000 |  |  | 0.30     |  |  | 2.96             |  |  |          | 

A summary of the status of the
Companys non-vested shares and changes during the years ended October 31, 2012
and 2011 is presented below:

| |                                       |  |           |   |  | Weighted   | 
| | ------------------------------------- |  | --------- | - |  | ---------- | 
| |                                       |  |           |   |  | Average    | 
| |                                       |  |           |   |  | Grant Date | 
| |                                       |  | Number of |   |  | Fair Value | 
| |                                       |  | Options   |   |  | $          | 
| | Non-vested, October 31, 2010          |  | 250,000   |   |  | 0.19       | 
| | Vested                                |  | (250,000  | ) |  | 0.19       | 
| | Non-vested, October 31, 2011 and 2012 |  |          |   |  |           | 

F-15

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|12. | Stock Options(continued)                                                                  
|--- | ------------------------------------------------------------------------------------------
|    |                                                                                           
|    | Additional information regarding stock options as of
      October 31, 2012 is as follows:

| |           |  | Exercise |  |  |                   |  | 
| | --------- |  | -------- |  |  | ----------------- |  | 
| | Number of |  | Price    |  |  |                   |  | 
| | Options   |  | $        |  |  | Expiry
      Date |  | 
| | 2,000,000 |  | 0.15     |  |  | March 3, 2015     |  | 
| | 275,000   |  | 0.50     |  |  | July 23, 2017     |  | 
| | 350,000   |  | 1.00     |  |  | December 18, 2017 |  | 
| | 2,625,000 |  |          |  |  |                   |  | 

|13. | Commitments             
|--- | ------------------------
|    |                         
|    | a)                      
|    |                         
|    |                         
|    |                         
|    | b)                      
|    |                         
|14. | Supplemental
Disclosures

| |                                                    |  |         |  |  |      |  |  | Accumulated   | 
| | -------------------------------------------------- |  | ------- |  |  | ---- |  |  | ------------- | 
| |                                                    |  |         |  |  |      |  |  | from June 5,  | 
| |                                                    |  |         |  |  |      |  |  | 2006 (Date of | 
| |                                                    |  |         |  |  |      |  |  | Inception) to | 
| |                                                    |  |         |  |  |      |  |  | October 31,   | 
| |                                                    |  | 2012    |  |  | 2011 |  |  | 2012          | 
| |                                                    |  | $       |  |  | $    |  |  | $             | 
| | Non-cash investing and
      financing activities: |  |         |  |  |      |  |  |               | 
| | Shares issued for settlement of debt               |  | 167,400 |  |  |     |  |  | 167,400       | 
| |                                                    |  |         |  |  |      |  |  |               | 
| | Interest paid                                      |  |        |  |  |     |  |  |              | 
| | Income taxes paid                                  |  |        |  |  |     |  |  |              | 

F-16

---

ON4 COMMUNICATIONS INC.(A
Development Stage Company) Notes to the Financial Statements October 31,
2012 (Expressed in US dollars)

|15. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The Company has $7,565,815 of net operating losses
      carried forward to offset taxable income in future years which expire
      commencing in fiscal 2026. The income tax benefit differs from the amount
      computed by applying the federal income tax rate of 34% to net income
      (loss) before income taxes for the years ended October 31, 2012 and 2011,
      respectively, as a result of the following:

| |                                       |  | 2012     |   |  | 2011   |  
| | ------------------------------------- |  | -------- | - |  | ------ | -
| |                                       |  | $        |   |  | $      |  
| |                                       |  |          |   |  |        |  
| | Net income (loss) before
      taxes  |  | (907,401 | ) |  | 4,455  |  
| | Statutory rate                        |  | 34%      |   |  | 34%    |  
| |                                       |  |          |   |  |        |  
| | Expected tax recovery (expense)       |  | 308,516  |   |  | (1,515 | )
| | Permanent differences and
      other |  | (191,317 | ) |  | 80,317 |  
| | (78,802)                              |  | (117,199 | ) |  |        |  
| |                                       |  |          |   |  |        |  
| | Income tax provision                  |  |         |   |  |       |  

