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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D. C. 20549

FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For Fiscal Year EndedApril 30, 2011

Commission File #000-27397

INOVA TECHNOLOGY, INC.(Exact name of registrant as specified in its charter)

NEVADA(State or other jurisdiction of
incorporation or organization)

98-0204280(IRS Employer Identification Number)

2300 W. Sahara Ave. Suite 800 Las Vegas, Nevada 89102(Address of principal executive offices) (Zip Code)

800-507-2810(Registrant's telephone no.,
including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:COMMON STOCK, $0.001 PAR VALUE

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
[   ]    No [   ]

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 [   ]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [  
]    No [   ]

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
Yes [   ]    No [   ]

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K 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, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

Large accelerated filer [   ]   
Accelerated filer [   ]    Non-accelerated filer
[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]

Number of shares of the registrant's common stock outstanding as
of August 5, 2011 was: 62,263,909.

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DOCUMENTS INCORPORATED BY REFERENCE

None

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Inova Technology Inc.

Form 10-K

Table of Contents

|           |                                                                                            | **Page**
|---------- | ------------------------------------------------------------------------------------------ | --------
|PART I    
|Item 1.    | Description of Business                                                                    | 4       
|Item 1A    | Risk Factors                                                                               | 4       
|Item 2.    | Description of Property                                                                    | 4       
|Item 3.    | Legal
      Proceedings                                                                    | 5       
|Item 4.    | Submission of Matters to a
      Vote of Security Holders                                  | 5       
|           |                                                                                            |         
|PART
II   
|Item 5.    | Market for
      Common Equity and Related Stockholder Matters                             | 6       
|Item 6     | Selected Financial Data                                                                    | 6       
|Item 7.    | Managements
      Discussion and Analysis of Financial Condition and result of Operations | 6       
|Item 8.    | Financial Statements                                                                       | 10      
|Item 9     | Changes in
      and Disagreements with Accountants on Accounting and Financial Disclosure | 47      
|Item 9A.   | Controls and Procedures                                                                    | 47      
|           |                                                                                            |         
|PART
  III
|Item 10.   | Directors,
      Executive Officers, and Corporate Governance                              | 48      
|Item 11.   | Executive Compensation                                                                     | 49      
|Item 12.   | Security
      Ownership of Certain Beneficial Owners and Management                       | 50      
|Item 13.   | Certain Relationships and
      Related Transactions                                       | 51      
|Item 14.   | Principal
      Accountant Fees and Services                                               | 51      
|           |                                                                                            |         
|PART IV   
|Item 15.   | Exhibits                                                                                   | 52      

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PART I

Item 1. Description of Business

Organization and History of the Company

Inova Technology Inc. (the Company) was incorporated in
Nevada in 1997, as Newsgurus.com, Inc. The company changed its name to Secure
Enterprise Solutions Inc. in 2002, then to Edgetech Services Inc. (Edgetech)
In 2007, the Company assumed its present name of Inova Technology, Inc.

In 2005, Edgetech entered into an agreement with the
shareholders of Webs Biggest, Inc., Mr. Xavier Roy of Los Angeles, California,
and Advisors LLC, (collectively, Webs Biggest) which resulted in Edgetech
issuing 25 million convertible preferred shares to the shareholders of Webs
Biggest in consideration for 100% of the outstanding capital of Webs Biggest
and $250,000 be used for general working capital of Edgetech.

In 2006, Edgetech bought certain assets of Data Management,
Inc., a Nevada corporation in exchange for 25 million convertible preferred
shares. The convertible shares used to acquire it represented approximately 90%
of the voting stock of Edgetech on a fully diluted basis. Concurrently, Edgetech
sold its wholly-owned subsidiary, Webs Biggest Limited, to Advisors LLC in
exchange for 25 million convertible preferred shares of Edgetech Services, Inc.
held by Advisors LLC. The 25 million convertible preferred shares given to buy
Data Management were the same 25 million convertible preferred shares received
from the sale of Webs Biggest.

Prior to these transactions described above, the Company was
controlled by Advisors LLC, an entity related to Mr. Paul Aunger, an officer and
director of the registrant. When the transactions described above were
completed, this resulted in a change of control of the Company and the
controlling shareholder became Southbase International Ltd., an entity related
to Mr. Adam Radly, an officer and director of the Company. Prior to these
transactions, the unaffiliated shareholders of the Company owned approximately
10% of the Registrant and they continued to own approximately 10% of the Company
on a fully diluted basis.

On May 1, 2007, Inova also acquired RightTag Inc. (RightTag),
a manufacturer of radio frequency identification (RFID) products.

On December 21, 2007, Inova acquired Texas-based Desert
Communications (Desert) for $5.9 million ($3.3 million paid in cash and $2.6
million to be paid under notes payable).

On September 1, 2008, Inova acquired Trakkers, LLC (Trakkers)
and Tesselon, LLC (Tesselon) for $6.1 million including $500,000 cash, $2.3
million to be paid under notes payable, $2 million paid in the form of a seller
note and $1.3 million of redeemable preferred stock (non-convertible and
nonvoting).

Description of the Companys Business

Inova is a technology holding company. Inova has five
subsidiaries. These subsidiaries and their respective businesses are listed
below:

|Subsidiary/Division         | Business                                                            
|--------------------------- | --------------------------------------------------------------------
|Edgetech Services Inc.      | IT services and consulting                                          
|Trakkers LLC                | RFID rentals                                                        
|RightTag, Inc.              | Manufacturer of radio frequency identification
      (RFID) Products
|                            |                                                                     
|Inova Technology Holdings   | Holding company                                                     
|Desert Communications, Inc. | IT consulting and sales and computer network
      solutions        

Item 1A. Risk Factors

Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995: Except for historical information, the
forward-looking matters discussed in this news release are subject to certain
risks and uncertainties which could cause the Company's actual results and
financial condition to differ materially from those anticipated by the
forward-looking statements including, but not limited to, the Company's
liquidity and the ability to obtain financing, the timing of regulatory
approvals, uncertainties related to corporate partners or third-parties, product
liability, the dependence on third parties for manufacturing and marketing,
patent risk, copyright risk, competition, and the early stage of products being
marketed or under development, as well as other risks indicated from time to
time in the Company's filings with the Securities and Exchange Commission. The
Company assumes no obligation to update or supplement forward-looking statements
that become untrue because of subsequent events.

Item 2. Description of Property

Inova does not own any real estate property.

4

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Leases:

There is an office lease for Desert, effective May 2008 until
August 2011. Rent is payable at $6,300 per month including tax. The lease has
not been renewed to date and Desert plans to continue on a month-to-month basis.

There is an office lease for Trakkers, effective until April
2012. Rent is payable at $3,300 per month including tax.

Rent expense was $115,492 and $163,647 for fiscal 2011 and
2010, respectively. No real estate is owned by the Inova companies.

Item 3. Legal Proceedings

In May, 2010 Ascendiant filed suit for collection of the
$833,906 principal and interest described in Note 10. The suit was stayed to New
York and Inova and Desert have been dismissed. Ascendiant filed a new suit in a
different California court for the same action; the suit is pending.

Item 4. Submission of Matters to a Vote of Security Holders
and Small Business Issuer Purchases of Securities

No matters were submitted to a vote of security holders through
solicitation or otherwise during the fourth quarter of the fiscal year covered
by this report.

5

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PART II.

Item 5. Market for Common Equity and Related Stockholder
Matters

The Companys common stock is traded on the pink sheets under
the symbol INVA.OB Our CUSIP No. is 45776L209.

The following table lists the high and low closing sales prices
for each quarter on the OTCBB for our common shares for the past two fiscal
years and are adjusted for our 400 to 1 reverse stock split which was effective
on November 12, 2008 and a forward 20:1 split October, 2010. There are
approximately 56 shareholders of record, 1 of which is a holder for several
hundred individuals. The below quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not represent actual
transactions.

**High**
    
    
    **Low**4/30/2011
    
    .06
    
    
    .071/31/2011
    
    .20
    
    
    .4010/31/2010
    
    .03
    
    
    .207/31/2010
    
    .02
    
    
    .054/30/2010
    
    .13
    
    
    .051/31/2010
    
    .13
    
    
    .0310/31/2009
    
    .15
    
    
    .087/31/2009
    
    .13
    
    
    .05


There are no restrictions that limit our ability to pay
dividends on our common stock. We have not declared any dividends since
incorporation and we do not anticipate doing so in the foreseeable future. Our
present policy is to retain future earnings for use in our operations and
expansion of our business.

Item 6. Selected Financial Data

N/A

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

The information contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operation contains "forward
looking statements."Actual results may materially differ from those
projected in the forward looking statements as a result of certain risks and
uncertainties set forth in this report. Although our management believes that
the assumptions made and expectations reflected in the forward looking
statements are reasonable, there is no assurance that the underlying assumptions
will, in fact, prove to be correct or that actual future results will not be
materially different from the expectations expressed in this Annual Report. The
following discussion should be read in conjunction with the Companys
Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Intangible assets

Intangible assets with definite lives are recorded at cost and
amortized using the straight-line method over their estimated useful lives.

6

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Impairment of long-lived assets

The Company reviews the carrying value of its definite lived
intangible assets at least annually. Other long-lived assets, including
intangibles, are reviewed whenever events or changes in circumstances indicate
that the historical-cost carrying value of an asset may no longer be
appropriate. The Company assesses recoverability of the asset by comparing the
undiscounted future net cash flows expected to result from the asset to its
carrying value. If the carrying value exceeds the undiscounted future net cash
flows of the asset, an impairment loss is measured and recognized. An impairment
loss is measured as the difference between the net book value and the fair value
of the long-lived asset.

Goodwill and other indefinite intangibles

Goodwill and other intangibles with indefinite lives are not
amortized but are reviewed for impairment at least annually, or more frequently
if an event or circumstance indicates that an impairment may have occurred. To
test for impairment, the fair value of each reporting unit is compared to the
related net book value, including goodwill. If the net book value of the
reporting unit exceeds the fair value, an impairment loss is measured and
recognized. An income approach is utilized to estimate the fair value of each
reporting unit. The income approach is based on the projected debt-free cash
flow, which is discounted to the present value using discount factors that
consider the timing and risk of cash flows.

Embedded conversion features

The Company evaluates embedded conversion features within
convertible debt and convertible preferred stock under ASC 815 Derivatives and
Hedging to determine whether the embedded conversion feature should be
bifurcated from the host instrument and accounted for as a derivative at fair
value with changes in fair value recorded in earnings. If the conversion feature
does not require derivative treatment under ASC 815, the instrument is evaluated
under ASC 470-20 Debt with Conversion and Other Options for consideration of
any beneficial conversion feature.

Revenue and cost recognition

Inova has four sources of revenues: IT network design and
implementation from Desert, computer equipment sales from Desert, IT consulting
services from Edgetech, and sales of RFID items from RightTag rental income from
Trakkers/Tesselon. Revenue that is received before it is earned is classified as
deferred revenue.

IT network design and implementation:

Revenues from fixed-price contracts are recognized on the
percentage-of-completion method, measured by the percentage of cost incurred to
date to estimated total cost for each contract. This method is used because
management considers total cost to be the best available measure of progress on
the contracts. Because of inherent uncertainties in estimating costs, it is at
least reasonably possible that the estimates used will change within the near
term.

Contract costs include all direct material and labor costs and
those indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs, and depreciation. Selling, general and administrative
costs are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and income, which are recognized
in the period in which the revisions are determined. Changes in estimated job
profitability resulting from job performance, job conditions, contract penalty
provisions, claims, change orders, and settlements, are accounted for as changes
in estimates in the current period.

The asset, Costs and estimated earnings in excess of billings
on uncompleted contracts, represents revenues recognized in excess of amounts
billed. The liability, Billings in excess of costs and estimated earnings on
uncompleted contracts, represents billings in excess of revenues
recognized.

Computer equipment sales, IT consulting services & sales
of RFID items:

Revenue is recognized when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the
price is fixed or determinable, and collectability is reasonably assured.

Rental income for RFID items:

The Company follows Staff Accounting Bulletin No. 104
recognizing RFID rental income. Revenue generally is realized or realizable and
earned when all of the following criteria are met: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered;
(3) the sellers price to the buyer is fixed or determinable; and (4)
collectability is reasonably assured. A rental contract term can be daily or
weekly. Consistent with SAB 104, the Companys policy recognizes revenue from
equipment rentals in the period earned on a straight-line basis, over the
contract term, regardless of the timing of the billing to customers. Revenue
from the sale of new and used equipment and parts is recognized at the time of
delivery to, or pick-up by, the customer and when all obligations under the
sales contract have been fulfilled, risk of ownership has been transferred and
collectability is reasonably assured. Services revenue is recognized at the time
the services are rendered.

7

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Stock based compensation

ASC 718, Accounting for Stock-Based Compensation" established
financial accounting and reporting standards for stock-based employee
compensation plans. It defines a fair value based method of accounting for an
employee stock option or similar equity instrument. In January 2006, Inova
implemented ASC 718, and accordingly, Inova accounts for compensation cost for
stock option plans in accordance with ASC 718. Inova accounts for share based
payments to non-employees in accordance with ASC 505-50 Accounting for Equity
Instruments Issued to Non-Employees for Acquiring, or in Conjunction with
Selling, Goods or Services.

RESULTS OF OPERATIONS FOR THE YEAR ENDED APRIL 30, 2011
COMPARED TO YEAR ENDED APRIL 30, 2010

Total revenues (net sales) increased from $21,032,779 for the twelve month period ending April 2010 to $22,121,789 for the twelve month period ending April 30, 2011. This is primarily the result of an increase in awarded contracts compared to the previous year.

The Companys selling, general and administrative expenses
increased from $5,202,442 for the twelve months ending April 30, 2010 to
$5,731,783 for the same period in 2011. This is primarily the result of the loss
on transfer of assets under Deserts credit facility and legal expenses and
payroll from Desert Communications and Trakkers.

Last fiscal year, the Company reported a net loss from
continuing operations of $7,063,039 as compared to a loss of $3,350,377 for the fiscal year ended April 30, 2011. The
decreased loss is due to the $2.5 million interest charge in 2010 that resulted
from defaulted notes accelerating discount amortization

As of the date of the filing the Company is attempting to
restructure its debt with Boone and some other creditors. If successful there
would be a significant decrease in the current portion of debt outstanding,
interest rate reductions and extended maturity dates. If unsuccessful, we will
continue to be in default on these loans and incur additional interest expense.

We are exploring various ways to address our debt including
restructuring the debt with current lenders and refinancing with new lenders.
However, there can be no assurance that the Company will be successful.

The other item impacting equity in fiscal 2011 is a one-time
$2.5 million impairment charge to goodwill due to the curtailment of contracts
in Trakkers.

8

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EBITDA for the years ending April 30, 2011 and 2010 was
$1,595,054 and $ 1,981,979 for the year ending April 30, 2010. EBITDA is
Earnings before interest, tax, depreciation and amortization. Inova also
excludes the non-cash loss on derivative liabilities and impairment charges from
its EBITDA calculation.

|                          |   | Year ended     |   |   | Year ended     |  
|------------------------- | - | -------------- | - | - | -------------- | -
|EBITDA                    |   | April 30, 2011 |   |   | April 30, 2010 |  
|Net loss                  | $ | (3,350,377     | ) | $ | (7,063,039     | )
|                          |   |                |   |   |                |  
|Interest                  |   | 2,310,272      |   |   | 5,704,217      |  
|                          |   |                |   |   |                |  
|Tax                       |   | 80,746         |   |   | 59,626         |  
|                          |   |                |   |   |                |  
|Depreciation/Amortization |   | 865,390        |   |   | 1,167,469      |  
|                          |   |                |   |   |                |  
|Impairment loss           |   | 2,525,375      |   |   | 1,594,073      |  
|                          |   |                |   |   |                |  
|Derivative (gain) loss    |   | (836,353       | ) |   | 519,633        |  
|                          |   |                |   |   |                |  
|EBITDA                    | $ | 1,595,053      |   | $ | 1,981,979      |  

LIQUIDITY AND CAPITAL RESOURCES

As of April 30, 2011, we had cash and cash equivalents totaling
$396,140, current assets were $2,954,486, current liabilities were $18,232,634
and total stockholders deficit was $10,215,169. Working capital deficit
decreased from $(15,378,190) at April 30, 2010 to $(15,278,148) at April 30,
2011.

The working capital increased due to higher cash in 2011 as
compared to 2010. Since we are attempting to modify most of the notes some
lenders have agreed to us not making payments currently. This has caused the
notes to be in default and therefore are showing as current liabilities. It is
not likely the company will be required to pay significant principal in the near
future.

Both main subsidiaries (Trakkers and Desert) have working
capital turn ratios 3 to 4 times higher than industry averages for their
respective comparable companies.

As shown in the accompanying financial statements, we have
incurred recurring losses from operations, we have an accumulated deficit and
negative working capital as of April 30, 2011. These conditions raise
substantial doubt as to our ability to continue as a going concern. While we
have significant EBITDA we are not able to make all required debt payments
currently. Management is trying to raise additional capital through sales of
stock and refinancing debt. The financial statements do not include any
adjustments that might be necessary if we are unable to continue as a going
concern.

