---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 10-Q

(Mark One)

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

For the quarterly period ended July 31, 2011

or

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

For the transition period from ____________ to ____________

Commission File Number 001-34297

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

|Delaware                                                             | 98-0540536                       
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)
|                                                                     |                                  
|16413 N. 91 Street, C 100, Scottsdale, AZ                            | 85260                            
|(Address of principal executive offices)                             | (Zip Code)                       

480-619-5510(Registrants telephone number,
including area code)

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

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. [X]
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 whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a small
reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act.



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

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act[   ]
YES       [X] NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCYPROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a
court.[   ]
YES       [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date. 66,602,490
common shares issued and outstanding as of September 16, 2011.

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Table of Contents

|PART I - FINANCIAL
      INFORMATION                                                                | 3 
|--------------------------------------------------------------------------------------------------- | --
|Item
      1. Financial Statements                                                                  | 3 
|Item 2. Managements Discussion and Analysis of Financial
      Condition and Results of Operations | 4 
|Item
      3. Quantitative and Qualitative Disclosure About Market Risk                             | 9 
|Item 4. Controls and Procedures                                                                     | 10
|PART II  OTHER INFORMATION                                                                         | 10
|Item 1. Legal Proceedings                                                                           | 10
|Item
      2. Unregistered Sales of Equity Securities                                               | 10
|Item 3. Defaults Upon Senior Securities                                                             | 11
|Item
      4. [Removed and Reserved]                                                                | 11
|Item 5. Other Information                                                                           | 11
|Item
      6. Exhibits                                                                              | 11
|SIGNATURES                                                                                          | 13

2

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The unaudited interim financial statements of On4
Communications, Inc. follow. These statements are presented in U.S. dollars and
are prepared in accordance with generally accepted accounting principles in the
United States.

3

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ON4 COMMUNICATIONS INC.

Financial Statements

Nine Months Ended July 31, 2011

(Expressed in US dollars)

---

On4 Communications Inc. (A Development Stage Company)
Balance Sheets (Expressed in US Dollars)

|                                                                                                                |  | July 31,    |   |  | October 31, |  
|--------------------------------------------------------------------------------------------------------------- |  | ----------- | - |  | ----------- | -
|                                                                                                                |  | 2011        |   |  | 2010        |  
|                                                                                                                |  | $           |   |  | $           |  
|                                                                                                                |  | (unaudited) |   |  |             |  
|ASSETS                                                                                                          |  |             |   |  |             |  
|Current Assets                                                                                                  |  |             |   |  |             |  
|Cash                                                                                                            |  | 613         |   |  | 7,558       |  
|Total Current Assets                                                                                            |  | 613         |   |  | 7,558       |  
|Investment (Note 4)                                                                                             |  | 1           |   |  |            |  
|Property and
      equipment (Note 5)                                                                           |  | 1,368       |   |  | 3,594       |  
|Total Assets                                                                                                    |  | 1,982       |   |  | 11,152      |  
|LIABILITIES AND STOCKHOLDERS DEFICIT                                                                           |  |             |   |  |             |  
|Current Liabilities                                                                                             |  |             |   |  |             |  
|Accounts payable                                                                                                |  | 601,408     |   |  | 625,086     |  
|Accrued interest payable                                                                                        |  | 201,638     |   |  | 138,514     |  
|Due to related parties (Note 6)                                                                                 |  | 379,594     |   |  | 327,049     |  
|Notes payable (Note 7)                                                                                          |  | 468,690     |   |  | 467,018     |  
|Total Liabilities                                                                                               |  | 1,651,330   |   |  | 1,557,667   |  
|Nature of Operations and Continuance of
      Business (Note 1)                                                 |  |             |   |  |             |  
|Commitments (Note 10)                                                                                           |  |             |   |  |             |  
|Stockholders Deficit                                                                                           |  |             |   |  |             |  
|Preferred stock: 10,000,000 shares authorized, non-voting,
      no par value; No shares issued and outstanding |  |            |   |  |            |  
|Common stock: 100,000,000 shares
      authorized, $0.0001 par value; 66,602,490 shares issued and outstanding  |  | 6,660       |   |  | 6,660       |  
|Additional paid-in capital                                                                                      |  | 11,866,935  |   |  | 11,870,626  |  
|Common stock issuable                                                                                           |  | 70,000      |   |  | 70,000      |  
|Deficit
      accumulated during the development stage                                                          |  | (13,592,943 | ) |  | (13,493,801 | )
|Total Stockholders Deficit                                                                                     |  | (1,649,348  | ) |  | (1,546,515  | )
|Total Liabilities
      and Stockholders Deficit                                                               |  | 1,982       |   |  | 11,152      |  