The significant components of deferred
income tax assets and liabilities as at October 31, 2012 and 2011, after
applying enacted corporate income tax rates, are as follows:

| |                                            |  | 2012       |   |  | 2011       |  
| | ------------------------------------------ |  | ---------- | - |  | ---------- | -
| |                                            |  | $          |   |  | $          |  
| |                                            |  |            |   |  |            |  
| | Net operating losses carried
      forward |  | 2,572,377  |   |  | 2,455,178  |  
| | Valuation allowance                        |  | (2,572,377 | ) |  | (2,455,178 | )
| |                                            |  |            |   |  |            |  
| | Net
      deferred tax asset               |  |           |   |  |           |  

Deferred tax benefits, which may arise
as a result of these losses, have not been recognized in these financial
statements, and have been offset by a valuation allowance. The following table
lists the fiscal year in which the loss was incurred and the expiration date of
the operating:

Net
      OperatingLossPeriod Incurred
    
    $
    
    
    Expiry Date2006
    
    282,206
    
    
    20262007
    
    2,168,732
    
    
    20272008
    
    1,987,017
    
    
    20282009
    
    1,026,834
    
    
    20292010
    
    1,524,551
    
    
    20302011
    
    231,771
    
    
    20312012
    
    344,704
    
    
    20327,565,815


|    | The Company is in arrears on filing its statutory income
      tax returns and it therefore has estimated the expected amount of loss
      carryforwards available once the outstanding returns are filed. The
      Company expects to have net operating loss carryforwards for income tax
      purposes available to offset future taxable income. In addition, the
      Company may be subject to penalties and interest for failure to file these
      returns and related schedules.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|16. | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

F-17

---

ON4 COMMUNICATIONS INC.(A Development Stage Company) Notes to the Financial
Statements October 31, 2012 (Expressed in US dollars)

|16. | Subsequent Events(continued)
|--- | ----------------------------
|    |                             
|    | c)                          
|    |                             
|    | d)                          

F-18

---

|Item 9. | Changes in and Disagreements With
      Accountants on Accounting and Financial Disclosure
|------- | ------------------------------------------------------------------------------------------

There were no disagreements related to accounting principles or
practices, financial statement disclosure, internal controls or auditing scope
or procedure during the two fiscal years and interim periods.

|Item 9A. | Controls and Procedures
|-------- | -----------------------

Managements Report on Disclosure Controls and
Procedures

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms, and that such
information is accumulated and communicated to our management, including our
president (who is acting as our principal executive officer and as our principal
financial officer and principle accounting officer) to allow for timely
decisions regarding required disclosure

As of October 31, 2012, the end of our fiscal year covered by
this report, we carried out an evaluation, under the supervision and with the
participation of our president (also our principal executive officer and our
principal financial and accounting officer), of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the foregoing,
our president (also our principal executive officer and our principal financial
and accounting officer) concluded that our disclosure controls and procedures
were not effective as of the end of the period covered by this annual report. In
its assessment of the effectiveness of internal control over financial reporting
as of October 31, 2012, we determined that there were control deficiencies that
constituted material weaknesses, as described below:

| | 1. | We did not maintain appropriate financial reporting
      controls As of October 31, 2012, our company has not maintained
      sufficient internal controls over financial reporting for the financial
      reporting process. As at October 31, 2012, our company did not have
      sufficient financial reporting controls with respect to timely financial
      reporting and the ability to process complex accounting
  issues.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Accordingly, our company concluded that these control
deficiencies resulted in a reasonable possibility that a material misstatement
of the annual or interim financial statements will not be prevented or detected
on a timely basis by our companys internal controls.

Managements Report on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting. Responsibility, estimates
and judgments by management are required to assess the expected benefits and
related costs of control procedures. The objectives of internal control include
providing management with reasonable, but not absolute, assurance that assets
are safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with managements authorization and
recorded properly to permit the preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United
States. Our management assessed the effectiveness of our internal control over
financial reporting as of October 31, 2012. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework. Our management has concluded that, as of
October 31, 2012, our internal control over financial reporting is effective.
Our management reviewed the results of their assessment with our Board of
Directors.