OFF-BALANCE SHEET ARRANGEMENTS

None.

9

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Item 8. Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors Inova Technology, Inc. Santa
Monica, California

We
have audited the accompanying consolidated balance sheets of Inova Technology,
Inc. (Inova), as of April 30, 2011 and 2010 and the related consolidated
statements of operations, changes in stockholders equity and cash flows for the
years ended April 30, 2011 and 2010. These consolidated financial statements are
the responsibility of Inovas management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

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

In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Inova
as of April 30, 2011 and 2010 and the results of its consolidated operations and
its consolidated cash flows for the years ended April 30, 2011 and 2010 in
conformity with accounting principles generally accepted in the United States of
America.

The
accompanying financial statements have been prepared assuming that Inova will
continue as a going concern. Inova incurred losses from operations for fiscal
2011 and 2010 and has a working capital deficit as of April 30, 2011. These
factors raise substantial doubt about Inovas ability to continue as a going
concern. Management's plans in regard to these matters are described in Note 3.
The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

MALONEBAILEY, LLP www.malonebailey.com Houston,
Texas August 8, 2011

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INOVA TECHNOLOGY, INC.CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                                                                                |   | April 30, 2011 |   |   | April 30, 2010 |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | -------------- | - | - | -------------- | -
|ASSETS                                                                                                                                                                                                                                                          |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Current assets                                                                                                                                                                                                                                                  |   |                |   |   |                |  
|Cash                                                                                                                                                                                                                                                            | $ | 396,140        |   | $ | 336,746        |  
|Accounts
      receivables                                                                                                                                                                                                                                      |   | 184,789        |   |   | 109,500        |  
|Contract receivables, net of
      allowance of $21,746 and $21,822                                                                                                                                                                                             |   | 782,286        |   |   | 2,011,853      |  
|Credit facility
      receivable                                                                                                                                                                                                                                |   | 1,230,596      |   |   | 952,562        |  
|Inventory                                                                                                                                                                                                                                                       |   | 100,471        |   |   | 93,335         |  
|Costs in excess
      of billing and estimated earnings                                                                                                                                                                                                         |   | 229,039        |   |   | 290,329        |  
|Prepaid and other current assets                                                                                                                                                                                                                                |   | 31,165         |   |   | 46,423         |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Total current assets                                                                                                                                                                                                                                            |   | 2,954,486      |   |   | 3,840,748      |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Fixed assets, net                                                                                                                                                                                                                                               |   | 149,104        |   |   | 185,017        |  
|Revenue earning
      equipment, net                                                                                                                                                                                                                            |   | 892,690        |   |   | 1,250,929      |  
|Intangible assets, net                                                                                                                                                                                                                                          |   | -              |   |   | 463,976        |  
|Goodwill, net                                                                                                                                                                                                                                                   |   | 4,157,596      |   |   | 6,669,454      |  
|Other Assets                                                                                                                                                                                                                                                    |   | 6,121          |   |   | 50,432         |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Total assets                                                                                                                                                                                                                                                    | $ | 8,159,997      |   | $ | 12,460,556     |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                                                                                                                           |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Current liabilities                                                                                                                                                                                                                                             |   |                |   |   |                |  
|Accounts payable                                                                                                                                                                                                                                                | $ | 950,149        |   | $ | 2,152,657      |  
|Accrued liabilities                                                                                                                                                                                                                                             |   | 2,861,923      |   |   | 1,465,859      |  
|Deferred income                                                                                                                                                                                                                                                 |   | 442,669        |   |   | 424,872        |  
|Derivative liabilities                                                                                                                                                                                                                                          |   | 2,515,687      |   |   | 5,607,940      |  
|Notes payable -
      related parties                                                                                                                                                                                                                           |   | 1,200,000      |   |   | 1,650,000      |  
|Notes payable, net of
      unamortized discount of $0 and $134,816                                                                                                                                                                                             |   | 10,262,206     |   |   | 7,917,610      |  
|Total current liabilities                                                                                                                                                                                                                                       |   | 18,232,634     |   |   | 19,218,938     |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Notes payable -
      net of current maturities                                                                                                                                                                                                                 |   | -              |   |   | 137,898        |  
|Notes payable - related parties,
      net of current maturities                                                                                                                                                                                                |   | 142,532        |   |   | 142,532        |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Total liabilities                                                                                                                                                                                                                                               |   | 18,375,166     |   |   | 19,499,368     |  
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Stockholders' deficit                                                                                                                                                                                                                                           |   |                |   |   |                |  
|Convertible
      preferred stock, $0.001 par value; 25,000,000
      shares               authorized;
      1,500,000 shares issued and outstanding (As
      of               April
      30, 2011 and 2010, shares are included in non-controlling interest) |   | -              |   |   | -              |  
|Common stock,
      $0.001 par value; 150,000,000
      shares               authorized;
      61,263,909 and 56,338,300 shares issued and outstanding                                                                                                          |   | 61,264         |   |   | 56,338         |  
|Additional
      paid-in capital                                                                                                                                                                                                                                |   | 4,937,526      |   |   | 4,768,432      |  
|Non-controlling interest                                                                                                                                                                                                                                        |   | 1,307,506      |   |   | 1,307,506      |  
|Accumulated
      deficit                                                                                                                                                                                                                                       |   | (16,521,465    | ) |   | (13,171,088    | )
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Total stockholders' deficit                                                                                                                                                                                                                                     |   | (10,215,169    | ) |   | (7,038,812     | )
|                                                                                                                                                                                                                                                                |   |                |   |   |                |  
|Total liabilities and stockholders' deficit                                                                                                                                                                                                                     | $ | 8,159,997      |   | $ | 12,460,556     |  

See summary of accounting policies and notes to consolidated
financial statements.

---

INOVA TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF
OPERATIONSFor the years ended April 30, 2011 and 2010

|                                            |   | 2011        |   |   | 2010        |  
|------------------------------------------- | - | ----------- | - | - | ----------- | -
|Revenues                                    | $ | 22,121,789  |   | $ | 21,032,779  |  
|                                            |   |             |   |   |             |  
|Cost of revenues                            |   | (15,245,413 | ) |   | (14,340,559 | )
|Selling, general and administrative         |   | (5,731,783  | ) |   | (5,202,442  | )
|Depreciation expense                        |   | (69,942     | ) |   | (80,405     | )
|Amortization expense                        |   | (450,453    | ) |   | (654,975    | )
|Impairment loss                             |   | (2,525,375  | ) |   | (1,594,073  | )
|                                            |   |             |   |   |             |  
|Operating loss                              |   | (1,901,177  | ) |   | (839,675    | )
|                                            |   |             |   |   |             |  
|Other income (expense):                     |   |             |   |   |             |  
|Interest income                             |   | 24,719      |   |   | -           |  
|Other income                                |   | -           |   |   | 486         |  
|Gain (Loss) on derivative
      liabilities |   | 836,353     |   |   | (519,633    | )
|Interest expense                            |   | (2,310,272  | ) |   | (5,704,217  | )
|                                            |   |             |   |   |             |  
|Net loss                                    | $ | (3,350,377  | ) | $ | (7,063,039  | )
|                                            |   |             |   |   |             |  
|Basic and diluted income (loss) per share   | $ | (0.06       | ) | $ | (0.14       | )
|                                            |   |             |   |   |             |  
|Weighted average common shares outstanding  |   | 58,560,338  |   |   | 50,093,080  |  

See summary of accounting policies and notes to consolidated
financial statements.

---

INOVA TECHNOLOGY, INC.CONSOLIDATED STATEMENT OF STOCKHOLDERS
EQUITYYears ended April 30, 2011 and 2010

Common Stock
    
    
    Preferred Stock
    
    
    Additional
    
    
    Non-Controlling
    
    
    RetainedShares
    
    
    Par (0.001)
    
    
    Shares
    
    
    Par (0.001)
    
    
    Paid-in Capital
    
    
    Interest
    
    
    Deficit
    
    
    TotalBalances at April 30, 2009
    
    49,011,580
    
    $
    49,012
    
    
    1,500,000
    
    $
    1,500
    
    $
    5,734,201
    
    $
    -
    
    $
    (5,951,584
    )
    $
    (166,871
    )Cumulative effect of change in accounting
      principle- reclassification of derivative
      liabilities
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (232,642
    )
    
    -
    
    
    (156,465
    )
    
    (389,107
    )Reclassification of derivative liabilities
      to additional paid-in capital
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    680,779
    
    
    -
    
    
    -
    
    
    680,779Reclassification of derivative liabilities from additional
      paid-in capital
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (614,945
    )
    
    -
    
    
    -
    
    
    (614,945
    )Reclassification of preferred stock to
      non-controlling interest
    
    -
    
    
    -
    
    
    -
    
    
    (1,500
    )
    
    (1,306,006
    )
    
    1,307,506
    
    
    -
    
    
    -Common stock issued for cash
    
    1,762,960
    
    
    1,763
    
    
    -
    
    
    -
    
    
    93,237
    
    
    -
    
    
    -
    
    
    95,000Common stock issued for services
    
    4,140,760
    
    
    4,141
    
    
    -
    
    
    -
    
    
    245,748
    
    
    -
    
    
    -
    
    
    249,889Common stock issued for prior year accrued liabilities
    
    423,000
    
    
    423
    
    
    -
    
    
    -
    
    
    45,226
    
    
    -
    
    
    -
    
    
    45,649Common stock issued for conversion of notes
      payable
    
    1,000,000
    
    
    1,000
    
    
    -
    
    
    -
    
    
    39,500
    
    
    -
    
    
    -
    
    
    40,500Discount on notes payable from beneficial conversion
      feature
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    83,333
    
    
    -
    
    
    -
    
    
    83,333Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,063,039
    )
    
    (7,063,039
    )Balances at April 30, 2010
    
    56,338,300
    
    
    56,338
    
    
    1,500,000
    
    
    -
    
    
    4,768,432
    
    
    1,307,506
    
    
    (13,171,088
    )
    
    (7,038,812
    )Common stock issued for services
    
    3,425,609
    
    
    3,426
    
    
    -
    
    
    -
    
    
    105,344
    
    
    -
    
    
    -
    
    
    108,770Common stock issued for conversion of notes
      payable
    
    1,500,000
    
    
    1,500
    
    
    -
    
    
    -
    
    
    59,250
    
    
    -
    
    
    -
    
    
    60,750Common stock warrants issued for services
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    56,500
    
    
    -
    
    
    -
    
    
    56,500Reclassification of derivative liabilities
      from additional paid-in capital
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (52,000
    )
    
    -
    
    
    -
    
    
    (52,000
    )Net loss
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    -
    
    
    (3,350,377
    )
    
    (3,350,377
    )Balances at April 30, 2011
    
    61,263,909
    
    $
    61,264
    
    
    1,500,000
    
    $
    -
    
    $
    4,937,526
    
    $
    1,307,506
    
    $
    (16,521,465
    )
    $
    (10,215,169
    )


See summary of accounting policies and notes to consolidated
financial statements.

---

INOVA TECHNOLOGY, INC.CONSOLIDATED STATEMENTS OF CASH
FLOWSFor the years ended April 30, 2011 and 2010

|                                                                                                         |   | 2011       |   |   | 2010       |  
|-------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                     |   |            |   |   |            |  
|Net loss                                                                                                 | $ | (3,350,377 | ) | $ | (7,063,039 | )
|Adjustments
      to reconcile net loss to net cash used provided by operating activities:               |   |            |   |   |            |  
|Depreciation expense, $344,995 and
      $432,089 included in cost of revenues                           |   | 414,937    |   |   | 512,494    |  
|Amortization expense - loan discounts
      and deferred financing costs                                 |   | 128,900    |   |   | 4,358,975  |  
|Amortization expense - intangible                                                                        |   | 450,453    |   |   | 654,975    |  
|Paid in kind interest                                                                                    |   | 183,401    |   |   | -          |  
|Impairment loss                                                                                          |   | 2,525,375  |   |   | 1,594,073  |  
|Stock issued for services                                                                                |   | 108,770    |   |   | 249,889    |  
|Warrants issued for services                                                                             |   | 56,500     |   |   | -          |  
|Write off of accounts payable                                                                            |   | -          |   |   | (254,839   | )
|Derivative (gain) loss                                                                                   |   | (836,353   | ) |   | 519,633    |  
|Changes
      in operating assets and liabilities:                                                       |   |            |   |   |            |  
|Accounts receivable                                                                                      |   | 1,154,278  |   |   | (40,137    | )
|Credit facility receivable                                                                               |   | (278,034   | ) |   | (952,562   | )
|Inventory                                                                                                |   | (7,136     | ) |   | (21,610    | )
|Costs in excess of billing and estimated earnings                                                        |   | 61,290     |   |   | (252,005   | )
|Prepaid expenses and other current assets                                                                |   | 15,258     |   |   | 10,139     |  
|Other assets                                                                                             |   | 44,311     |   |   | -          |  
|Accounts payable and accrued expenses                                                                    |   | 193,562    |   |   | 967,830    |  
|Deferred revenues                                                                                        |   | 17,797     |   |   | 20,682     |  
|Net cash provided by operating activities
      of operations                                            |   | 882,932    |   |   | 304,498    |  
|                                                                                                         |   |            |   |   |            |  
|CASH FLOW INVESTING ACTIVITIES                                                                           |   |            |   |   |            |  
|Purchase of fixed assets                                                                                 |   | (20,785    | ) |   | (40,876    | )
|Net cash used in investing activities                                                                    |   | (20,785    | ) |   | (40,876    | )
|                                                                                                         |   |            |   |   |            |  
|CASH FLOW FINANCING ACTIVITIES                                                                           |   |            |   |   |            |  
|Proceeds from sale of stock                                                                              |   | -          |   |   | 95,000     |  
|Proceeds from notes payable                                                                              |   | 103,500    |   |   | 2,015,181  |  
|Repayments made on notes payable                                                                         |   | (456,253   | ) |   | (3,183,966 | )
|Proceeds from notes payable - related parties                                                            |   | -          |   |   | 160,736    |  
|Repayments made on notes payable - related parties                                                       |   | (450,000   | ) |   | (101,721   | )
|Net cash used in financing activities                                                                    |   | (802,753   | ) |   | (1,014,770 | )
|                                                                                                         |   |            |   |   |            |  
|NET CHANGE IN CASH                                                                                       |   | 59,394     |   |   | (751,148   | )
|CASH AT BEGINNING OF YEAR                                                                                |   | 336,746    |   |   | 1,087,894  |  
|CASH AT END OF YEAR                                                                                      | $ | 396,140    |   | $ | 336,746    |  
|                                                                                                         |   |            |   |   |            |  
|SUPPLEMENTAL INFORMATION:                                                                                |   |            |   |   |            |  
|Interest
      paid                                                                                      | $ | 584,547    |   | $ | 851,845    |  
|Income
      taxes paid                                                                                  | $ | -          |   | $ | -          |  
|                                                                                                         |   |            |   |   |            |  
|NON-CASH INVESTINGAND FINANCING ACTIVITIES:                                                              |   |            |   |   |            |  
|Common
      stock issued for partial payment of notes payable and accrued liabilities                   | $ | -          |   | $ | 45,649     |  
|Common
      stock issued for conversion of debt                                                         |   | 60,750     |   |   | 40,500     |  
|Discount
      on notes payable from beneficial conversion features and warrants                         |   | -          |   |   | 83,333     |  
|Cumulative
      effect of change in accounting principle-reclassification of derivative
      liability |   | -          |   |   | 420,162    |  
|Reclassification of preferred stock to non-controlling interest                                          |   | -          |   |   | 1,307,506  |  
|Reclassification of derivative liabilities to additional paid-in
      capita                            |   | -          |   |   | 680,779    |  
|Reclassification of derivative liabilities from additional paid-in
      capita                          |   | 52,000     |   |   | 614,945    |  
|Reclassification of put notes from derivative liabilities                                                |   | 2,307,900  |   |   | 1,375,000  |  
|Financed
      fixed asset purchase                                                                      |   | -          |   |   | 18,492     |  
|Discount
      on notes payable from derivative liabilities                                              |   | -          |   |   | 1,000,499  |  

See summary of accounting policies and notes to consolidated
financial statements

---

INOVA TECHNOLOGY, INC. NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE 1  HISTORY AND ORGANIZATION OF THE COMPANY

Inova Technology, Inc. (Inova and the Company) was
incorporated in Nevada on May 16, 1997, as Newsgurus.com, Inc. and changed its
name to Secure Enterprise Solutions Inc. on January 10, 2002, then to Edgetech
Services Inc. and on August 17, 2006 to Inova Technology, Inc.

15

---

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

These consolidated financial statements include the accounts of
Inova Technology, Inc. and its wholly owned subsidiaries Edgetech Services, Inc.
(Edgetech), RightTag, Inc. (RightTag), Desert Communications, Inc.
(Desert), Inova Technology Holdings, LLC., Trakkers, LLC (Trakkers) and
Tesselon, LLC (Tesselon). Significant inter-company accounts and transactions
have been eliminated.