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

F-1

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On4 Communications Inc. (A Development Stage Company)
Statements of Operations (Expressed in US Dollars) (unaudited)

For The
    
    
    For The
    
    
    For The
    
    
    For The
    
    
    Accumulated FromThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine Months
    
    
    June 5, 2006Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    (Date of Inception)July 31,
    
    
    July 31,
    
    
    July 31,
    
    
    July 31,
    
    
    to July 312011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Revenue
    
    
    
    
    
    
    
    
    
    
    
    
    
    Costs of Sales
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross margin
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating ExpensesAdvertising and marketing
    
    
    
    
    
    
    
    
    
    
    5,648
    
    
    182,182Amortization of intangible assets
    
    
    
    
    1,739
    
    
    
    
    
    5,216
    
    
    17,989Amortization of property
      and equipment
    
    242
    
    
    (546
    )
    
    725
    
    
    3,374
    
    
    34,007Consulting fees
    
    
    
    
    (5
    )
    
    (2,191
    )
    
    323,034
    
    
    2,136,862Foreign exchange loss
    
    (666
    )
    
    (1,410
    )
    
    15,395
    
    
    26,134
    
    
    265,000General and administrative
    
    7,288
    
    
    32,653
    
    
    22,789
    
    
    101,014
    
    
    1,078,042Impairment of goodwill
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,274,110Impairment of intangible
      assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,219,724Management fees (Note 6(b))
    
    
    
    
    45,000
    
    
    
    
    
    135,000
    
    
    1,162,596Payroll
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,566Professional fees
    
    15,366
    
    
    51,011
    
    
    53,864
    
    
    209,313
    
    
    666,212Research and development
    
    
    
    
    1,749
    
    
    
    
    
    7,432
    
    
    318,360Total Operating Expenses
    
    22,230
    
    
    130,191
    
    
    90,582
    
    
    816,165
    
    
    11,358,650Operating Loss
    
    (22,230
    )
    
    (130,191
    )
    
    (90,582
    )
    
    (816,165
    )
    
    (11,358,650
    )Other Income (Expense)Gain on settlement of
      debt
    
    1,985
    
    
    469,506
    
    
    1,985
    
    
    425,595
    
    
    648,979Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    181,682Interest expense
    
    (35,626
    )
    
    (12,987
    )
    
    (79,294
    )
    
    (142,812
    )
    
    (661,518
    )Write-off of note receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,114,182
    )Total Other Income (Expense)
    
    (33,641
    )
    
    456,519
    
    
    (77,309
    )
    
    282,783
    
    
    (945,039
    )Gain (Loss) from Continuing Operations
    
    (55,871
    )
    
    326,328
    
    
    (167,891
    )
    
    (533,385
    )
    
    (12,303,689
    )Discontinued Operations (Note 3)Gain (loss) from discontinued operations
    
    
    
    
    42,048
    
    
    (8,085
    )
    
    (52,385
    )
    
    (1,282,616
    )Gain on disposal of discontinued operations
    
    
    
    
    
    
    
    76,834
    
    
    
    
    
    76,834Gain (Loss) on Discontinued Operations
    
    
    
    
    42,048
    
    
    68,749
    
    
    (52,385
    )
    
    (1,205,782
    )Net Income (Loss)
    
    (55,871
    )
    
    368,376
    
    
    (99,142
    )
    
    (585,767
    )
    
    (13,509,471
    )Net Income (Loss) Per Share  Basic and
      DilutedContinuing operations
    
    
    
    
    0.01
    
    
    
    
    
    (0.01
    )Discontinued operations
    
    
    
    
    
    
    