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

20

---

Inherent Limitations on Effectiveness of Controls

Internal control over financial reporting has inherent
limitations which include but is not limited to the use of independent
professionals for advice and guidance, interpretation of existing and/or
changing rules and principles, segregation of management duties, scale of
organization, and personnel factors. Internal control over financial reporting
is a process which involves human diligence and compliance and is subject to
lapses in judgment and breakdowns resulting from human failures. Internal
control over financial reporting also can be circumvented by collusion or
improper management override. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements on a
timely basis, however these inherent limitations are known features of the
financial reporting process and it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over
financial reporting that occurred during the year ended October 31, 2012 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.

|Item 9B. | Other Information
|-------- | -----------------

Effective July 23, 2012, Tom Locke resigned as chief financial
officer, secretary, treasurer and as a director of our company. His resignation
was not the result of any disagreements with our company regarding its
operations, policies, practices or otherwise.

Concurrently with Mr. Lockes resignation, we appointed Mr.
Ryan Madson, our current chief operating officer, as secretary, treasurer, chief
marketing officer, and as a director of our company, effective as of July 23,
2012.

PART III

|Item 10. | Directors, Executive Officers and Corporate
      Governance
|-------- | ------------------------------------------------------------

The following individuals serve as the directors and executive
officers of our company as of the date of this annual report. All directors of
our company hold office until the next annual meeting of our shareholders or
until their successors have been elected and qualified. The executive officers
of our company are appointed by our board of directors and hold office until
their death, resignation or removal from office.

Name
    Position Held with Our
      Company
    Age
    Date First Elected or
      AppointedClayton Moore
    President, Chief Executive Officer and
      Director
    35
    November 4, 2011Steven Allmen
    Director
    52
    November 4, 2011Ryan Madson
    Chief Operating Officer, Chief Marketing
      Officer, Secretary, Treasurer and Director
    38
    November 4, 2011


21

---

Business Experience

The following is a brief account of the education and business
experience during at least the past five years of each director, executive
officer and key employee of our company, indicating the persons principal
occupation during that period, and the name and principal business of the
organization in which such occupation and employment were carried out.

Clayton Moore  President, Chief Executive Officer and
Director

Mr. Moore is the founder and visionary of NetCents. After
attending Caledonia College (British Columbia) and specializing in business
administration, Mr. Moore began his career in the service industry as general
manager for Silver Springs, a large restaurant establishment in Radium Hot
Springs, British Columbia. After spending time in various management positions
in the service industry, Mr. Moore was inspired to create the first version of
the NetCents payment system. He spent the next 5 years creating and funding the
development of his first company, The Cybux Cash Card Company Ltd. Cybux was
tested in the British Columbia school systems and was eventually sold to a third
party which led to the creation of the next generation, a payment system
designed with total anonymity and security for buying goods and services over
the internet known as NetCents. Mr. Moore has been president of NetCents since
its incorporation in 2006.

Steven Allmen Director

Steven Allmen has over twenty years of experience working with
leading companies in the loyalty, retail, telecom, financial services and
marketing sectors. His experience in delivering strategic partnerships and
business solutions has enabled companies to achieve results and build market
leadership through innovative use of technology and business strategy. Mr.
Allmen has practical business experience across multiple industries having held
senior positions at Aeroplan Canada (current), The Hudsons Bay Company, Air
Miles and Compusearch Micromarketing. By combining his years of experience and
comprehensive understanding of market trends, Mr. Allmen can effectively advise
our company on business development strategies, new product development and
partnership programs that yield immediate results. Mr. Allmen is currently the
vice-president, New Partner Development, Aeroplan Canada at Groupe Aeroplan and
is responsible for new partner development, securing strategic alliances and
negotiating new contracts for Aeroplan, Canadas premier coalition loyalty
program. Mr. Allmen holds a BA, political science and history from York
University.

Ryan Madson  Chief Operating Officer, Chief Marketing
Officer, Secretary, Treasurer and Director

Mr. Madson is a versatile professional who has spent the better
part of his career in executive positions in the automotive and high tech
industries. As a graduate of business and engineering at Malaspina University,
he has the skill set in management and marketing required to execute the
business plan of NetCents. As chief executive officer of Cybux, Mr. Madson,
working with parents, teachers and school boards, created and developed a
successful rollout of a school cash card program that was integrated into six
school districts with a total of 20 schools.

Family Relationships

There are no family relationships between any of our directors,
executive officers and proposed directors or executive officers.