Use of estimates

The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amount of
revenues and expenses during the year. Actual results could differ from these
estimates.

Reclassifications

Certain prior year amounts have been reclassified to conform
with the current year presentation.

Cash and cash equivalents

For purposes of the statement of cash flows, Inova considers
all highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.

Accounts receivable

Trade and other accounts receivable are carried at face value
less any provisions for uncollectible accounts considered necessary. Accounts
receivable primarily include contract receivables from customers in Texas. Bad
debt expense is recognized based on managements estimate of likely losses per
year, based on past experience and an estimate of current year uncollectible
amounts. The allowance for doubtful accounts was $21,746 and $21,822 as of April
30, 2011 and 2010, respectively.

Inventory

Inventories are stated at the lower of cost or market. Cost is
determined by the average cost method for all inventories. Inventories consist
primarily of components and finished products held for sale. Rapid technological
change and new product introductions and enhancements could result in excess or
obsolete inventory. To minimize this risk, Inova evaluates inventory levels and
expected usage on a periodic basis and records adjustments as required.

16

---

Property and equipment

Property and equipment, including revenueproducing rental
equipment are carried at cost, less accumulated depreciation and amortization.
Additions are capitalized and maintenance and repairs are charged to expense as
incurred. Depreciation and amortization is provided principally on the
straight-line basis method over the estimated useful lives of the assets. When
property is retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the accounts and any resulting gains or losses are
credited or charged to operations.

Intangible assets

Intangible assets with definite lives are recorded at cost and
amortized using the straight-line method over their estimated useful lives.

Impairment of long-lived assets

The Company reviews the carrying value of its definite lived
intangible assets at least annually. Other long-lived assets, including
intangibles, are reviewed whenever events or changes in circumstances indicate
that the historical-cost carrying value of an asset may no longer be
appropriate. The Company assesses recoverability of the asset by comparing the
undiscounted future net cash flows expected to result from the asset to its
carrying value. If the carrying value exceeds the undiscounted future net cash
flows of the asset, an impairment loss is measured and recognized. An impairment
loss is measured as the difference between the net book value and the fair value
of the long-lived asset. Impairment charges of $13,517 and $99,185 were recorded
for the years ended April 30, 2011 and 2010, respectively.

Goodwill and other indefinite intangibles

Goodwill and other intangibles with indefinite lives are not
amortized but are reviewed for impairment at least annually, or more frequently
if an event or circumstance indicates that an impairment may have occurred. To
test for impairment, the fair value of each reporting unit is compared to the
related net book value, including goodwill. If the net book value of the
reporting unit exceeds the fair value, an impairment loss is measured and
recognized. An income approach is utilized to estimate the fair value of each
reporting unit. The income approach is based on the projected debt-free cash
flow, which is discounted to the present value using discount factors that
consider the timing and risk of cash flows. Impairment charges of $2,511,858 and
$1,494,888 were recorded for the years ended April 30, 2011 and 2010,
respectively.

Embedded conversion features

Inova evaluates embedded conversion features within convertible
debt and convertible preferred stock under ASC 815 Derivatives and Hedging to
determine whether the embedded conversion feature should be bifurcated from the
host instrument and accounted for as a derivative at fair value with changes in
fair value recorded in earnings. If the conversion feature does not require
derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20
Debt with Conversion and Other Options for consideration of any beneficial
conversion feature.

Income taxes

Inova uses the liability method of accounting for income taxes.
Under this method, deferred income taxes are recorded to reflect the tax
consequences on future years of temporary differences between the tax basis of
assets and liabilities and their financial amounts at year-end. Inova provides a
valuation allowance to reduce deferred tax assets to their net realizable value.

17

---

Revenue and cost recognition

Inova has five sources of revenues: Information techonology
(IT) network design and implementation from Desert, computer equipment sales
from Desert, IT consulting services from Edgetech, sales of radio frequency
identification (RFID) items from RightTag and rental income from Trakkers and
Tesselon. Revenue that is received before it is earned is classified as deferred
revenue.

IT network design and implementation:

Revenues from fixed-price contracts are recognized on the
percentage-of-completion method, measured by the percentage of cost incurred to
date to estimated total cost for each contract. This method is used because
management considers total cost to be the best available measure of progress on
the contracts. Because of inherent uncertainties in estimating costs, it is at
least reasonably possible that the estimates used will change within the near
term.

Contract costs include all direct material and labor costs and
those indirect costs related to contract performance, such as indirect labor,
supplies, tools, repairs, and depreciation. Selling, general and administrative
costs are charged to expense as incurred. Provisions for estimated losses on
uncompleted contracts are made in the period in which such losses are
determined. Changes in job performance, job conditions, and estimated
profitability may result in revisions to costs and income, which are recognized
in the period in which the revisions are determined. Changes in estimated job
profitability resulting from job performance, job conditions, contract penalty
provisions, claims, change orders, and settlements, are accounted for as changes
in estimates in the current period.

The asset, Costs and estimated earnings in excess of billings
on uncompleted contracts, represents revenues recognized in excess of amounts
billed. The liability, Billings in excess of costs and estimated earnings on
uncompleted contracts, represents billings in excess of revenues recognized.

Computer equipment sales, IT consulting services & sales
of RFID items:

Revenue is recognized when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, the
price is fixed or determinable, and collectability is reasonably assured.

Rental income for RFID items:

The Company follows Staff Accounting Bulletin (SAB) No. 104
recognizing RFID rental income. Revenue generally is realized or realizable and
earned when all of the following criteria are met: (1) persuasive evidence of an
arrangement exists; (2) delivery has occurred or services have been rendered;
(3) the sellers price to the buyer is fixed or determinable; and (4)
collectability is reasonably assured. A rental contract term can be daily or
weekly. Consistent with SAB 104, the Companys policy recognizes revenue from
equipment rentals in the period earned on a straight-line basis, over the
contract term, regardless of the timing of the billing to customers. Revenue
from the sale of new and used equipment and parts is recognized at the time of
delivery to, or pick-up by, the customer and when all obligations under the
sales contract have been fulfilled, risk of ownership has been transferred and
collectability is reasonably assured. Services revenue is recognized at the time
the services are rendered.

Stock based compensation

ASC 718, Accounting for Stock-Based Compensation" established
financial accounting and reporting standards for stock-based employee
compensation plans. It defines a fair value based method of accounting for an
employee stock option or similar equity instrument. In January 2006, Inova
implemented ASC 718, and accordingly, Inova accounts for compensation cost for
stock option plans in accordance with ASC 718. Inova accounts for share based
payments to non-employees in accordance with ASC 505-50 Accounting for Equity
Instruments Issued to Non-Employees for Acquiring, or in Conjunction with
Selling, Goods or Services.

18

---

Basic and diluted net income (loss) per share

Basic loss per share is computed using the weighted average
number of shares of common stock outstanding during each period. Diluted loss
per share includes the dilutive effects of common stock equivalents on an as if
converted basis. For the years ended April 30, 2011 and 2010, potential
dilutive securities had an anti-dilutive effect and were not included in the
calculation of diluted net loss per common share.

Financial Instruments

The carrying amount of our financial instruments, consisting of
cash equivalents, accounts receivable, accounts and notes payable, short-term
borrowings and certain other liabilities, approximate their fair value due to
their relatively short maturities. The carrying amount of our long-term debt
approximates fair value since the stated rate of interest approximates a market
rate of interest.

Transfers and Servicing of Financial Assets and
Liabilities

The Company accounts for transfers and servicing of financial
assets and liabilities in accordance with ASC 860-10 (formerly SFAS 140)
Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities. When the conditions are met for the transfer of assets or
liabilities to qualify as a sale, the assets or liabilities are derecognized and
the gain or loss on the sale is determined at the date of transfer based upon
the amount at which the assets and liabilities are transferred less any fees,
discounts and other charges. The Company recognizes any servicing assets and
servicing liabilities at their fair value using the fair value measurement
method as prescribed by ASC 860-10. As of April 30, 2011 and 2010, the Companys
servicing asset consisted of a gross margin receivable due from a third party
that purchased accounts receivable and accounts payable from us. The carrying
amounts of our gross margin receivable approximates its fair value due to its
relatively short maturity.

Derivative Financial Instruments

Inova does not use derivative instruments to hedge exposures to
cash flow, market, or foreign currency risks. Inova evaluates all of it
financial instruments to determine if such instruments are derivatives or
contain features that qualify as embedded derivatives. For derivative financial
instruments that are accounted for as liabilities, the derivative instrument is
initially recorded at its fair value and is then re-valued at each reporting
date, with changes in the fair value reported as charges or credits to income.
For option-based simple derivative financial instruments, Inova uses the
Black-Scholes option-pricing model to value the derivative instruments at
inception and subsequent valuation dates. For complex embedded derivatives,
Inova uses a Monte Carlo simulation model to value the derivative instruments at
inception and subsequent valuation dates. The classification of derivative
instruments, including whether such instruments should be recorded as
liabilities or as equity, is re-assessed at the end of each reporting period.
Derivative instrument liabilities are classified in the balance sheet as current
or non-current based on whether or not net-cash settlement of the derivative
instrument could be required within 12 months of the balance sheet date.

Fair Value Measurements

In September 2006, the FASB issued ASC 820 which defines fair
value, establishes a framework for measuring fair value, and expands disclosures
about fair value measurements. The provisions of ASC 820 were effective January
1, 2008. As defined in ASC 820, fair value is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (exit price). The Company
utilizes market data or assumptions that market participants would use in
pricing the asset or liability, including assumptions about risk and the risks
inherent in the inputs to the valuation technique. These inputs can be readily
observable, market corroborated, or generally unobservable. The Company
classifies fair value balances based on the observability of those inputs. ASC
820 establishes a fair value hierarchy that prioritizes the inputs used to
measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1
measurement) and the lowest priority to unobservable inputs (level 3
measurement).

19

---

The three levels of the fair value hierarchy defined by ASC 820
are as follows:

Level 1  Quoted prices are available in active markets for
identical assets or liabilities as of the reporting date. Active markets are
those in which transactions for the asset or liability occur in sufficient
frequency and volume to provide pricing information on an ongoing basis. Level 1
primarily consists of financial instruments such as exchange-traded derivatives,
marketable securities and listed equities.

Level 2  Pricing inputs are other than quoted prices in active
markets included in level 1, which are either directly or indirectly observable
as of the reported date. Level 2 includes those financial instruments that are
valued using models or other valuation methodologies. These models are primarily
industry-standard models that consider various assumptions, including quoted
forward prices for commodities, time value, volatility factors, and current
market and contractual prices for the underlying instruments, as well as other
relevant economic measures. Substantially all of these assumptions are
observable in the marketplace throughout the full term of the instrument, can be
derived from observable data or are supported by observable levels at which
transactions are executed in the marketplace. Instruments in this category
generally include non-exchange-traded derivatives such as commodity swaps,
interest rate swaps, options and collars.

Level 3  Pricing inputs include significant inputs that are
generally less observable from objective sources. These inputs may be used with
internally developed methodologies that result in managements best estimate of
fair value.

The following tables set forth assets and liabilities measured
at fair value on a recurring and non-recurring basis by level within the fair
value hierarchy as of April 30, 2011 and 2010. As required by ASC 820, financial
assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement. The Companys
assessment of the significance of a particular input to the fair value
measurement requires judgment, and may affect the valuation of fair value assets
and liabilities and their placement within the fair value hierarchy levels.

|Liabilities Measured at Fair Value on 
      a Recurring
      Basis |  | April 30, 2011 | 
|-------------------------------------------------------------------- |  | -------------- | 
|                                                                     |  | **Level 1**    | 
|Derivative and warrant liabilities                                   |  | -              | 

|                                   |  | April 30, 2010 | 
|---------------------------------- |  | -------------- | 
|                                   |  | **Level 1**    | 
|Derivative and warrant liabilities |  | -              | 

The derivatives listed above are carried at fair value. The
fair value amounts in current period earnings associated with the Companys
derivatives resulted from Level 3 fair value methodologies; that is, the
Companys pricing inputs include significant inputs that are generally less
observable from objective sources. These inputs may be used with internally
developed methodologies that result in managements best estimate of fair
value.

20

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|                                                      |                |         |  |  |         |  |   |           |  |   |           |  |   |             | 
|----------------------------------------------------- | -------------- | ------- |  |  | ------- |  | - | --------- |  | - | --------- |  | - | ----------- | 
|Assets Measured at Fair Value ona Non-Recurring Basis | April 30, 2011 |         |  |  |        
|                                                      |                | Level 1 |  |  | Level 2 |  |   | Level 3   |  |   | Total     |  |   | Gain (Loss) | 
|Goodwill & Intangible Assets                          |                | -       |  |  | -       |  | $ | 4,157,596 |  | $ | 4,157,596 |  | $ | 2,525,375   | 

|                             | April 30, 2010 |         |  |  |        
|---------------------------- | -------------- | ------- |  |  | -------
|                             |                | Level 1 |  |  | Level 2
|Goodwill & Intangible Assets |                | -       |  |  | -      

In accordance with the provisions of ASC 360-10 Accounting for
the Impairment and Disposal of Long-Lived Assets, for the year ended April 30,
2011, long-lived intangible assets with a carrying amount of $13,517 were
written down to their fair value of $0, resulting in an impairment charge of
$13,517, which was included in earnings for the year ended April 30, 2011.

In accordance with the provisions of ASC 360-10 Accounting for
the Impairment and Disposal of Long-Lived Assets, for the year ended April 30,
2010, long-lived intangible assets with a carrying amount of $563,161 were
written down to their fair value of $463,976, resulting in an impairment charge
of $99,185, which was included in earnings for the year ended April 30, 2010.

In accordance with the provisions of ASC 350-20 Goodwill and
Other Intangible Assets, for the year ended April 30, 2011, goodwill with a
carrying amount of $6,669,454 was written down to its implied fair value of
$4,157,596, resulting in an impairment charge of $2,511,858, which was included
in earnings for year ended April 30, 2011.

In accordance with the provisions of ASC 350-20 Goodwill and
Other Intangible Assets, for the year ended April 30, 2010, goodwill with a
carrying amount of $8,164,342 was written down to its implied fair value of
$6,669,454, resulting in an impairment charge of $1,494,888, which was included
in earnings for year ended April 30, 2010.

Recent accounting pronouncements

Inova does not expect the adoption of recently issued
accounting pronouncements to have a significant impact on our results of
operations, financial position or cash flow.

NOTE 3  GOING CONCERN

As shown in the accompanying financial statements, we have
incurred a losses of $3,350,377 and $7,063,039 for the years ended April 30,
2011 and 2010, and have an accumulated deficit of $16,521,465 and negative
working capital of $15,278,148 as of April 30, 2011. These conditions raise
substantial doubt as to our ability to continue as a going concern. The
consolidated financial statements contained herein do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should we be unable to continue in existence. Our ability to continue as a going
concern is dependent upon our ability to generate sufficient cash flows to meet
our obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain profitable operations. However, there is no
assurance that profitable operations or sufficient cash flows will occur in the
future. Management is trying to raise additional capital through sales of stock
and refinancing debt.

21

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NOTE 4  CONTRACT RECEIVABLES & CREDIT FACILITY
RECEIVABLE

|                           |   | 30-Apr-11 |  |   | 30-Apr-10 | 
|-------------------------- | - | --------- |  | - | --------- | 
|Completed contracts        | $ | 669,486   |  | $ | 1,897,777 | 
|Contracts in progress      |   | 112,800   |  |   | 114,076   | 
|Total contract receivables | $ | 782,286   |  | $ | 2,011,853 | 

Costs, estimated earnings, and billings on uncompleted
contracts are summarized as follows:

|                                        |   | 30-Apr-11  |   |   | 30-Apr-10 |  
|--------------------------------------- | - | ---------- | - | - | --------- | -
|Costs incurred on uncompleted contracts | $ | 1,016,219  |   | $ | 587,038   |  
|Estimated earnings                      |   | 581,875    |   |   | 372,457   |  
|Less: billings to date                  |   | (1,369,055 | ) |   | (669,165  | )
|Total                                   | $ | 229,039    |   | $ | 290,329   |  

Included in the accompanying balance sheet under the following
captions:

|                                                                                  |   | 30-Apr-11 |  |   | 30-Apr-10 | 
|--------------------------------------------------------------------------------- | - | --------- |  | - | --------- | 
|Costs and estimated earnings in excess of
      billings on uncompleted contracts | $ | 229,039   |  | $ | 290,329   | 
|Billings in excess of costs and estimated earnings on
      uncompleted contracts |   | -         |  |   | -         | 
|Total                                                                             | $ | 229,039   |  | $ | 290,329   | 

22

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Credit Facility Receivable:

On December 30, 2009, the Company entered into a series of
related agreements with New England Technology Finance, LLC (NETF) providing
for NETF to purchase eligible accounts receivable balances and to finance
qualified purchases (as defined). This facility is comprised of three
components: (1) an Asset Purchase and Liability Assumption Agreement (the
APLA), under which NETF finances certain of the Company's qualified product
purchases in connection with consummating sales to customers and (2) an Asset
Purchase Agreement (the APA), and (3) a Master Servicing Agreement (MSA).