Involvement in Certain Legal Proceedings

None of our directors, executive officers, promoters or control
persons has been involved in any of the following events during the past five
years:

| | 1. | A petition under the Federal bankruptcy laws or any state
      insolvency law was filed by or against, or a receiver, fiscal agent or
      similar officer was appointed by a court for the business or property of
      such person, or any partnership in which he was a general partner at
      or within two years before the time of such filing, or any corporation or
      business association of which he was an executive officer at or within two
      years before the time of such filing;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

22

---

| | 2. | Such person was convicted in a criminal proceeding or is
      a named subject of a pending criminal proceeding (excluding traffic
      violations and other minor offenses);                                                                                                                                                                                                                                                                                                                                                                 
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 3. | Such person was the subject of any order, judgment, or
      decree, not subsequently reversed, suspended or vacated, of any court of
      competent jurisdiction, permanently or temporarily enjoining him from, or
      otherwise limiting, the following activities:                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | i.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | ii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | iii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 4. | Such person was the subject of any order, judgment or
      decree, not subsequently reversed, suspended or vacated, of any Federal or
      State authority barring, suspending or otherwise limiting for more than 60
      days the right of such person to engage in any activity described in
      paragraph (f)(3)(i) of this section, or to be associated with persons
      engaged in any such activity;                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 5. | Such person was found by a court of competent
      jurisdiction in a civil action or by the Commission to have violated any
      Federal or State securities law, and the judgment in such civil action or
      finding by the Commission has not been subsequently reversed, suspended,
      or vacated;                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 6. | Such person was found by a court of competent
      jurisdiction in a civil action or by the Commodity Futures Trading
      Commission to have violated any Federal commodities law, and the judgment
      in such civil action or finding by the Commodity Futures Trading
      Commission has not been subsequently reversed, suspended or
  vacated;                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 7. | Such person was the subject of, or a party to, any
      Federal or State judicial or administrative order, judgment, decree, or
      finding, not subsequently reversed, suspended or vacated, relating to an
      alleged violation of:                                                                                                                                                                                                                                                                                                    
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | i.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | ii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    | iii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | 8. | Such person was the subject of, or a party to, any
      sanction or order, not subsequently reversed, suspended or vacated, of any
      self-regulatory organization (as defined in Section 3(a)(26) of the
      Exchange Act (15 U.S.C. 78c(a)(26)), any registered entity (as defined in
      Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)), or any
      equivalent exchange, association, entity or organization that has
      disciplinary authority over its members or persons associated with a
      member.

23

---

Compliance with Section 16(a) of the Securities Exchange Act
of 1934

Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors and persons who own more
than 10% of a registered class of our equity securities to file with the
Securities and Exchange Commission initial statements of beneficial ownership,
reports of changes in ownership and annual reports concerning their ownership of
our shares of common stock and other equity securities, on Forms 3, 4 and 5,
respectively. Executive officers, directors and greater than 10% shareholders
are required by the Securities and Exchange Commission regulations to furnish us
with copies of all Section 16(a) reports they file.

Based solely on our review of the copies of such forms received
by our company, or written representations from certain reporting persons that
no Form 5s were required for those persons, we believe that, during the fiscal
year ended October 31, 2012, all filing requirements applicable to our officers,
directors and greater than 10% beneficial owners as well as our officers,
directors and greater than 10% beneficial owners of our subsidiaries were
complied with.

Code of Ethics

We have not yet adopted a code of ethics that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions because we have
not yet finalized the content of such a code. Companies whose equity securities
are quoted on the OTC Bulletin Board are not currently required to implement a
code of ethics.

Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that it does not have a
member of its audit committee that qualifies as an "audit committee financial
expert" as defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent"
as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities
Exchange Act of 1934, as amended.

We believe that the members of our board of directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. We
believe that retaining an independent director who would qualify as an "audit
committee financial expert" would be overly costly and burdensome and is not
warranted in our circumstances given the early stages of our development and the
fact that we have not generated any material revenues to date. In addition, we
currently do not have nominating, compensation or audit committees or committees
performing similar functions nor do we have a written nominating, compensation
or audit committee charter. Our board of directors does not believe that it is
necessary to have such committees because it believes the functions of such
committees can be adequately performed by our board of directors.

|Item 11. | Executive Compensation
|-------- | ----------------------

The particulars of the compensation paid to the following
persons:

| | (a) | our principal executive officer;                                                                                                                                                                                                                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                 
| | (b) | each of our two most highly compensated executive
      officers who were serving as executive officers at the end of the years
      ended October 31, 2012 and 2011; and                                                                      
| |     |                                                                                                                                                                                                                                                 
| | (c) | up to two additional individuals for whom disclosure
      would have been provided under (b) but for the fact that the individual
      was not serving as our executive officer at the end of the years ended
      October 31, 2012 and 2011,