Qualified product purchases financed by NETF under the APLA are
repaid from collections of accounts receivable balances that the Company
generates from its sales of such products to customers. The Company transfers
title to the invoices to NETF at the time these sales are financed and delivery
is made to the customer. The Company pays contractual financing and servicing
fees to NETF for its financing of these purchases in an amount that is equal to
a percentage of the gross profit margin on such sales. The percentages fees vary
based on the (a) amount of gross profit on such sales, and (b) number of days in
which the receivables from such sales remain uncollected.

NETF remits periodically to the Company an amount equal to the
monthly gross profit margin on the sales less the contractual fees. The APLA
also provides for the Company to repurchase, after 90 days, at NETFs request,
any amounts that remain by the customer at a repurchase price equal to the
outstanding balance due on the account. NETF pre-approves all product purchases
and the credit worthiness of the Company's customers under this arrangement as a
precondition to financing the sale.

Under the APA, the Company transfers eligible accounts
receivable to NETF in exchange for advances of up to 75% of their gross amount
less the amount of any liability to a third party assumed by NETF with respect
to the purchased accounts. NETF charges the Company fees (the Discount Factor)
in an amount equal to the LIBOR rate plus 4% per annum on advances made at the
time of the transfer. The Company also retains servicing rights under the MSA.
Under the terms of the MSA, the Company manages collections and other ongoing
interactions with its customers in exchange for fees amounting to approximately
20% of the gross invoice amount NETF settles fees payable to the Company under
this arrangement net of the Discount Factor.

The APA also provides for the Company to repurchase, after 90
days, at NETFs request, any amounts that remain unpaid by the customer at a
repurchase price equal to 75% of the outstanding balance due on the account;
however such repurchases are limited to 15% of all receivables transferred to
NETF under this arrangement. In addition, NETF pre-approves the credit
worthiness of the Company's customers under this arrangement as a precondition
to purchasing any invoice.

The Company accounts for its transfers of accounts receivable
to NETF under each of these agreements in accordance with the provision of ASC
860-10 (formerly SFAS 140) Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities as sales of such accounts receivable
balances. The gain or loss on sales of receivables NETF is determined at the
date of transfer based upon the amount at which they are transferred to NETF
less any fees, discounts and other charges provided under the agreements. The
Company has determined that all transfers of receivables and payables to NETF
under the above agreement qualify as sales because (1) the transferred assets
and liabilities have been isolated from Desert (2) NETF has the right to pledge
or exchange the assets and (3) Desert does not maintain effective control over
the transferred assets. During fiscal 2011 and 2010, the Company recognized a
loss on these sales of $296,829 and $66,227, which is the amount of fees
incurred on gross margin advances noted above. As of April 30, 2011 and 2010,
the gross margin receivable owed to Desert as a result of the servicing
agreement was $1,230,596 and $952,562. The carrying amounts of our gross margin
receivable approximates its fair value due to its relatively short maturity.

During the year ended April 30, 2011, Desert sold approximately
$14.5 million of accounts receivable to NETF and NETF assumed approximately $9
million in accounts payable related to these assets.

During the year ended April 30, 2010, Desert sold approximately
$4.5 million of accounts receivable to NETF and NETF assumed approximately $3
million in accounts payable related to these assets.

This facility contains customary affirmative and negative
covenants as well as specific provisions related to the quality of the accounts
receivables sold. The Company has also indemnified NETF for the risk of loss
under any transferred balances except for loss incurred as a result of customer
credit risk.

23

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NOTE 5  PROPERTY AND EQUIPMENT

Property and equipment consisted of the following at April 30,
2011 and 2010:

|                                     |  | Life          |  |   | 2011       |   |   | 2010       |  
|------------------------------------ |  | ------------- |  | - | ---------- | - | - | ---------- | -
|Office equipment                     |  | 2 to 10 years |  | $ | 100,850    |   | $ | 92,900     |  
|Office furniture                     |  | 7 to 8 years  |  |   | 37,504     |   |   | 37,504     |  
|Vehicles                             |  | 3 to 5 years  |  |   | 275,857    |   |   | 299,010    |  
|Leasehold improvements               |  | 3.25          |  |   | 164,944    |   |   | 164,944    |  
|Scanners (revenue earning equipment) |  | 5 years       |  |   | 2,011,023  |   |   | 2,088,518  |  
|                                     |  |               |  |   |            |   |   |            |  
|Subtotal                             |  |               |  |   | 2,590,178  |   |   | 2,682,876  |  
|Less: accumulated depreciation       |  |               |  |   | (1,548,384 | ) |   | (1,246,930 | )
|                                     |  |               |  |   |            |   |   |            |  
|Total                                |  |               |  | $ | 1,041,794  |   | $ | 1,435,946  |  

Depreciation expense totaled $414,937 and $512,494 in 2011 and
2010, respectively. Depreciation on scanners is included cost of revenues in the
consolidated statements of operations. For the years ended April 30, 2011 and
2010, $344,995 and $432,089 of depreciation expense was included in cost of
revenues, respectively. During the year ended April 30, 2011, Inova wrote off
$113,483 of fixed assets that were fully depreciated during the year.

NOTE 6  GOODWILL AND INTANGIBLES

RightTag:

In May 2007 when Inova acquired RightTag, Inova accounted for
the acquisition using the purchase method of accounting for business
combinations. The purchase price and costs associated with the acquisition
exceeded the fair value of net assets acquired by $436,572, which was
preliminarily assigned to goodwill.

During 2008, Inova completed the valuation of the intangible
assets acquired in the RightTag transaction. Pursuant to the valuation, purchase
price of $135,702 was assigned to the customer list acquired and the remaining
$300,870 was assigned to goodwill. During fiscal 2009, goodwill impairment of
$158,075 was recorded, resulting in a carrying value of $142,795. The customer
list was fully amortized during fiscal 2010.

An impairment analysis on the goodwill was performed at April
30, 2011 and 2010 and no impairment to goodwill was recorded.

Desert:

In December 2007 when Inova acquired Desert, Inova accounted
for the acquisition using the purchase method of accounting for business
combinations. The purchase price and costs associated with the acquisition
exceeded the fair value of net assets acquired by $4,275,000, of which $860,555
was assigned to the customer list and employment agreements acquired and the
remaining $3,315,918 was assigned to goodwill. The customer list and employment
agreements were fully amortized as of April 30, 2011.

An impairment analysis on the goodwill was performed at April
30, 2011 and 2010 and no impairment to goodwill was recorded.

Webs Biggest:

In June 2005 when Inova acquired Webs Biggest, it was recorded
as a reverse acquisition whereby Webs Biggest purchased Inovas assets and
liabilities to be recorded at fair value. In 2008, Inova completed its valuation
of the assets and liabilities acquired in the Webs Biggest merger. Pursuant to
the valuation, purchase price of $360,641 was assigned to the customer list
acquired and the remaining $2,612,304 was assigned to goodwill.

An impairment analysis at April 30, 2010 was undertaken and
impairment to goodwill of $1,494,888 was recorded;all goodwill was impaired as
of April 30, 2010 due to there being no remaining customers or active contracts
associated with this business segment as of April 30, 2010.

24

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Trakkers:

In September 2008 when Inova acquired Trakkers, Inova accounted
for the acquisition using the purchase method of accounting for business
combinations. The purchase price and costs associated with the acquisition
exceeded the fair value of net assets acquired by $4,232,454, of which
$1,021,713 for were assigned to customer list and employment agreements and the
remaining $3,210,741 was assigned to goodwill.

An impairment analysis on the goodwill was performed at April
30, 2011 and 2010 and $2,511,858 and $0 of impairment to goodwill was
recorded.

Goodwill and Intangible Assets consists of the following as of
April 30, 2010 and 2011:

Goodwill
    
    2011
    
    
    2010RightTag
    $
    142,795
    
    $
    142,795Desert
    
    3,315,918
    
    
    3,315,918Trakkers/Tesselon
    
    698,883
    
    
    3,210,741Total
    $
    4,157,596
    
    $
    6,669,454


Intangible Assets
    
    Life
    
    
    2011
    
    
    2010Desert  customer list
    
    3 years
    
    $
    498,930
    
    $
    498,930Trakkers/Tesselon  customer list
    
    3 years
    
    
    496,179
    
    
    496,179Trakkers  employment
      agreements
    
    3 years
    
    
    525,534
    
    
    525,534Subtotal
    
    
    
    
    1,520,643
    
    
    1,520,643Less: accumulated amortization
    
    
    
    
    (1,520,643
    )
    
    (1,056,667
    )Total
    
    
    
    $
    -
    
    $
    463,976


For the years ended April 30, 2011 and 2010, Inova recorded
amortization expenses of $450,453 and $654,975, respectively.

25

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NOTE 7  RELATED-PARTY TRANSACTIONS

A summary of changes in related-party payable account for the
years ended April 30, 2011 and 2010 is as follows:

2011
    
    
    2010Beginning balance
    $
    1,792,532
    
    $
    1,733,517Proceeds from the related-party payable
    
    -
    
    
    150,000Less: repayments made on related-party
      payable
    
    (450,000
    )
    
    (90,985
    )Total related-party payable
    $
    1,342,532
    
    $
    1,792,532


Related-party payable account consisted of the following as of
April 30, 2010 and 2011:

2011
    
    
    2010Due to Southbase, entity related to CEO.
      Matures May 2017, 7%, unsecured
    $
    142,532
    
    $
    142,532Due to Desert sellers, notes obtain from
      acquisition. Matured December 2010 (in default), 18%, secured by all
      common stock of Desert
    
    1,200,000
    
    
    1,500,000Due to Desert sellers, working capital
      facility, 18% Matured December 2010, unsecured
    
    -
    
    
    150,000Total related-party payable
    
    1,342,532
    
    
    1,792,532Less: current maturities
    
    (1,200,000
    )
    
    (1,650,000
    )Long-term portion of related-party payable
    $
    142,532
    
    $
    142,532


26

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Advisors, LLC & Webs Biggest, Inc.

Advisors, LLC is a company owned by Paul Aunger, a director of
the Company. The Company has a consulting agreement with Advisors, LLC for
payments of $1,000 per month. Advisors, LLC owns Webs Biggest, Inc.

In April, 2010 Advisors, LLC purchased 1,762,960 shares of
common stock for $95,000. In addition, 890,760 shares with a fair value of
$46,765 were issued for consulting services provided.

During fiscal 2011, 2,248,649 shares of common stock with a
fair value of $96,000 were issued to Advisors, LLC for services rendered.
Advisors, LLC is controlled by a director of the Company. The fair value of the
stock was recorded to expense during the quarter ended October 31, 2010.

No amounts were owed to Advisors, LLC as of April 30, 2011 and
2010.

Southbase International, Limited(Southbase)

Southbase is a company related to Adam Radly, our CEO. The
Company has a consulting agreement with Southbase earning fees of
$20,000 per month.

During fiscal 2010, Southbase, International received 2,500,000
shares of Inova common stock with a fair value of $130,000 for partial payment
of outstanding amounts owed.

Desert Sellers

There are notes payable to the previous owners of Desert
Communications in the amount of $1,200,000 and accrued interest of $619,451 and
$315,466 as of April 30, 2011 and 2010. The notes are secured by all of the
common stock of Desert. On December 1, 2009, the sellers agreed to extend the
maturity of these notes through December 1, 2010. The notes are now in default.
As a result of the extension, the interest rate increased to 18%. Prior to
December 1, 2009, the interest rate was 7%. See Note 8 below for the accounting
impact of this modification. During fiscal 2011, $300,000 was repaid on the
these notes.

The sellers also participated in a working capital facility and
loaned $150,000 to the Company during fiscal 2010. The note bears interest at
18%, is due December, 2010 and is unsecured. This note was repaid in fiscal
2011.

The Desert sellers are paid bonuses based on the operating
results of Desert. As of April 30, 2011 and 2010, $37,475 and $217,622 of
bonuses owed to the Desert sellers and are included in accrued liabilities in
the consolidated balance sheet.

27

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NOTE 8  NOTES PAYABLE

Convertible Note Payable  Ascendiant Opportunity Fund, LLC
(Ascendiant):

In July 2008, a note payable of $500,000 with an original issue
discount of $52,875 was issued for 1.5 years by Ascendiant. It is secured by all
assets of Desert. The note is convertible into shares of Inova common stock at
$0.075 per share. In addition, 52,896,400 warrants to purchase Inova common
stock were issued with this note. As a result of the conversion feature and
warrants, a discount of $447,125 was recorded to be amortized over the term of
the note using the effective interest method. See below for information on the
accounting for the conversion feature and warrants. As of April 30, 2011 and
2010, this note was in default and due on demand and as a result, all of the
remaining unamortized discount has been amortized as of April 30, 2010. During
the years ended April 30, 2010 $456,370 of the discount was amortized to
interest expense.

This loan has the following financial requirements:

- Maintain cash plus availability under IBM $2.5 million line of credit of
  $250,000 or greater;
- EBITDA of $1.7 million for 12 month period ending December 31, 2008 and
  $300,000 for each 3-month period beginning December 31, 2007;
- No concentration above $2.5 million to any supplier through the IBM
  facility;
- No concentration above 20% to any single customer;
- No single accounts payable more than the greater of $300,000 or 20% of the
  accounts receivable balance under 60 days. The portion beyond 90 days past due
  must be less than 10% of the total accounts receivable.

As of April 30, 2011 and 2010, the Company was not in
compliance with these covenants. As a result the note is in default and the
interest rate increased from 15% to 18%.

Inova analyzed the conversion option for derivative accounting
consideration under ASC 815 Derivatives and Hedging. Inova determined that
derivative accounting is not applicable. Inova then analyzed the conversion
option under ASC 470-20 Debt with Conversion and Other Options and determined
there was a beneficial conversion feature resulting in a discount to the note of
$182,642.

2,644,820 warrants with a fair value of $264,483 were issued to
Ascendiant with this note. The warrants expire in July 2013. They have an
aggregated exercise price of $200. The warrant shares are subject to a put
option agreement whereby anytime between January 1, 2010 and July 1, 2013,Ascendiant can require Inova torepurchase from Ascendiant the
warrant shares for $250,000. Under ASC 815-40 Put Warrants, warrants for put
shares should be classified as liabilities and measured at fair value at the end
of each reporting period with the change in fair value recorded to earnings. As
a result, the fair value of these warrants was recorded as a derivative
liability. Upon exercise of the put option, if Inova does not repurchase the
shares within 30 days, the resulting liability with become a convertible note
that is convertible into shares of Inova common stock.

The convertible note and warrant agreements both contain
dilutive issuance clauses. Under these clauses, based on future issuances of
Inova common stock or other convertible instruments, the conversion price of the
note above can be adjusted downward or the Company can be required to issue
additional warrants to Ascendiant. During fiscal 2009, the Company issued
3,095,940 additional warrants to purchase Inova common stock with a fair value
of $309,594 as a result of this clause. These warrants are also subject to the
put option agreement described above. As a result, these warrants are also
classified as liabilities under ASC 815-40.

28

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During fiscal 2010, the Company adopted ASC 815-15 "Determining
Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own
Stock". As a result of the adoption, the conversion option above was
reclassified from equity to a liability. See Note 10 below.

Note Modification

In July 2009, Inova modified the terms of its $500,000 note
with Ascendiant to extend the maturity date from December 2009 to December 2010.
In addition, the interest rate on the note increased to the higher of (i) Prime
Rate plus 3% or (ii) 18% and the put option described above was increased from
$250,000 to $375,000.

Inova evaluated the extension event under ASC 470-60 Troubled
Debt Restructurings. Because the investors did not grant concessions on this
outstanding loan, the transaction was not accounted for as troubled debt
restructuring. Consequently, Inova evaluated these transactions under ASC 470-50
Debtors Accounting for a Modification or Exchange of Debt Instrumentsto determine if the modification was substantial. The modification was
determined to be not substantial and as a result, no gain or loss was recorded
on the date of the extension.

Put Option Exercise

On April 8, 2010 Ascendiant exercised 2,448,900 warrants to
purchase Inova common stock and concurrently exercised its put option, requiring
Inova torepurchase the shares acquired from the warrant exercise from
Ascendiant for $375,000. The $375,000 note is included in notes payable in the
consolidated balance sheet as of April 30, 2011 and 2010.

Since Inova did not repurchase the shares within 30 days, on
May 8, 2010 a one year $375,000 convertible note was established by Ascendiant
at a 20% interest rate. The note is convertible into shares of Inova common
stock at $1.50 per share and is unsecured.