24

---

who we will collectively refer to as the named executive
officers of our company, are set out in the following summary compensation
table, except that no disclosure is provided for any named executive officer,
other than our principal executive officers, whose total compensation did not
exceed $100,000 for the respective fiscal year:

|SUMMARY COMPENSATION
      TABLE                                                                            
|------------------------------------------------------------------------------------------------------------
|Name and principal
      position                                                                           
|Clayton Moore(1)President, Chief
      Executive Officer and Director                                       
|Tom Locke(2)Former Chief
      Financial Officer, Secretary, Treasurer and
      Director                   
|Ryan Madson(3)Chief Operating
      Officer, Chief Marketing Officer,Secretary,
      Treasurer and Director
|Gord Jessop(4)former President,
      Chief Operating Officer andDirector                                   
|Cameron Robb(5)former Chief
      Executive Officer, Chief Financial Officer
      and Director             

| | (1) | Mr. Moore was appointed on November 4, 2011.                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Mr. Locke served as chief financial officer, secretary,
      treasurer and as a director from November 4, 2011 until his resignation on
      June 23, 2012.                 
| | (3) | Mr. Madson has served as chief operating officer from
      November 4, 2011 and as chief marketing officer, secretary, treasurer and
      as a director since June 23, 2012.
| | (4) | Mr. Jessop resigned as president, chief operating officer
      and as a director on November 4, 2011.                                                                        
| | (5) | Mr. Robb resigned as chief executive officer, chief
      financial officer and as a director on November 4,
2011.                                                            

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. Our
directors and executive officers may receive share options at the discretion of
our board of directors in the future. We do not have any material bonus or
profit sharing plans pursuant to which cash or non-cash compensation is or may
be paid to our directors or executive officers, except that share options may be
granted at the discretion of our board of directors.

Stock Option Plan

On September 18, 2006 our directors approved the adoption of
our 2006 Non-Qualified Stock Option Plan (amended on October 10, 2006) which
permits our company to grant up to 1,500,000 options to acquire shares of common
stock, to directors, officers, employees and consultants of our company. Other
than the aforementioned 2006 Non-Qualified Option Plan, we do not have any other
equity compensation plans or arrangements.

25



---

2012 Grants of Plan-Based Awards

No equity or non-equity awards were granted to the named
executives in 2012.

Outstanding Equity Awards at Fiscal Year End

There were no outstanding equity awards as at October 31, 2012.

Option Exercises

During our fiscal year ended October 31, 2012, there were no
options exercised by our named officers.

Compensation of Directors

We do not have any agreements for compensating our directors
for their services in their capacity as directors, although such directors are
expected in the future to receive stock options to purchase shares of our common
stock as awarded by our board of directors.

We have determined that none of our directors are independent
directors, as that term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the
Securities Exchange Act of 1934, as amended, and as defined by Rule
4200(a)(15) of the NASDAQ Marketplace Rules.

Pension, Retirement or Similar Benefit Plans

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers. We have no
material bonus or profit sharing plans pursuant to which cash or non-cash
compensation is or may be paid to our directors or executive officers, except
that stock options may be granted at the discretion of the board of directors or
a committee thereof.

Indebtedness of Directors, Senior Officers, Executive
Officers and Other Management

None of our directors or executive officers or any associate or
affiliate of our company during the last two fiscal years, is or has been
indebted to our company by way of guarantee, support agreement, letter of credit
or other similar agreement or understanding currently outstanding.

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

The following table sets forth, as of February 11, 2013,
certain information with respect to the beneficial ownership of our common
shares by each shareholder known by us to be the beneficial owner of more than
5% of our common shares, as well as by each of our current directors and
executive officers as a group. Each person has sole voting and investment power
with respect to the shares of common stock, except as otherwise indicated.
Beneficial ownership consists of a direct interest in the shares of common
stock, except as otherwise indicated.

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|Name and Address of Beneficial Owner                                                                                                                              | Title of Class | Amount and Nature
      of Beneficial Ownership | Percentage of
      Class (1)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------- | ----------------------------------------------- | -----------------------------
|Clayton Moore (2)President, Chief
      Executive Officer, Director 1188 West Pender Street Vancouver,
      British Columbia Canada                              | Common         | Nil                                             | Nil                          
|Steven Allmen (2)Director 14
      Bernice Avenue Toronto, Ontario Canada                                                                                         | Common         | Nil                                             | Nil                          
|Tom Locke (3)Former Chief Financial
      Officer, Secretary, Treasurer and Director 102  628 West 12th
      Avenue Vancouver, British Columbia Canada          | Common         | Nil                                             | Nil                          
|Ryan Madson (2)Chief Operating Officer,
      Chief Marketing Officer, Secretary, Treasurer and Director
      6654 Jenkins Road Nanaimo, British Columbia Canada | Common         | Nil                                             | Nil                          
|John Kaczmarowski (4)Former Chief
      Technical Officer 3642 West 1st Avenue Vancouver, British
      Columbia Canada                                           | Common         | Nil                                             | Nil                          
|Directors and Officers as a group                                                                                                                                 | Common         | Nil                                             | Nil                          
|Magna Group LLC 5 Hanover Square New York, NY 10004                                                                                                               | Common         | 13,701,297                                      | 7.14%                        

| | (1) | Based on 191,999,434 shares of common stock issued and
      outstanding as of February 11, 2013. Except as otherwise indicated, we
      believe that the beneficial owners of the common shares listed above,
      based on information furnished by such owners, have sole investment and
      voting power with respect to such shares, subject to community property
      laws where applicable. Beneficial ownership is determined in accordance
      with the rules of the Securities and Exchange Commission and generally
      includes voting or investment power with respect to securities. Shares of
      common stock subject to options or warrants currently exercisable or
      exercisable within 60 days, are deemed outstanding for purposes of
      computing the percentage ownership of the person holding such option or
      warrants, but are not deemed outstanding for purposes of computing the
      percentage ownership of any other person.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | First appointed on November 4, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (3) | Mr. Locke served as Chief Financial Officer, Secretary,
      Treasurer and as a Director from November 4, 2011 until his resignation on
      June 23, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | (4) | Mr. Kaczmarowski served as Chief Technical Officer from November 4, 2011 until his resignation on October 1, 2012.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Changes in Control

On December 15, 2011, we entered into a share exchange
agreement with NetCents and the selling shareholders of NetCents. Pursuant to
the terms of the share exchange agreement, our company and NetCents agreed to
engage in a share exchange which, if completed, would result in NetCents
becoming a wholly owned subsidiary of our company. The share exchange has not
been completed as of the date of this Annual Report and is subject to completion
of due diligence by the parties, and to the following material terms and
conditions:

|1. | We will issue 2 shares of our common stock from treasury
      for every 1 share of NetCents stock issued and outstanding on the date of
      closing;
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------

27

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|2. | NetCents will have no more than 16,245,421 shares of its
      common stock issued and outstanding on the closing date of the Share
      Exchange Agreement. Additional issuances must be authorized by our
      company;                                                                                                                                                                                                       
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3. | NetCents will have delivered to our company audited
      financial statements for its last two fiscal years and any applicable
      interim period ended no more than 35 days before the closing of the share
      exchange agreement, prepared in accordance with United States GAAP and
      audited by an independent auditor registered with the Public Company
      Accounting Oversight Board in the United States; and
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4. | NetCents will file all required documentation with the
      Province of Alberta to effect the share exchange.                                                                                                                                                                                                                                                                                                                    

Also on December 15, 2011, NetCents received the approval for
the share exchange agreement and the share exchange transaction from holders of
approximately 76% of its voting securities through written resolution in lieu of
holding a meeting.

Consummation of the above referenced transaction would result
in a change of control of our company. Other than the aforementioned share
exchange agreement, we are unaware of any contract or other arrangement or
provisions of our Articles or Bylaws the operation of which may at a subsequent
date result in a change of control of our company. There are not any provisions
in our Articles or Bylaws, the operation of which would delay, defer, or prevent
a change in control of our company.

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

As at October 31, 2012, we owed $31,200 (October 31, 2011 -
$nil) to Tom Locke, our former chief financial officer, and director. The
amounts owing are unsecured, non-interest bearing, and due on demand.