Other Amounts Owed to Ascendiant

There is a contested commission note to Ascendiant Securities
for originally for $78,000 of commissions. As of April 30, 2011 and 2010,
$278,930 was owed for this note. The note is included in notes payable in the
consolidated balance sheet. The note originally bore interest at 11.25%, but is
now in default and bears interest at 18%. The Company is contesting this note
due to the original circumstances surrounding it. Ascendiant has claimed to be
the broker that introduced Inova to Boone and accordingly claims certain
commissions from transactions between Inova and Boone. Inova disputes this
claim.

Notes Payable  Boone Lenders, LLC (Boone):

Fiscal 2008

During fiscal 2008, Inova issued a note to Boone for $1,792,000
with an original issue discount of $192,000 due in November 2012. The note bears
interest at Prime+3% or 11.25% . 8,746,960 warrants to purchase Inova common
stock were issued to Boone with this note. The warrants expire in November 2012
and have an aggregate exercise price of $100. As a result of the warrants and
the original issue discount, a total discount of $1,184,799 was recorded to be
amortized over the term of the note using the effective interest method. See
below for information on the accounting for the warrants.

29

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The warrant shares are subject to a put option agreement
whereby anytime between June 10, 2010 and June 10, 2013,Boone can
require Inova torepurchase from Boone the warrant shares for $1,300,000.
Under ASC 815-40 Put Warrants, warrants for put shares should be classified as
liabilities and measured at fair value at the end of each reporting period with
the change in fair value recorded to earnings. As a result, the fair value of
these warrants was recorded as a derivative liability. Upon exercise of the put
option, if Inova does not repurchase the shares within 30 days, the resulting
liability with become a convertible note. The exercise period for this put
option was accelerated to April 1, 2010 as a result of the debt restructuring
below. $1,000,000 of put options were exercised as of April 30, 2010, see
Convertible Put Exercise Note below.

Fiscal 2009

During fiscal 2009, Inova issued several notes to Boone for an
aggregate principal amount of $3,373,763 with aggregate original issue discounts
of $339,600. The notes bear interest at Prime+3% or 11.25% . The notes were due
at various dates from March 2009 through March 2011. In connection with these
notes, Inova granted warrants to purchase 13,851,540 shares of Inova's common
stock, warrants to purchase 92 shares of Desert Communications, Inc. common
stock, and warrants to purchase 19.44% of Trakkers, LLC. The warrants expire at
various dates from April 2013 through February 2014 and have an aggregated
exercise price of $1,300. As a result of the warrants and the original issue
discounts, a total discount of $2,869,883 was recorded to be amortized over the
term of the notes using the effective interest method. See below for information
on the accounting for the warrants. As of April 30, 2011 and 2010, all of these
notes were in default and due on demand and as a result, all remaining
unamortized discounts were amortized as of April 30, 2010. During the years
ended April 30, 2011 and 2010, $0 and $2,182,298 of the discount was amortized
to interest expense.

The warrant shares are subject to various put option agreements
whereby anytime between January 2010 and January 1, 2013,Boone can
require Inova torepurchase from Boone the warrant shares for $1,574,250.
Under ASC 815-40 Put Warrants, warrants for put shares should be classified as
liabilities and measured at fair value at the end of each reporting period with
the change in fair value recorded to earnings. As a result, the fair value of
these warrants was recorded as a derivative liability. Upon exercise of the put
option, if Inova does not repurchase the shares within 30 days, the resulting
liability with become a convertible note. The exercise period for these put
options was accelerated to April 1, 2010 as a result of the debt restructuring
below. $1,000,000 of put options were exercised as of April 30, 2010, see
Convertible Put Exercise Note below.

Fiscal 2010

During fiscal 2010, Inova issued several notes to Boone for an
aggregate principal amount of $1,128,856 with aggregate original issue discounts
of $178,357. The notes bear interest at Prime+3% or 11.25% . The notes were due
at various dates from December 2009 through February 2011. In connection with
these notes, Inova granted warrants to purchase 11,697,440 shares of Inova's
common stock, warrants to purchase 64 shares of Desert Communications, Inc.
common stock, and warrants to purchase 1.44% of Trakkers, LLC. The warrants
expire at various dates from May 2014 through January 2017 and have an
aggregated exercise price of $800. As a result of the warrants and the original
issue discounts, a total discount of $978,857 was recorded to be amortized over
the term of the notes using the effective interest method. See below for
information on the accounting for the warrants. As of April 30, 2011 and 2010,
all of these notes were in default and due on demand and as a result, all
remaining unamortized discounts were amortized as of April 30, 2010. During the
year ended April 30, 2011 and 2010, $0 and $978,857 of the discount was
amortized to interest expense.

The warrant shares are subject to various put option agreements
whereby for various periods ranging from April 2010 to February 2014,Boone can require Inova torepurchase from Boone the warrant shares
for $534,900. Under ASC 815-40 Put Warrants, warrants for put shares should be
classified as liabilities and measured at fair value at the end of each
reporting period with the change in fair value recorded to earnings. As a
result, the fair value of these warrants was recorded as a derivative liability.
Upon exercise of the put option, if Inova does not repurchase the shares within
30 days, the resulting liability with become a convertible note. The exercise
period for these put options was accelerated to April 1, 2010 as a result of the
debt restructuring below. $1,000,000 of put options were exercised as of April
30, 2010, see Convertible Put Exercise Note below.

Fiscal 2011

During the quarter ended July 31, 2010, Boone exercised
warrants to purchase 30,111,440 shares of Inova common stock and 130.90 shares
of Desert common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$1,515,900. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note during the quarter ended July 31, 2010.

During the quarter ended October 31, 2010, Boone exercised
warrants to purchase 7,444,240 shares of Inova common stock and 19.44% of
Trakkers common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$792,000. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note in November 2010.

30

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Paid-In Kind Interest

Boone is capitalizing and charging paid in kind interest on
several of its notes. Each period, at a rate mutually agreed to by the Company
and Boone, interest is recognized on the outstanding principal balance and added
to the principal balance of the note. This started in May 2010 for Boones notes
as a temporary arrangement which can be cancelled at any time. The interest
rates range from 11% to 20% on various notes.

For the year ended April 30, 2011, a total of $183,401 of
interest was recognized and recorded to the principal balance of all loans from
Boone Lenders, LLC except the convertible put notes described below.

Anti-Dilution Warrants

All of the warrants granted above contained dilutive issuance
clauses in their agreements. Under these clauses, based on future issuances of
Inova common stock or other convertible instruments, Inova can be required to
issue additional warrants to Boone. During fiscal 2008, the Company issued
468,120 additional warrants to purchase Inova common stock with a fair value of
$37,450 as a result of this clause. During fiscal 2009, the Company issued
8,031,040 additional warrants to purchase Inova common stock with a fair value
of $845,192 as a result of this clause. During fiscal 2010, the Company issued
2,123,200 additional warrants to purchase Inova common stock with a fair value
of $212,320 as a result of this clause. These warrants are also subject to the
put option agreements described above. As a result, these warrants are also
classified as liabilities under ASC 815-40. See Note 9 for more information.

Debt Restructuring

In the third quarter of fiscal 2010 Inova restructured several
of its previously issued notes payable to Boone to extend the maturity dates,
modify the interest rate and payment terms. Inova combined 6 previous notes that
had due dates ranging from December 16, 2009 through December 30, 2010 into one
$836,446 note payable. The original notes had interest rates of Prime + 3% or
11.25% . The new note has an interest rate of 17.5% . Starting in December 2010,
principal payments will be made out of Desert Communication Inc.s (DCI) free
cash flow which is defined by the agreement as DCIs earnings before interest,
taxes, depreciation and amortization (EBITDA) subject to various adjustments.
The note is secured by all assets including the shares Inova holds of each of
Inovas subsidiaries. In addition, in conjunction with the debt restructuring,
all put options that previously could not be exercised until future periods were
accelerated to April 1, 2010.

In conjunction with the $836,446 restructured note payable,
1,524,640 Inova warrants and 7.01 Desert warrants were issued to Boone with a
fair value of $190,168. They have an aggregated exercise price of $200. The fair
value of the warrants at the inception of the notes was recorded as a discount
to the note to be amortized through maturity of the note using the effective
interest method. This discount was combined with remaining unamortized discounts
on the 6 notes included in the restructuring. As of April 30, 2011 and 2010,
this note was in default and due on demand and as a result, all of the remaining
unamortized discount was amortized as of April 30, 2010. During the year ended
April 30, 2011 and 2010, $0 and $654,621 of the discount was amortized to
interest expense.

All previous warrant grants and their associated put options
under the notes included in the above restructuring are now combined into this
note. This includes the warrants granted in conjunction with the restructuring
mentioned above. The total warrants under this note as of the date of the
restructuring was 27,476,420 warrants to purchase Inova common stock and 78.1
warrants to purchase Desert common stock, all of which are subject to aggregate
put options of $2,213,500. In March 2010, $1,000,000 of these put options were
exercised for 8,031,040 warrants to purchase Inova common stock and 31.59
warrants to purchase Desert common stock. See Convertible Put Exercise Note
section below.

Inova evaluated the extension event above under ASC 470-60
Troubled Debt Restructurings. Because the investors did not grant concessions
on this outstanding loan, the transaction was not accounted for as troubled debt
restructuring. Consequently, Inova evaluated these transactions under ASC 470-50
Debtors Accounting for a Modification or Exchange of Debt Instrumentsto determine if the modification was substantial. The modification was
determined not to be substantial and as a result, no gain or loss was recorded
on the date of the extension. In addition, all previously unamortized discounts
associated with previous notes will be amortized over the maturity of the new
note.

Convertible Put Exercise Note

On March 22, 2010 Boone exercised $1,000,000 of its put
options, requiring Inova torepurchase from Boone up to 5,768,300 shares
of Inova common stock and 31.59 shares of Desert common stock for $1,000,000.
Since Inova did not repurchase the shares within 30 days a 2 year $1,000,000
convertible note was established by Boone at a 24% interest rate. A discount of
$200,000 was recorded on this note as a result of the conversion options, see
below. As of April 30, 2010, this notes was in default and due on demand and as
a result, all of the remaining unamortized discount has been amortized to
interest expense as of April 30, 2010.

31

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During the quarter ended July 31, 2010, Boone exercised
warrants to purchase 30,111,440 shares of Inova common stock and 130.90 shares
of Desert common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$1,515,900. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note during the quarter ended July 31, 2010. The
note is due on May 21, 2012 and bears interest at 22%.

During the quarter ended January 31, 2011, Boone exercised
warrants to purchase 7,444,240 shares of Inova common stock and 19.44% of
Trakkers common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$792,000. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note during the quarter ended January 31, 2011. The
note is due on January 31, 2012 and bears interest at 20%.

The conversion options are subject to reset provisions that can
reduce the conversion prices based on subsequent equity or rights offerings by
Desert, Trakkers or Inova below the prices above.

The notes are convertible into shares of Desert or Trakkers
common stock at an amount equal to (A) 350% of Desert or Trakkerss EBITDA for
the 12 full-months preceding such date, minus (i) the aggregate amount of
Deserts indebtedness to the initial Holder at such date and (ii) the aggregate
amount of the Companys indebtedness to the Desert Sellers at such date, divided
by (B) the total number of issued and outstanding shares of common stock at such
date.

The notes are also convertible into shares of Inova common
stock at the lower of (i) $0.075 per share of Inova common stock and (ii) the
lowest per share price of Inova common stock conversion price in effect at April
22, 2010 in any warrant, option, convertible note or other instrument that has
been issued by Inova or that is otherwise convertible or exchangeable into
Inova, after taking into effect any applicable reset or other conversion or
exchange price adjustments. As of April 30, 2011, the lowest per share price in
effect was $0.0405.

The conversion options are subject to reset provisions that can
reduce the conversion prices based on subsequent equity or rights offerings by
Desert or Inova below the prices above.

Inova analyzed the instruments above under ASC 815 Derivatives
and Hedging and determined that these instruments should be classified as
liabilities and recorded at fair value due to their being no explicit limit to
the number of shares to be delivered upon settlement of the above conversion
options. The fair value of the instruments was determined using a Monte Carlo
simulation model utilizing present value and various probabilities of events.
This amount is included in derivative liabilities in the consolidated balance
sheet. See Note 10 for more information on derivatives and the valuation model.

Covenants

All Boone loans have the following financial requirements:

- Maintain cash plus availability under IBM $2.5 million line of credit of
  $250,000 or greater;
- EBITDA of $1.7 million for any fiscal year;
- No concentration above $2.5 million to any supplier through the IBM
  facility;
- No concentration above 20% to any single customer;
- No single accounts payable more than the greater of $300,000 or 20% of the
  accounts receivable balance under 60 days. The portion beyond 90 days past due
  must be less than 10% of the total accounts receivable.

Inova was not in compliance with these covenants as of April
30, 2011 and 2010 and as a result, these notes are in default.

Note Payable - Agile Opportunity Fund, LLC (Agile):

In February 2008, Inova borrowed $250,000 under a note payable
from Agile Opportunity Fund, LLC. This note has an interest rate of 18% per
annum and it matures on December 31, 2010. The note was convertible into shares
of Inova common stock at $0.10 per share. In addition, 1,250,000 warrants to
purchase Inova common stock were issued with this note. As a result of the
conversion feature and warrants, a discount of $150,000 was recorded to be
amortized over the term of the note using the effective interest method. See
below for information on the accounting for the conversion feature and warrants.
During the years ended April 30, 2010 and 2009, $40,337 and $109,663 of the
discount was amortized to interest expense. This note is secured by all tangible
and intangible assets of Inova.

32

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Inova analyzed the conversion option for derivative accounting
consideration under ASC 815 Derivatives and Hedging. Inova determined that
derivative accounting is not applicable. Inova then analyzed the conversion
option under ASC 470-20 Debt with Conversion and Other Options and determined
there was a beneficial conversion feature resulting in a discount to the note of
$50,000.

1,250,000 warrants with a fair value of $100,000 were issued to
Agile with this note. These warrants expire in February 2013. They have an
exercise price of $0.10 per share. The warrant shares are subject to a put
option agreement whereby anytime between February 2010 and February 2013,Agile can require Inova torepurchase from Agile the warrant shares
for $100,000. Under ASC 815-40 Put Warrants, warrants for put shares should be
classified as liabilities and measured at fair value at the end of each
reporting period with the change in fair value recorded to earnings. As a
result, the fair value of these warrants was recorded as a derivative liability.
Upon exercise of the put option, if Inova does not repurchase the shares within
30 days, the resulting liability with become a convertible note that is
convertible into shares of Inova common stock.

The convertible note and warrant agreements both contain
dilutive issuance clauses. Under these clauses, based on future issuances of
Inova common stock or other convertible instruments, the conversion price of the
note above can be adjusted downward or the Company can be required to issue
additional warrants to Inova. During fiscal 2009, the Company issued 4,260
additional warrants to purchase Inova common stock.

During fiscal 2010, the Company adopted ASC 815-15 "Determining
Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own
Stock". As a result of the adoption, the conversion option above was
reclassified from equity to a liability. See Note 9 below.

Note Modification

In December 2009, Inova modified the terms of its $250,000 note
with Agile to extend the first principal payment date from December 2009 to
December 2010. It also increased the original issue discount by $50,000 and
reduced the conversion price to $0.0405 per share.

Inova evaluated the extension event under ASC 470-60 Troubled
Debt Restructurings. Because the investors did not grant a concession on this
outstanding loan, the transaction was not accounted for as troubled debt
restructuring. Consequently, Inova evaluated these transactions under ASC 470-50
Debtors Accounting for a Modification or Exchange of Debt Instrumentsto determine if the modification was substantial. Because the present value
of the future cash flows under the modified debt exceeded the present value of
the future cash flows under the old debt by more than 10%, the debt modification
was determined to be substantial and accordingly the debt was extinguished.
Inova evaluated the new debt instrument under ASC 470-20 Debt with Conversion
and Other Options and determined that it contained a beneficial conversion
feature with an intrinsic value of $83,333. This amount was recorded as a
discount to the note to be amortized until maturity using the effective interest
method.

Conversions

On March 30, 2010 Agile converted $40,500 of its debt to
1,000,000 shares of Inova stock at an exercise price of $0.0405 per share.

During fiscal 2011, Inova issued 1,500,000 shares of common
stock for the conversion of $60,750 of debt to Agile Opportunity Fund, LLC at a
conversion price of $0.0405.

Registration Rights for Ascendiant, Boone and Agile
Notes

Inova entered into a registration rights agreement with
Ascendiant, Boone and Agile requiring that a filing be done for the number of
Registrable Securities equal to the lesser of (i) the total number of
Registrable Securities and (ii) one-third of the number of issued and
outstanding shares of Common Stock that are held by non-affiliates. Registrable
securities are (i) all Warrant Shares (ii) any additional shares of Common Stock
issuable in connection with any anti-dilution provisions in the Warrants (iii)
all Put Shares (iv) any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event. Inova shall
pay to each party an amount in cash, as partial liquidated damages and not as a
penalty, equal to 2.00% of the aggregate purchase price paid by each party
pursuant to the original note agreements for any unregistered Registrable
Securities then held by each party. The parties agree that Inova shall not be
liable for liquidated damages under this Agreement with respect to any Warrants
or Warrant Shares. Inova analyzed the registration right arrangement under the
guidance of FSP ASC 815-15-b and determined that the contingent obligation to
make future payments under the registration payment arrangement is not probable.