As at October 31, 2012, we owed $2,329 (2011 - $nil) to Clayton
Moore, our president, chief executive officer, and director. The amounts owing
are unsecured, non-interest bearing and due on demand.

As at October 31, 2012, we owed $205,338 (2011 - $205,338) to
Cameron Robb, our former president, chief executive officer, and director. The
amounts owing are unsecured, non-interest bearing, and due on demand.

Except as disclosed herein, no director, executive officer,
shareholder holding at least 5% of shares of our common stock, or any family
member thereof, had any material interest, direct or indirect, in any
transaction, or proposed transaction during the year ended October 31, 2012, in
which the amount involved in the transaction exceeded or exceeds the lesser of
$120,000 or one percent of the average of our total assets at the year-end for
the last three completed fiscal years.

Director Independence

We currently act with three directors, consisting of Clayton
Moore, Steven Allmen and Ryan Madson. We have determined that none of our
directors is an independent director as defined in NASDAQ Marketplace Rule
4200(a)(15).

We do not have a standing audit, compensation or nominating
committee, but our entire board of directors acts in such capacities. We believe
that our members of our board of directors are capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting. The board of directors of our company does
not believe that it is necessary to have an audit committee because we believe
that the functions of an audit committee can be adequately performed by the
board of directors. In addition, we believe that retaining an independent
director who would qualify as an audit committee financial expert would be
overly costly and burdensome and is not warranted in our circumstances given the
early stages of our development.

28

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|Item 14. | Principal Accounting Fees and Services
|-------- | --------------------------------------

The aggregate fees billed for the most recently completed
fiscal year ended October 31, 2012 and for the fiscal year ended October 31,
2011 for professional services rendered by the principal accountant for the
audit of our annual financial statements and review of the financial statements
included in our quarterly reports on Form 10-Q and services that are normally
provided by the accountant in connection with statutory and regulatory filings
or engagements for these fiscal periods were as follows:

Year EndedOctober 31, 2012
      $
    **October 31,
      2011** $Audit Fees
    17,500
    18,250Audit Related Fees
    Nil
    NilTax Fees
    Nil
    NilAll Other Fees
    Nil
    NilTotal
    17,500
    18,250


Our board of directors pre-approves all services provided by
our independent auditors. All of the above services and fees were reviewed and
approved by the board of directors either before or after the respective
services were rendered.

Our board of directors has considered the nature and amount of
fees billed by our independent auditors and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
our independent auditors independence.

PART IV

|Item 15. | Exhibits, Financial Statement Schedules
|-------- | ---------------------------------------

|(a) | Financial Statements
|--- | --------------------
|    |                     
|    | (1)                 
|    |                     
|    | (2)                 
|    |                     
|(b) | Exhibits            

|Exhibit No. | Description                                                                                                                                  
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------
|(3)         | (i) Articles of
      Incorporation; (ii) By-laws                                                                                            
|3.1         | Articles of Incorporation (incorporated by
      reference to our Registration Statement filed on Form SB-2 on August 20,
      2004)        
|3.2         | By-Laws (incorporated by
      reference to our Registration Statement filed on Form SB-2 on August 20,
      2004)                          
|3.3         | Certificate of Amendment dated June 10, 2008
      (incorporated by reference to our Current Report on Form 8-K filed on June
      26, 2008)