If Inova were required to pay the 2% penalty for not filing
registration statements, the estimated penalty would be approximately $144,000.
The lenders have historically granted waivers for these registration rights
penalties and therefore management believes the likelihood of this payment to be
remote.

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Line of Credit with IBM Credit LLC:

Desert Communications, Inc. had a $2.5 million line of credit
with IBM Credit LLC. This revolving line of credit had an interest rate of prime
plus 2% and was secured by the assets of Desert. Payments are made based on a
borrowing base calculation which determines availability. During the year ended
April 30, 2010, Desert borrowed $726,217 and repaid $2,142,169 against this
line. The outstanding balance on this line of credit was $0 as of April 30,
2010.

The $2.5 million line of credit Desert had with IBM Credit LLC
has been paid off and replaced with a similar facility with GTF as described
above in Note 4.

Working Capital Facility:

The Company entered into a tri-party secured agreement in
April, 2010 whereby Agile ($150,000), Boone ($100,000) and the former owners of
Desert Communications ($150,000) provided amounts totaling $400,000 to Desert
Communications. This was in the form of a Note due December, 2010 bearing
interest at a rate of 20% and containing the same covenants all Boone documents
require. Fees of $10,450 were paid to Boone in conjunction with this debt and
were recorded as a discount to the note.

During fiscal 2011 Agile and Desert sellers were paid off and
Boone's balance was paid down to $50,000.

Other significant debt transactions during the year ended
April 30, 2010:

Trakkers Sellers Notes Modification

In October 2009, Inova modified the terms of its $1,528,089
note with Trakkers former owners to extend the first principal payment date from
September 2009 to December 2010. The notes are now in default.

Inova evaluated the extension event under ASC 470-60 Troubled
Debt Restructurings. Because the investors did not grant a concession on this
outstanding loan, the transaction was not accounted for as troubled debt
restructuring. Consequently, Inova evaluated these transactions under ASC 470-50
Debtors Accounting for a Modification or Exchange of Debt Instrumentsto determine if the modification was substantial. As a result, the debt
modification was not substantial and therefore the new debt terms will be
accounted for prospectively.

On March 7, 2011, Inova borrowed $103,500 from Asher in an 8%
convertible note. The note is convertible 180 days from the issuance date into
Inova common stock at a price equal to 61% of the average of the stocks lowest
three prices during the ten trading days prior to conversion. When the
conversion option becomes effective, it will be classified as a liability due to
there being no explicit limit to the number of shares to be issued under ASC
815-15. The note is due on December 8, 2011 and is unsecured.

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Desert Sellers Notes Modification.

On December 1, 2009, the sellers agreed to extend the maturity
of these notes through December 1, 2010. As a result of the extension, the
interest rate increased to 18%. Prior to December 1, 2009, the interest rate was
7%

Inova evaluated the extension event under ASC 470-60 Troubled
Debt Restructurings. Because the investors did not grant a concession on this
outstanding loan, the transaction was not accounted for as troubled debt
restructuring. Consequently, Inova evaluated these transactions under ASC 470-50
Debtors Accounting for a Modification or Exchange of Debt Instrumentsto determine if the modification was substantial. As a result, the debt
modification was not substantial and therefore the new debt terms will be
accounted for prospectively.

During the year ended April 30, 2011 and 2010, Inova made the
following cash repayments on its outstanding notes payable:

2011
    
    
    2010Notes payable to Boone/Ascendiant/Agile
    $
    210,000
    
    $
    640,522Line of credit from IBM
    
    114,643
    
    
    2,142,169Notes payable to Desert/Trakkers/RightTag
      previous owners
    
    450,000
    
    
    122,713Notes payable to other
    
    131,610
    
    
    380,283Total cash paid
    $
    906,253
    
    $
    3,285,687


A summary of changes in notes payable for the years ended April
30, 2011 and 2010 is as follows:

2011
    
    
    **2010**Beginning balance
    $
    9,848,040
    
    $
    6,360,729Gross proceeds from the notes payable
    
    103,500
    
    
    2,572,705Non-cash additions due to put note
      exercises
    
    2,307,900
    
    
    1,375,000Less: repayments made on notes payable
    
    (906,253
    )
    
    (3,285,687
    )Less: conversion
    
    (60,750
    )Add: paid in kind
    
    183,401Less: debt discount from warrants, original
      issue discounts and conversion options
    
    
    
    
    (1,533,682
    )Add: amortization of discount
    
    128,900
    
    
    4,358,975Total notes payable
    $
    11,604,900
    
    $
    9,848,040


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Notes payable consisted of the following as of April 30, 2011
and 2010:

|                                           |   |            |  |  | April 30, 2011 |   |   |            |  |   |           |  |   | April 30, 2010 |   |   |           | 
|------------------------------------------ | - | ---------- |  |  | -------------- | - | - | ---------- |  | - | --------- |  | - | -------------- | - | - | --------- | 
|                                           |   | Principal  |  |  | Unamortized    |   |   | Carrying   |  |   | Principal |  |   | Unamortized    |   |   | Carrying  | 
|Lender                                     |   | Amount     |  |  | Discount       |   |   | Amount     |  |   | Amount    |  |   | Discount       |   |   | Amount    | 
|Boone Lenders, LLC                         | $ | 6,809,972  |  |  | -              |   | $ | 6,809,972  |  | $ | 4,378,671 |  | $ | (10,450        | ) | $ | 4,368,221 | 
|Ascendiant Opportunity Fund, LLC           |   | 1,153,930  |  |  | -              |   |   | 1,153,930  |  |   | 1,153,930 |  |   | -              |   |   | 1,153,930 | 
|Agile Opportunity Fund, LLC                |   | 198,750    |  |  |                |   |   | 198,750    |  |   | 409,500   |  |   | (108,122       | ) |   | 301,378   | 
|IBM - Trakkers, LLC                        |   |            |  |  |                |   |   |            |  |   |           |  |   |                |   |   |           | 
|Lease Facility Desert Communications, Inc. |   | 218,278    |  |  | (5,916         | ) |   | 212,362    |  |   | 332,921   |  |   | (16,244        | ) |   | 316,677   | 
|Sellers                                    |   | 1,200,000  |  |  | -              |   |   | 1,200,000  |  |   | 1,650,000 |  |   | -              |   |   | 1,650,000 | 
|Trakkers, LLC Sellers                      |   | 1,769,686  |  |  | -              |   |   | 1,769,686  |  |   | 1,769,686 |  |   | -              |   |   | 1,769,686 | 
|Southbase, LLC - Related Party             |   | 142,532    |  |  | -              |   |   | 142,532    |  |   | 142,532   |  |   | -              |   |   | 142,532   | 
|Other debt                                 |   | 117,506    |  |  | -              |   |   | 117,506    |  |   | 145,616   |  |   |                |   |   | 145,616   | 
|Total                                      | $ | 11,610,654 |  |  | (5,916         | ) | $ | 11,604,738 |  | $ | 9,982,856 |  |   | (134,816       | ) | $ | 9,848,040 | 

The following are the future minimum payments for the notes
payable:

Year
    
    Amount2012
    $
    11,462,2062013
    
    -2014
    
    -2015
    
    -2016 and after
    
    142,532Total notes payable
    
    11,604,738Less: current maturities
    
    (11,462,206
    )Notes payable, net of current maturities
    $
    142,532


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NOTE 9 - DERIVATIVE LIABILITIES

ASC 815-40 Put Warrant Liabilities

Under ASC 815-40 Put Warrants, warrants for put shares should
be classified as liabilities and measured at fair value at the end of each
reporting period with the change in fair value recorded to earnings. As a
result, the fair value of the warrants granted to Ascendiant, Agile and Boone in
conjunction with the debt offerings noted above were recorded as a derivative
liabilities at inception. The liabilities were subsequently measured at fair
value at the end of each reporting period with the changes recorded to earnings.

ASC 815-15 Derivative Liabilities

In June 2008, the FASB finalized ASC 815-15, "Determining
Whether an Instrument (or Embedded Feature) is indexed to an Entity's Own Stock"
(formerly EITF 07-05). The EITF lays out a procedure to determine if an
equity-linked financial instrument (or embedded feature) is indexed to its own
common stock. The EITF is effective for fiscal years beginning after December
15, 2008. Two conversion options (Ascendiant and Agile) embedded in notes
payable agreements that were previously classified in equity were reclassified
to derivative liabilities on May 1, 2009 as a result of this EITF. Inova
estimated the fair value of these liabilities as of May 1, 2009 to be $420,162
and recorded them as a reduction of $232,642 to Additional Paid In Capital,
$156,465 to Accumulated Deficit and $31,055 to discounts on notes payable to
which these instruments were related. The effect of this adjustment was recorded
as a cumulative effect of change in accounting principle in our consolidated
statement of stockholders equity.

Inova amended the above convertible note agreements as of June
30, 2009 and July 31, 2009 to remove the provisions that triggered derivative
accounting under ASC 815-15. Specifically, the sections in the agreements
related to issuing anti-dilutive warrants based on a measure other than one
linked to the companys stock price were removed. As a result of these
amendments, the $680,779 derivative liability created during the quarter while
the provisions were still effective was moved to additional paid in capital when
the documents were modified.

Boone Convertible Put Exercise Note

As discussed in Note 9, Inova determined that the instruments
embedded in the convertible put notes exercised by Boone during fiscal 2010 and
2011 should be classified as liabilities and recorded at fair value due to their
being no explicit limit to the number of shares to be delivered upon settlement
of the above conversion options. The fair value of the embedded conversion
option in the $1,000,000 convertible put note was determined to be $200,000 as
of April 30, 2010 using a Monte Carlo simulation model. Because the number of
shares to be issued upon settlement cannot be determined under this instrument,
Inova cannot determine whether it will have sufficient authorized shares at a
given date to settle any other of its share-settleable instruments. As a result
of this, under ASC 815-15 Accounting for Derivative Financial Instruments
Indexed to and Potentially Settled in, a Company's Own Stock (formerly EITF
00-19), all other share-settleable instruments must be reclassified from equity
to liabilities. Inova had two conversion options embedded in notes payable
agreements (Ascendiant and Agile) and 1,528,140 warrants to purchase Inova
common stock that were classified in equity as of the date that the Boone put
note became convertible. The fair value of these instruments on that date was
$614,945 and this value was reclassified to liabilities.

During the quarter ended July 31, 2010, Boone exercised
warrants to purchase 30,111,440 shares of Inova common stock and 130.90 shares
of Desert common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$1,515,900. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note during the quarter ended July 31, 2010.

Additionally, Inova determined that the instruments embedded in
a second convertible put note exercised by Boone during fiscal 2011 should be
classified as liabilities and recorded at fair value due to their being no
explicit limit to the number of shares to be delivered upon settlement of the
above conversion options. During the quarter ended January 31, 2011, Boone
exercised warrants to purchase 7,444,240 shares of Inova common stock and 19.44%
of Trakkers common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$792,000. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note during the quarter ended January 31, 2011.

The fair value of the embedded conversion options in the
$1,000,000, $1,515,900 and $792,000 convertible put notes was determined to be
$730,068 as of April 30, 2011 using a Monte Carlo simulation model.

37

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These notes are convertible into shares of Desert or Trakkers
common stock at an amount equal to (A) 350% of the subsidiarys EBITDA for the
12 full-months preceding such date, minus (i) the aggregate amount of the
subsidiarys indebtedness to the initial Holder at such date and (ii) the
aggregate amount of the Companys indebtedness to the subsidiarys Sellers at
such date, divided by (B) the total number of issued and outstanding shares of
common stock at such date. The note is also convertible into shares of Inova
common stock at the lower of (i) $30 per share of Inova common stock and (ii)
the lowest per share price of Inova common stock conversion price in effect in
any warrant, option, convertible note or other instrument that has been issued
by Inova or that is otherwise convertible or exchangeable into Inova, after
taking into effect any applicable reset or other conversion or exchange price
adjustments. The conversion options are subject to reset provisions that can
reduce the conversion prices based on subsequent equity or rights offerings by
Desert, Trakkers or Inova below the prices above. As a result of the exercise,
the put option liabilities were transferred from derivative liabilities to notes
payable during the quarter.

Because the number of shares to be issued upon settlement
cannot be determined under these instruments, Inova cannot determine whether it
will have sufficient authorized shares at a given date to settle any other of
its share-settleable instruments. As a result of this, under ASC 815-15
Accounting for Derivative Financial Instruments Indexed to and Potentially
Settled in, a Company's Own Stock (formerly EITF 00-19), the conversion options
noted above and all other share-settleable instruments are classified as
liabilities. Inova has three conversion options embedded in notes payable
agreements and 11,367,655 and 48,161,435 warrants at April 30, 2011 and 2010 to
purchase Inova common stock that are classified as liabilities as a result of
the provisions of the convertible put notes.

The following table summarizes the derivative liabilities
included in the consolidated balance sheet:

Derivative LiabilitiesBalance at April 30, 2009
    
    5,108,480Put Warrant Liability Additions
    
    1,918,087ASC 815-15 (EITF 07-05) Additions
    
    420,162Boone Convertible Put Note
    
    200,000ASC 815-15 (EITF 00-19) Additions
    
    614,945ASC 815-15 (EITF 07-05) Deletions
    
    (680,779
    )Change in fair value
    
    (597,955
    )Put warrants exercised
    
    (1,375,000
    )Balance at April 30, 2010
    $
    5,607,940ASC 815-15 (EITF 00-19) Additions
    
    52,000Change in fair value
    
    (836,353
    )Put exercise reclass to debt
    
    (2,307,900
    )Balance at April 30, 2011
    $
    2,515,687


The following table summarizes the derivative gain or loss
recorded as a result of the derivative liabilities above:

Year Ended
    
    
    EndedDerivative loss related to put warrant
      liabilities
    
    April 30, 2011
    
    
    April 30, 2010Excess of fair value of put
      warrant liabilities over note payable
    $
    -
    
    $
    905,267Fair value of anti-dilution warrants at
      inception
    
    -
    
    
    212,320Change in fair value
    
    836,353
    
    
    (597,954
    )Total
    $
    836,353
    
    $
    519,633


Valuation Models

Inova values its warrant derivatives and simple conversion
option derivatives using the Black-Scholes option-pricing model. Assumptions
used include (1) 1.89% to 3.41% risk-free interest rate, (2) warrant life is the
remaining contractual life of the warrants, (3) expected volatility 212% to
752%, (4) zero expected dividends (5) exercise prices as set forth in the
agreements, (6) common stock price of the underlying share on the valuation
date, and (7) number of shares to be issued if the instrument is converted.

Inova valued the conversion options and reset provisions under
its convertible put exercise note with Boone using a Monte Carlo simulation
model utilizing present value and various probabilities of events. Assumptions
used include (1) 0.20 - 0.97% risk free rate, (2) conversion prices as set forth
in the agreement, (3) expected Inova stock price volatility of 261-752%, (4)
expected Desert and Trakkers stock price volatility of 25%, and (6) common stock
price of the underlying share on the valuation date. Inova valued the note as a
combination of the underlying debt payment and series of two options. Since the
options are mutually exclusive, the Monte Carlo simulation was used to estimate
when either of the options are exercisable. When both are exercisable Inova
assumed that the more valuable of the two would be exercised.

38

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NOTE 10  COMMITMENTS AND CONTINGENCIES

Earn Outs:

As part of the Trakkers acquisition an earn-out of 5% annually
of all revenues generated by Trakkers less than $2.5 million and 10% of any
revenues greater than $2.5 million for 5 years was established.

As part of the Right Tag acquisition an earn-out was
established: Gross Profit for Right Tag for the 12 months period (Earn Out
Period) ending April 2008 x 100%, Gross Profit for Right Tag for the 12 months
period ending April 2009 x 100%, Gross Profit for Right Tag for the 12 months
period ending April 2010 x 40%, Gross Profit for Right Tag for the 12 month
period ending April 2011 x 20%, and Gross Profit Right Tag for for the 12 month
period April 2012 x 15%. Each payment will be comprised of 50% cash and 50%
stock of Inova and will be paid 45 days after final date for calculation of the
Earn Out for each Earn Out Period.

The amount payable under these earn outs as of April 30, 2011
and 2010 is $335,574 and $210,937, respectively.

Leases:

There is an office lease for Desert, effective May 2008 until
August 2011. Rent is payable at $6,300 per month including tax. The lease has
not been renewed to date and Desert plans to continue on a month-to-month basis.

There is an office lease for Trakkers, effective until April
2012. Rent is payable at $3,300 per month including tax.

Rent expense was $163,647 and $148,529 for fiscal 2011 and
2010, respectively. No real estate is owned by the Inova companies.

Litigation:

In May, 2010 Ascendiant filed suit for collection of the
$833,906 principal and interest. The suit was stayed to New York and Inova and
Desert have been dismissed. Ascendiant filed a new suit in a different
California court for the same action; the suit is pending.

NOTE 11  CAPITAL LEASES

Equipment leases:

Assets under capital leases, included in property and
equipment, consisted of the following at April 30:

2011
    
    
    2010Vehicle
    $
    18,492
    
    $
    33,638Revenue-producing equipment
    
    917,056
    
    
    917,056Less: accumulated depreciation
    
    (531,774
    )
    
    (346,051
    )Net assets under capital leases
    $
    403,774
    
    $
    604,643


39

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The following are the future minimum lease payments for the
capital leases:

Year
    
    Amount2012
    
    232,284Total future minimum lease payments under
      capital leases
    $
    232,284


NOTE 12  PROFIT SHARING PLAN

A 401K plan was established in September 2008. Employer
contributions are made each pay period and a total of $64,206 was contributed
for the year ending April 30, 2010 and $151,889 for the year ending April 30,
2011.

NOTE 13  INCOME TAX

Inova uses the liability method, where deferred tax assets and
liabilities are determined based on the expected future tax consequences of
temporary differences between the carrying amounts of assets and liabilities for
financial and income tax reporting purposes.

At April 30, 2011, for federal income tax and alternative
minimum tax reporting purposes, Inova had approximately $3,504,313 of unused net
operating losses available for carry forward to future years. The benefit from
carry-forward of such net operating losses will expire in various years through
2030. Under the provisions of Section 382 of the Internal Revenue Code, the
benefit from utilization of approximately $2,563,000 of net operating losses
incurred prior to June 2005 was significantly limited as a result of the change
of control that occurred in connection with Inovas acquisition of Webs
Biggest. The benefit could be subject to further limitations if significant
future ownership changes occur in Inova.

At April 30, 2011, deferred tax assets consisted of the
following:

UnitedStates
    
    
    Canada
    
    
    TotalNOL at April 30, 2011
    $
    4,900,000
    
    $
    89,000
    
    $
    4,989,000Estimated tax rate
    
    35%
    
    
    20%
    
    
    N/ADeferred tax assets
    
    1,715,000
    
    
    18,000
    
    
    1,733,000Valuation allowance
    
    (1,715,000
    )
    
    (18,000
    )
    
    (1,733,000
    )Net deferred tax assets
    $
    -
    
    $
    -
    
    $
    -


40

---

At April 30, 2010, deferred tax assets consisted of the
following:

UnitedStates
    
    
    Canada
    
    
    TotalNOL at April 30, 2010
    $
    3,471,000
    
    $
    33,000
    
    $
    3,504,000Estimated tax rate
    
    35%
    
    
    20%
    
    
    N/ADeferred tax assets
    
    1,215,000
    
    
    7,000
    
    
    1,222,000Valuation allowance
    
    (1,215,000
    )
    
    (7,000
    )
    
    (1,222,000
    )Net deferred tax assets
    $
    -
    
    $
    -
    
    $
    -


There are no federal income taxes payable in 2011 or 2010 as a
result of the operating losses recorded during those years. Based on a number of
factors, including the lack of a history of profits, management believes that
there is sufficient uncertainty regarding the realization of deferred tax
assets, and, accordingly, has not booked an income tax benefit as of April 30,
2011 and 2010. All losses incurred can be carried forward for seven years for
Canadian income tax purposes and twenty years for United States income tax
purposes.

NOTE 14  COMMON STOCK

During fiscal 2010:

100,000 shares of common stock valued at $8,125 were issued to
third parties as payment on commissions on notes payable.

650,000 shares of common stock valued at $65,000 were issued to
a third party as payment for investor relation services.

423,000 shares of common stock valued at $45,649 were issued to
the former owners of RightTag, Inc. as payments of earn-outs in accordance with
the original purchase agreement. These earn-outs were included in accrued
liabilities as of April 30, 2009.

1,000,000 shares of common stock valued at $40,500 were issued
to Agile for conversion of outstanding note principal. (see Note 8)

1,762,960 shares of common stock were purchased by Advisors,
LLC for $95,000. In addition, 890,760 shares valued at $46,765 were issued to
Advisors, LLC in lieu of consulting fees.

2,500,000 shares of common stock valued at $130,000 were issued
to Southbase, International for payment of consulting fees.

During fiscal 2011:

2,248,649 shares of common stock with a fair value of $96,000
were issued to Advisors, LLC for services rendered. Advisors, LLC is controlled
by a director of the Company. The fair value of the stock was recorded to
expense.

On August 3, 2010, Inova entered into an agreement with a
public relations firm. Under the terms of the agreement, Inova issued 2% of its
outstanding common shares at the inception of the agreement as an advance and
non-refundable fee for future services. This resulted in the issuance of
1,126,960 shares of common stock with a fair value of $11,270. This amount was
expensed during the quarter ended October 31, 2010.

During the quarter ended October 30, 2010 50,000 shares of
common stock with a fair value of $1,500 were issued to a public relations firm
for services rendered. The fair value of the stock was recorded to expense
during the quarter ended October 30, 2010.

On October 20, 2010 the Board of Directors approved a
resolution to complete the issue of a stock dividend to all current
shareholders. The ratio will be 20 new shares for every one share held by all
shareholders as at the record date. The authorized shares of the company will be
adjusted by the same ratio. All share and per share amounts have been adjusted
retroactively as if the dividend occurred on the first day of the first period
presented.

Inova issued 1,500,000 shares of common stock for the
conversion of $60,750 of debt to Agile Opportunity Fund, LLC.

41

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NOTE 15  REDEEMABLE PREFERRED STOCK & NON-CONTROLLING
INTEREST

Series A Preferred Stock

Inova has authorized an undesignated amount of Series A
preferred shares. Each Series A preferred share is convertible into common stock
at the rate of 1 to 0.06. There were no shares of Series A preferred stock
issued as of April 30, 2011 and 2010.

Series B Convertible Preferred Stock

Inova has authorized 5,000 non-restricted Series B preferred
shares to be issued for each acquisition with more than $40 million in sales or
$10 million in EBITDA and 5,000 non-restricted Series B preferred shares
authorized to be issued for each acquisition with less than $40 million in
sales. Each Series B preferred share is convertible into common stock at the
rate of 1 to 100. There were no shares of Series B preferred stock issued as of
April 30, 2011 and 2010.

Series B Redeemable Preferred Stock

On September 1, 2008, 1,500,000 shares of redeemable preferred
stock were issued in conjunction with the purchase of Trakkers and Tesselon.
This is redeemable Series B, non-voting preferred, which has a dissolution value
of $1 per share. The agreement was amended on December 18, 2008 and again in
July 2009. The original and first amended preferred stock agreements were
determined to have errors and did not represent the intent of both parties
causing both to be amended. Inova must determine the method of redemption of the
preferred stock any time over the one year period from issuance and when
redeemed Inova may choose from the following 3 redemption options: 1) $1,500,000
payment of cash 2) Issuance of 375,000 common shares 3) Transfer of 10% of the
Trakkers/Tesselon companies. Option 2) requires the company to issue the 375,000
common shares in three annual installments of 125,000 common shares each
beginning no later than October 31, 2010. If elected, options 1) and 3) are due
on the third anniversary of the issuance of the preferred stock. During 2009,
the company originally anticipated that it would select option 2 and therefore
classified the fair value of the preferred stock as a component of stockholders
equity as of April 30, 2009. Management later determined it is best for the
company to elect option 3) and therefore will settle the instrument by issuing
10% ownership of Trakkers LLC on the third anniversary of the agreement. Because
the one year period from the original issuance of the preferred stock has
passed, the Company can no longer change the method of redemption. At inception
of the instrument, the company determined the fair value of the preferred stock
was $1,307,506. Because the instrument will now be settled with subsidiary
stock, Inova has classified the instrument as non-controlling interest in the
consolidated balance sheet as of April 30, 2011 and 2010 in accordance with ASC
810-10-45-17A and ASC 815-40-15-5C (formerly EITF 08-08) Accounting for an
Instrument (or an Embedded Feature) with a Settlement Amount That Is Based on
the Stock of an Entitys Consolidated Subsidiary.

NOTE 16  WARRANTS

Fiscal 2010

During the year ended April 30, 2010, in connection with
financing arrangements with its lenders, Inova granted warrants to purchase
14,634,620 shares of Inovas common stock, warrants to purchase 70.96 shares of
Desert Communications, Inc. common stock, and warrants to purchase 13.5% of
Trakkers, LLC. (See Note 8) Each warrant can be exercised for a total of $100
for an aggregate exercise price of $1,200 for all warrant shares. All warrants
vest immediately and have contractual terms ranging from 5-7 years. All of the
warrants issued prior to July 31, 2009 contained anti-dilution provisions that
may result in the issuance of additional warrants. Under the provision, if Inova
sells or issues common stock or an option to purchase common stock at a price
that reflects an equity valuation of Inova of less than $10,000,000 (a dilutive
issuance), the holder is entitled to receive additional warrants so that the
warrant is exercisable into the same percentage of common stock as was
outstanding immediately prior to the dilutive issuance.

During the year ended April 30, 2010, an additional 2,123,200
warrants to purchase Inova common stock were issued to various lenders under the
anti-dilution provision above. The anti-dilution warrants have the same terms as
the original instruments, mainly an exercise price of $100 for all warrant
shares and contractual terms ranging from 5-7 years. On July 31, 2009, the
warrant agreements were amended to remove the anti-dilution provisions. See Note
9.

The warrant shares are subject to various put option agreements
whereby for various periods ranging from April 2010 to February 2014,the
lenders can require Inova torepurchase the warrant shares for $534,900.
Under ASC 815-40 Put Warrants, warrants for put shares should be classified as
liabilities and measured at fair value at the end of each reporting period with
the change in fair value recorded to earnings. As a result, the fair value of
these warrants was recorded as a derivative liability. Upon exercise of the put
option, if Inova does not repurchase the shares within 30 days, the resulting
liability with become a convertible note. See Note 9. The exercise period for
these put options was accelerated to April 1, 2010 as a result of the debt
restructuring described in Note 8.

On March 22, 2010 Boone exercised warrants to purchase
5,768,300 shares of Inova common stock and 31.59 shares of Desert common stock.
Contemporaneously, Boone exercised the related put options, requiring Inova
torepurchase the warrant shares from Boone for $1,000,000. See Notes 8
and 9.

42

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On April 8, 2010, Ascendiant exercised warrants to purchase
2,448,905 shares of Inova common stock. Contemporaneously, Ascendiant exercised
the related put options, requiring Inova torepurchase the warrant shares
from Boone for $375,000. See Notes 8 and 9.

Fiscal 2011

During the quarter ended July 31, 2010, Boone exercised
warrants to purchase 30,111,440 shares of Inova common stock and 130.90 shares
of Desert common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$1,515,900. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note during the quarter ended July 31, 2010. See
Note 8.

During the quarter ended October 31, 2010, Boone exercised
warrants to purchase 7,682,340 shares of Inova common stock and 19.44% of
Trakkers common stock. Contemporaneously, Boone exercised the related put
options, requiring Inova to repurchase the warrants shares from Boone for
$792,000. Under the put option agreement, if Inova fails to repurchase the
warrant shares from Boone, the put option liability will become a convertible
note. Inova did not repurchase the warrant shares and accordingly, the put
option became a convertible note in November 2010. See Note 8.

Inova issued 1,000,000 warrants to a public relations firm with
a fair value of $56,500 that were fully vested and non-forfeitable on the date
of grant. The fair value of these warrants was reclassified to derivative
liabilities at $52,000 due to provisions in certain convertible note agreements
(described in Note 9) that cause all share-settable instruments issued by Inova
to be classified as liabilities.

The following tables summarize common stock warrants
outstanding by entity:

|                                        |  |             |   |   |          |  |   |           |  |  | Weighted     | 
|--------------------------------------- |  | ----------- | - | - | -------- |  | - | --------- |  |  | ------------ | 
|                                        |  |             |   |   | Weighted |  |   |           |  |  | average      | 
|                                        |  |             |   |   | average  |  |   | Aggregate |  |  | remaining    | 
|                                        |  |             |   |   | exercise |  |   | intrinsic |  |  | contractual  | 
|Warrants to purchase Inova common stock |  | Warrants    |   |   | price    |  |   | value     |  |  | life (years) | 
|Outstanding at April 30, 2008           |  | 12,575,100  |   | $ | 0.31     |  | $ | 1,817,116 |  |  | 3.85         | 
|Granted                                 |  | 28,095,720  |   |   | 0.00     |  |   |           |  |  |              | 
|Exercised                               |  | -           |   |   | -        |  |   |           |  |  |              | 
|Forfeited                               |  | -           |   |   | -        |  |   |           |  |  |              | 
|Expired                                 |  | -           |   |   | -        |  |   |           |  |  |              | 
|Outstanding at April 30, 2009           |  | 40,670,820  |   | $ | 0.10     |  | $ | 2,472,218 |  |  | 3.90         | 
|Granted                                 |  | 16,757,820  |   |   | 0.00     |  |   |           |  |  |              | 
|Exercised                               |  | (8,217,205  | ) |   | 0.00     |  |   |           |  |  |              | 
|Forfeited                               |  | -           |   |   | -        |  |   |           |  |  |              | 
|Expired                                 |  | (1,050,000  | ) |   | .07      |  |   |           |  |  |              | 
|Outstanding at April 30, 2010           |  | 48,161,435  |   | $ | 0.05     |  | $ | 2,720,778 |  |  | 4.11         | 
|Granted                                 |  | 1,000,000   |   |   | 0.18     |  |   |           |  |  |              | 
|Exercised                               |  | (37,793,780 | ) |   | .00      |  |   |           |  |  |              | 
|Forfeited                               |  | -           |   |   | -        |  |   |           |  |  |              | 
|Expired                                 |  |             |   |   |          |  |   |           |  |  |              | 
|Outstanding at April 30, 2011           |  | 11,367,655  |   | $ | 0.03     |  | $ | 676,196   |  |  | 2.56         | 

43

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|                                         |  |          |   |   |          |  |   |           |  |  | Weighted     | 
|---------------------------------------- |  | -------- | - | - | -------- |  | - | --------- |  |  | ------------ | 
|                                         |  |          |   |   | Weighted |  |   |           |  |  | average      | 
|                                         |  |          |   |   | average  |  |   | Aggregate |  |  | remaining    | 
|                                         |  |          |   |   | exercise |  |   | intrinsic |  |  | contractual  | 
|Warrants to purchase Desert common stock |  | Warrants |   |   | price    |  |   | value     |  |  | life (years) | 
|Outstanding at April 30, 2008            |  | -        |   | $ | -        |  | $ | -         |  |  | 0.00         | 
|Granted                                  |  | 91.53    |   |   | 0.00     |  |   |           |  |  |              | 
|Exercised                                |  | -        |   |   | -        |  |   |           |  |  |              | 
|Forfeited                                |  | -        |   |   | -        |  |   |           |  |  |              | 
|Expired                                  |  | -        |   |   | -        |  |   |           |  |  |              | 
|Outstanding at April 30, 2009            |  | 91.53    |   | $ | -        |  | $ | 992,060   |  |  | 4.57         | 
|Granted                                  |  | 70.96    |   |   | 0.00     |  |   |           |  |  |              | 
|Exercised                                |  | (31.59   | ) |   | 0.00     |  |   |           |  |  |              | 
|Forfeited                                |  | -        |   |   | -        |  |   |           |  |  |              | 
|Expired                                  |  | -        |   |   | -        |  |   |           |  |  |              | 
|Outstanding at April 30, 2010            |  | 130.90   |   | $ | 0.00     |  | $ | 1,072,842 |  |  | 5.10         | 
|Granted                                  |  |          |   |   | 0.00     |  |   |           |  |  |              | 
|Exercised                                |  | (130.90  | ) |   | 0.00     |  |   |           |  |  |              | 
|Forfeited                                |  | -        |   |   | -        |  |   |           |  |  |              | 
|Expired                                  |  | -        |   |   | -        |  |   |           |  |  |              | 
|Outstanding at April 30, 2011            |  | 0        |   | $ | 0.00     |  | $ |           |  |  | 0            | 

|                                           |  |          |  |   |          |  |   |               |  |  | Weighted     | 
|------------------------------------------ |  | -------- |  | - | -------- |  | - | ------------- |  |  | ------------ | 
|                                           |  |          |  |   | Weighted |  |   |               |  |  | average      | 
|                                           |  |          |  |   | average  |  |   | **Aggregate** |  |  | remaining    | 
|                                           |  |          |  |   | exercise |  |   | intrinsic     |  |  | contractual  | 
|Warrants to purchase Trakkers common stock |  | Warrants |  |   | price    |  |   | value         |  |  | life (years) | 
|Outstanding at April 30, 2008              |  | -        |  | $ | -        |  | $ | - $           |  |  | 0.00         | 
|Granted                                    |  | 19.44%   |  |   | 0.00     |  |   |               |  |  |              | 
|Exercised                                  |  | -        |  |   | -        |  |   |               |  |  |              | 
|Forfeited                                  |  | -        |  |   | -        |  |   |               |  |  |              | 
|Expired                                    |  | -        |  |   | -        |  |   |               |  |  |              | 
|Outstanding at April 30, 2009              |  | 19.44%   |  | $ | -        |  | $ | 998,491       |  |  | 4.35         | 
|Granted                                    |  | 13.50%   |  |   | 0.00     |  |   |               |  |  |              | 
|Exercised                                  |  | -        |  |   | -        |  |   |               |  |  |              | 
|Forfeited                                  |  | -        |  |   | -        |  |   |               |  |  |              | 
|Expired                                    |  | -        |  |   | -        |  |   |               |  |  |              | 
|Outstanding at April 30, 2010              |  | 32.94%   |  | $ | -        |  | $ | 1,082,932     |  |  | 3.69         | 
|Granted                                    |  | %        |  |   | 0.00     |  |   |               |  |  |              | 
|Exercised                                  |  | 19.44    |  |   | -        |  |   |               |  |  |              | 
|Forfeited                                  |  | -        |  |   | -        |  |   |               |  |  |              | 
|Expired                                    |  | -        |  |   | -        |  |   |               |  |  |              | 
|Outstanding at April 30, 2011              |  | 13.50%   |  | $ | -        |  | $ | 10,606        |  |  | 3.18         | 

NOTE 17  MAJOR CUSTOMERS AND MAJOR VENDORS

During fiscal 2011 and 2010, revenues generated from three
customers were approximately 43% and 34% of total revenues. These revenues were
generated by Desert from its customers in network solution contracts.