29

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|Exhibit No. | Description                                                                                                                                                                                                                                                      
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.3         | Certificate of Merger dated May
      1, 2009 (incorporated by reference to our Current Report on Form 8- K
      filed on May 7, 2009)                                                                                                                          
|3.4         | Certificate of Amendment dated May 21, 2009
      (incorporated by reference to our Current Report on Form 8-K filed on July
      28, 2009)                                                                                                                     
|3.5         | Certificate of Amendment dated
      March 13, 2012 (incorporated by reference to our Current Report on Form
      8-K filed on May 1, 2012)                                                                                                                     
|3.6         | Certificate of Amendment dated November 30,
      2012 (incorporated by reference to our Current Report on Form 8-K filed on
      December 5, 2012)                                                                                                             
|(10)        | Material Contracts                                                                                                                                                                                                                                               
|10.1        | Merger Agreement between Sound Revolution Inc.
      and On4 Communications, Inc. dated March 12, 2009 (incorporated by
      reference to our Current Report on Form 8-K filed on March 16, 2009)                                                               
|10.2        | Merger Agreement Amendment
      between Sound Revolution Inc. and On4 Communications, Inc. dated March 26,
      2009 (incorporated by reference to our Current Report on Form 8-K filed on
      April 13, 2009)                                               
|10.3        | Asset Purchase Agreement between our company
      and On4 Communications, Inc. (Canada) dated April 29, 2010 (incorporated
      by reference to our Quarterly Report on Form 10-Q filed on June 22, 2010)                                                      
|10.4        | Asset Purchase Agreement
      between our company, Charity Tunes Inc., Bacchus Filings Inc., Bacchus
      Entertainment Ltd. and Penny Green dated April 30, 2010 (incorporated by
      reference to our Quarterly Report on Form 10-Q filed on June 22, 2010)
|10.5        | Acquisition Agreement between our company and
      Empire Success, LLC dated March 16, 2011 (incorporated by reference to our
      Quarterly Report on Form 10-Q filed on June 17, 2011)                                                                       
|10.6        | Letter of Intent between our
      company and NetCents Systems Ltd. (incorporated by reference to our
      Current Report on Form 8-K filed on November 9, 2011)                                                                                               
|10.7        | Share Exchange Agreement between our company
      and NetCents Systems Ltd., et al, dated December 15, 2011 (incorporated by
      reference to our Current Report on Form 8-K filed on December 19, 2011)                                                      
|(31)        | Rule 13a-14(a)/15d-14(a)
      Certifications                                                                                                                                                                                                                    
|31.1*       | Section 302 Certification pursuant to the
      Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal
      Financial Officer and Principal Accounting Officer                                                                                
|(32)        | Section 1350
      Certifications                                                                                                                                                                                                                                
|32.1*       | Section 906 Certification pursuant to the
      Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal
      Financial Officer and Principal Accounting Officer                                                                                
|(99)        | Additional Exhibits                                                                                                                                                                                                                                              
|99.1        | Audit Committee Charter dated September 30,
      2009 (incorporated by reference to our Annual Report on Form 10-K filed on
      February 16, 2010)                                                                                                            
|101**       | Interactive Data Files                                                                                                                                                                                                                                           
|101.INS     | XBRL Instance Document                                                                                                                                                                                                                                           
|101.SCH     | XBRL Taxonomy Schema                                                                                                                                                                                                                                             
|101.CAL     | XBRL Taxonomy Calculation Linkbase                                                                                                                                                                                                                               
|101.DEF     | XBRL Taxonomy Definition
      Linkbase                                                                                                                                                                                                                          
|101.LAB     | XBRL Taxonomy Label Linkbase                                                                                                                                                                                                                                     
|101.PRE     | XBRL Taxonomy Presentation
      Linkbase                                                                                                                                                                                                                        

|*  | Filed herewith.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|** | Furnished herewith. Pursuant to Rule 406T of
      Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are
      deemed not filed or part of any registration statement or prospectus for
      purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed
      not filed for purposes of Section 18 of the Securities and Exchange Act of
      1934, and otherwise are not subject to liability under those
      sections.

30

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                         | ON4
      COMMUNICATIONS, INC.                                  
|------------------------ | ----------------------------------------------------------------
|                         | (Registrant)                                                    
|                         |                                                                 
|                         |                                                                 
|Dated: February 13, 2013 | /s/ Clayton Moore                                               
|                         | Clayton Moore                                                   
|                         | President, Chief Executive Officer and Director                 
|                         | (Principal Executive Officer, Principal
      Financial Officer,
|                         | Principal Accounting Officer)                                   

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.

|Dated: February 13, 2013 | /s/ Clayton Moore                                               
|------------------------ | ----------------------------------------------------------------
|                         | Clayton Moore                                                   
|                         | President, Chief Executive Officer and Director                 
|                         | (Principal Executive Officer, Principal
      Financial Officer,
|                         | Principal Accounting Officer)                                   
|                         |                                                                 
|                         |                                                                 
|Dated: February 13, 2013 | /s/ Ryan Madson                                                 
|                         | Ryan Madson                                                     
|                         | Chief Operating Officer, Chief Marketing
      Officer,         
|                         | Secretary, Treasurer and Director                               
|                         |                                                                 
|                         |                                                                 
|Dated: February 13, 2013 | /s/ Steven Allmen                                               
|                         | Steven Allmen                                                   
|                         | Director                                                        

31

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