During fiscal 2011 and 2010, purchases from four vendors
totaled approximately 63% and 50% of total purchases. These purchases were made
by Desert.

NOTE 18  SEGMENT INFORMATION

Inova has three reportable segments, one providing IT solutions
and services (Edgetech), one providing RFID products (RFID) and one providing
network solutions (DCI). Operating segments are defined as components of an
enterprise about which separate financial information is available that is
evaluated regularly in deciding how to allocate resources and in assessing
performance. The following is the summary of operations by segment:

44

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For the year ended April 30, 2010:

RFID
    
    
    Edgetech
    
    
    DCI
    
    
    Corporate
    
    
    TotalRevenues
    
    2,042,798
    
    
    370,031
    
    
    18,524,107
    
    
    95,843
    
    
    21,032,779Cost of revenues
    
    (650,988
    )
    
    (162,826
    )
    
    (13,378,515
    )
    
    (148,230
    )
    
    (14,340,559
    )Gross profit
    
    1,391,810
    
    
    207,205
    
    
    5,145,592
    
    
    (52,387
    )
    
    6,692,220Operating costs
    
    (1,890,622
    )
    
    104,478
    
    
    (3,347,101
    )
    
    (2,918,283
    )
    
    (8,051,528
    )Operating income
    
    (498,812
    )
    
    311,683
    
    
    1,798,491
    
    
    (2,970,670
    )
    
    (1,359,308
    )Interest expense
    
    (712,842
    )
    
    (46,240
    )
    
    (270,538
    )
    
    (4,674,597
    )
    
    (5,704,217
    )Interest income
    
    -
    
    
    -
    
    
    307
    
    
    -
    
    
    307Other income
    
    179
    
    
    -
    
    
    -
    
    
    -
    
    
    179Net income (loss)
    
    (1,211,475
    )
    
    265,443
    
    
    1,528,260
    
    
    (7,645,267
    )
    
    (7,063,039
    )Total assets
    
    5,325,941
    
    
    67,414
    
    
    3,700,793
    
    
    3,366,408
    
    
    12,460,556


For the year ended April 30, 2011:

RFID
    
    
    DCI
    
    
    Corporate
    
    
    TotalRevenues
    
    2,041,870
    
    
    20,079,919
    
    
    -
    
    
    22,121,789Cost of revenues
    
    (635,206
    )
    
    (14,610,207
    )
    
    -
    
    
    (15,245,413
    )Gross profit
    
    1,406,664
    
    
    5,469,712
    
    
    -
    
    
    6,876,376Operating costs
    
    (3,910,601
    )
    
    (3,957,810
    )
    
    (72,790
    )
    
    (7,941,201
    )Operating income
    
    (2,503,937
    )
    
    1,511,902
    
    
    (72,790
    )
    
    (1,064,825
    )Interest expense
    
    (656,936
    )
    
    (418,978
    )
    
    (1,234,358
    )
    
    (2,310,272
    )Other income
    
    -
    
    
    24,720
    
    
    -
    
    
    -Net income (loss)
    
    (3,160,873
    )
    
    1,117,644
    
    
    (1,307,148
    )
    
    (3,350,377
    )Total assets
    
    2,114,081
    
    
    2,639,220
    
    
    3,406,696
    
    
    8,159,997


45

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NOTE 19  SUBSEQUENT EVENTS

On June 20, 2011, the Agile note from 2008 was amended to allow
the principal to be converted to stock at the rate of $0.03 per share.

46

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

There are no disagreements with our accountant on accounting
and financial disclosure.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended (the "Act") is accumulated and
communicated to the issuer's management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure. It should
be noted that the design of any system of controls is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions, regardless of how remote. As of the end of the period covered
by this Annual Report, we carried out an evaluation, under the supervision and
with the participation of our Chief Financial Officer and Chief Executive
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Chief Financial Officer
and Chief Executive Officer have concluded that the Companys disclosure
controls and procedures are not effective due to the identification of material
weaknesses in our internal controls.

Changes in Internal Controls over Financial Reporting

We have not yet made any changes in our internal controls over
financial reporting that occurred during the period covered by this report on
Form 10-K that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

Managements Annual Report on Internal Control Over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system
was designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes, in accordance with generally accepted accounting principles. Because

of inherent limitations, a system of internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate due to change in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

Our management conducted an evaluation of the effectiveness of
our internal control over financial reporting using the criteria set forth by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal ControlIntegrated Framework. Based on its evaluation, our management
concluded that our internal controls over financial reporting are not effective
due to material weaknesses in areas covering impairment determination, revenue
recognition and supervisory responsibilities.

In assessing the effectiveness of our internal control over
financial reporting, management identified the following material weakness in
internal control over financial reporting as of April 30, 2011:

- Deficiencies in Segregation of Duties. The Chief Executive Officer and the
  Chief Financial Officer are actively involved in the preparation of the
  financial statements, and therefore cannot provide an independent review. The
  company may establish an audit committee this year, which should address this
  problem.

The transactional controls of revenue, cash and assets for the
subsidiaries are adequate.

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

47

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PART III.

Item 10. Directors, Executive Officers and Corporate
Governance

Our directors and executive officers as of the date of this
Report are as follows:

| | Name          | Age | Position                                           
| | ------------- | --- | ---------------------------------------------------
| | Adam Radly    | 42  | Chief Executive Officer,
      President, Treasurer
| | Paul Aunger   | 52  | Secretary, Director                                
| | Bob Bates     | 42  | Chief Financial Officer                            
| | Alex Lightman | 48  | Director                                           

Adam Radly, President, Chief Executive Officer, Chairman and
Treasurer

Mr. Radly became Chief Executive Officer of Inova after the
merger with Webs Biggest. Mr. Radly was previously the founder and CEO of Isis
Communications. While he was CEO of Isis, the companys revenue increased from
zero to $22 million. He also complete an IPO for Isis raising A$50 million.
During his tenure, Isis completed eight acquisitions, and raised an additional
$30 million from U.S. institutional investors in a secondary offering. Isis
later merged with AAV Ltd.

Paul Aunger, Secretary

Mr. Aunger became a director and the Companys Secretary on
November 22, 2005. He is managing partner of Advisors, LLC.

Bob Bates, Chief Financial Officer

Bob is a CPA, CVA and CFE with over 20 years experience as a
Controller and CFO for various public and private entities in several countries.
He was with Allied Capital (NYSE) as Controller and has worked for other Billion
dollar companies. He also worked with KPMG. He is a director of Catalyst Group.

Mr. Alex Lightman, Director

Mr. Alex Lightman has been a director since August 2008. He was the founding CEO and Chairman of IPv6 Summit, Inc., a leading organizer of international IPv6 events and consultants to government and industry on IPv6 applications, training, and promotion. Mr. Lightman has nearly 20 years of high technology management experience and, in addition, has experience in politics (including work for US Senator), consulting, the oil drilling industry, and the renewable energy industry. Mr. Lightman is the author of Brave New Unwired World (Wiley, 2002) and a 1983 graduate of the Massachusetts Institute of Technology. He has attended graduate school at the Kennedy School of Government (Harvard University) and the University of Phoenix.

Director Independence

The full Board of Directors fulfills the role of the Audit
Committee. We do not have an Audit Committee financial expert. The Board
believes that due to the Companys small size, an audit committee is unnecessary
and would impose high costs in comparison to the potential benefits.

48

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission (the "SEC) initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of our Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish our Company with
copies of all Section 16(a) forms they file.

Based on our review of the Section 16(a) forms filed with the
SEC, no director, officer, or 10% beneficial owner of our securities failed to
timely file any report required under Section 16(a). To our knowledge, none of
the above persons failed to report a reportable transaction.

We do not have a code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. We have not adopted a
formal code of ethics because we have determined that such a code would be an
unnecessary and bureaucratic practice given the small size of the Company's
management; however we endeavor to carry out our responsibilities in accordance
with required laws and regulations.

Item 11. Executive Compensation.

The following describes the cash and stock compensation paid to
our directors and officers during the two past fiscal years. Our fiscal year
ends on April 30. As a result, our most recent fiscal year ended April 30, 2011,
and is referred to below as 2011. The previous fiscal year ended April 30, 2010
and is referred to as 2010 below.

SUMMARY COMPENSATION TABLE

|Name and principal                  |  |      |  |  | Management fee |  |  | Stock      |  |  |           | 
|----------------------------------- |  | ---- |  |  | -------------- |  |  | ---------- |  |  | --------- | 
|position                            |  | Year |  |  | ($)            |  |  | Awards ($) |  |  | Total ($) | 
|Adam Radly, Chairman and CEO        |  | 2011 |  |  |                |  |  | -0-        |  |  | 0,000     | 
|Adam Radly, Chairman and CEO        |  | 2010 |  |  | 0              |  |  | -0-        |  |  | 0,000     | 
|Paul Aunger, Secretary and Director |  | 2011 |  |  | 0              |  |  | 48,000     |  |  | 48,000    | 
|Paul Aunger, Secretary and Director |  | 2010 |  |  | 28,000         |  |  | 48,000     |  |  | 76,000    | 
|Bob Bates, CFO (HP Accounting)      |  | 2011 |  |  | 120,000        |  |  | -0-        |  |  | 120,000   | 
|Bob Bates, CFO (HP Accounting)      |  | 2010 |  |  | 120,000        |  |  | -0-        |  |  | 120,000   | 
|Jeff Mandelbaum, Director           |  | 2010 |  |  | 12,000         |  |  | -0-        |  |  | 12,000    | 
|Alex Lightman, Director             |  | 2011 |  |  | 12,000         |  |  | -0-        |  |  | 12,000    | 
|Alex Lightman, Director             |  | 2010 |  |  | 12,000         |  |  | -0-        |  |  | 12,000    | 

Other related party information:

We are not a party to an employment agreement with Mr Radly. Mr
Radly has agreed to provide his services at no cost to the Company. Companies in
which Mr Radly has an interest (and therefore are defined as related to Mr
Radly) do provide additional services to the Company that do not include his
services as CEO of Inova. The total amount earned by these entities in the most
recent fiscal years (the 12 months ending April 2010 and 2011) was $240,000, per
the management fee agreement. These payments are reflected in the executive
compensation for Mr. Radly in our filings because he has disclosed that he has
an interest in these companies.

The Company accrues professional fees of $1,000 to Advisors
LLC, a company related to Paul Aunger, a director of the company. The management
fees payable for work provided by Mr Radly and Mr Aunger are paid to various
companies related to them and not paid to them personally. The amounts in the
table above represent the total compensation paid in relation to work provided
by Mr Radly and Mr Aunger and staff of their entities.

Our executive officers do not have written employment
agreements with the Company.

49

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

The following table describes the equity compensation available
to our management.

|Equity Compensation Plan Information                         | 
|------------------------------------------------------------ | 
|                                                             | 
|                                                             | 
|                                                             | 
|                                                             | 
|                                                             | 
|                                                             | 
|                                                             | 
|Plan category                                                | 
|Equity compensation plans approved by
      security holders | 
|Equity compensation plans not approved by security holders   | 
|Total                                                        | 

(1) Includes 5,000 non-restricted Class B preferred shares
authorized to be issued for each acquisition with more than $40 million in sales
or $10 million in EBITDA and 5,000 non-restricted Class B preferred shares
authorized to be issued for each acquisition with less than $40 million in
sales. Each Class B preferred share is convertible into common stock at the rate
of 1 to 100.

The following table sets forth certain information known to us
with respect to beneficial ownership of our common stock as of April 30, 2011 by
each person known by us to beneficially own 5% or more of our outstanding common
stock; each of our directors; each of the Named Executive Officers; and all of
our directors and Named Executive Officers as a group.

In general, a person is deemed to be a "beneficial owner"of a security if that person has or shares the power to vote or direct the
voting of such security, or the power to dispose or direct the disposition of
such security. In computing the number of shares beneficially owned by a person
and the percentage ownership of that person, shares of common stock subject to
options or debentures held by that person that are currently exercisable or
convertible or exercisable or convertible within 60 days of April 30, 2011 are
deemed outstanding.

Percentage of beneficial ownership is based upon 62,273,289
shares of common stock outstanding at April 30, 2011. To our knowledge, except
as set forth in the footnotes to this table and subject to applicable community
property laws, each person named in the table has sole voting and investment
power with respect to the shares set forth opposite such person's name.

|                                           | Number of Shares Beneficially                   |                 
|------------------------------------------ | ----------------------------------------------- | ----------------
|Name and Address of Beneficial Owner (1)   | Owned                                           | Percent of Class
|Adam Radly - CEO and related entities      | 28,756,440 Common Stock,
      $0.001 Par Value | 46%             
|                                           |                                                 |                 
|Paul Aunger-Secretary and related entities | 22,171,189                                      | 36%             

(1) The address for these owners is 2300 W. Sahara Ave. Suite
800 Las Vegas, Nevada 89102

50

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Item 13. Certain Relationships and Related Transactions

A company related to our Chairman and CEO, Adam Radly, has
loaned the Company money. The amount outstanding under this loan is $142,532.
Interest is accruing at the rate of 7% per year.

In December 2007, a company related to our CEO agreed to
convert $600,000 of cash loaned to the Company plus the interest accrued on the
loan into 464,912 common shares of the Company. However, as discussed above,
this transaction was not accounted for until July 2008, when the authorized
shares were increased.

Item 14. Principal Accountant Fees and Services

AUDIT FEES

Our fees for fiscal 2010 and 2011 totaled $70,000 and $70,000
respectively.

AUDIT-RELATED FEES

Our fees for fiscal 2010 and 2011 totaled $45,000 and $50,000,
respectively.

TAX FEES

There were no tax fees paid to our principal accountants in the
last two fiscal years.

ALL OTHER FEES

Our fees for fiscal 2010 and 2011 totaled $0 and $0
respectively.

None of the above fees were subject to audit committee
pre-approval requirements.

51

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PART IV.

Item 15. Exhibits

(A) Exhibits

Exhibit
    
    DescriptionNumber31.1
    
    Certification of the
      Chief Executive Officer required by Rule 13a - 14(a) or Rule 15d - 14(a)31.2
    
    Certification of the Chief Financial
      Officer required by Rule 13a - 14(a) or Rule 15d - 14(a)32.1
    
    Certification of the
      Chief Executive Officer required by Rule 13a - 14(b) or Rule 15d - 14(b)
      and 18 U.S.C. 135032.2
    
    Certification of the Chief Financial
      Officer required by Rule 13a - 14(b) or Rule 15d - 14(b) and 18 U.S.C.
      135099.1
    
    Certificate Pursuant to NRS 78.209 of Amendment of Articles of Incorporation


52

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SIGNATURES

INOVA TECHNOLOGY INC.

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

INOVA TECHNOLOGY, INC.

By: /s/ Adam
Radly Adam Radly, Chief Executive Officer 
Date: August 9, 2011

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

|Signature       |  | Name and Title         |  | Date          
|--------------- |  | ---------------------- |  | --------------
|                |  |                        |  |               
|/s/ Adam Radly  |  | Adam Radly             |  |               
|                |  | Chairman and CEO       |  | August 9, 2011
|                |  |                        |  |               
|/s/ Bob Bates   |  | Bob Bates              |  |               
|                |  | CFO                    |  | August 9, 2011
|                |  |                        |  |               
|/s/ Paul Aunger |  | Paul Aunger            |  |               
|                |  | Secretary and Director |  | August 9, 2011

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