    
    
    
    Weighted Average Shares Outstanding
    
    66,602,000
    
    
    62,045,000
    
    
    66,602,000
    
    
    71,722,000


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

F-2

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On4 Communications Inc.(A Development Stage Company)
Statements of Cash Flows (Expressed in US Dollars) (unaudited)

|                                                                                  |  |                     |   |  |                     |   |  | Accumulated From    |  
|--------------------------------------------------------------------------------- |  | ------------------- | - |  | ------------------- | - |  | ------------------- | -
|                                                                                  |  |                     |   |  |                     |   |  | June 5, 2006        |  
|                                                                                  |  | For The Nine Months |   |  | For The Nine Months |   |  | (Date of Inception) |  
|                                                                                  |  | Ended July 31,      |   |  | Ended July 31,      |   |  | to July 31,         |  
|                                                                                  |  | 2011                |   |  | 2010                |   |  | 2011                |  
|                                                                                  |  | $                   |   |  | $                   |   |  | $                   |  
|Operating Activities                                                              |  |                     |   |  |                     |   |  |                     |  
|Net loss from continuing operations                                               |  | (167,891            | ) |  | (585,767            | ) |  | (12,303,689         | )
|Adjustments to reconcile net
      loss to net cash used in operating activities: |  |                     |   |  |                     |   |  |                     |  
|Accretion of discount on
      convertible debt                                   |  |                    |   |  | 76,782              |   |  | 75,000              |  
|Amortization of
      property and equipment                                      |  | 725                 |   |  | 3,374               |   |  | 34,007              |  
|Amortization of intangible
      assets                                           |  |                    |   |  | 5,216               |   |  | 17,989              |  
|Gain on
      settlement of debt                                                  |  | (1,985              | ) |  | (430,037            | ) |  | (652,301            | )
|Impairment of goodwill                                                            |  |                    |   |  |                    |   |  | 3,274,109           |  
|Impairment of
      intangible assets                                             |  |                    |   |  |                    |   |  | 2,219,724           |  
|Issuance of notes payable for
      services and penalties                        |  |                    |   |  |                    |   |  | 90,402              |  
|Issuance of
      shares for services                                             |  |                    |   |  |                    |   |  | 528,000             |  
|Stock-based compensation                                                          |  | (3,691              | ) |  | 319,534             |   |  | 1,136,981           |  
|Write-off of
      notes receivable                                               |  |                    |   |  |                    |   |  | 1,114,182           |  
|Changes in operating assets and liabilities:                                      |  |                     |   |  |                     |   |  |                     |  
|Accounts
      receivable                                                         |  |                    |   |  | 64,737              |   |  | (5,431              | )
|Prepaid expenses and deposits                                                     |  |                    |   |  | (6,346              | ) |  | (10,678             | )
|Accounts payable
      and accrued liabilities                                    |  | 33,556              |   |  | 128,562             |   |  | 808,222             |  
|Accrued interest payable                                                          |  | 63,124              |   |  | 189,966             |   |  | 420,909             |  
|Deferred revenue                                                                  |  |                    |   |  | (58,264             | ) |  |                    |  
|Due to related parties                                                            |  | 54,217              |   |  | 159,308             |   |  | 576,853             |  
|Net Cash Used In Operating Activities                                             |  | (21,945             | ) |  | (132,935            | ) |  | (2,675,721          | )
|Investing Activities                                                              |  |                     |   |  |                     |   |  |                     |  
|Acquisition of intangible
      assets                                            |  |                    |   |  |                    |   |  | (182,687            | )
|Cash acquired in reverse merger                                                   |  |                    |   |  |                    |   |  | 1,523               |  
|Acquisition of property and
      equipment                                       |  |                    |   |  | (2,897              | ) |  | (33,562             | )
|Advances for note receivable                                                      |  |                    |   |  |                    |   |  | (1,114,182          | )
|Net Cash Used In Investing Activities                                             |  |                    |   |  | (2,897              | ) |  | (1,328,908          | )
|Financing Activities                                                              |  |                     |   |  |                     |   |  |                     |  
|Proceeds from issuance of
      common stock                                      |  |                    |   |  |                    |   |  | 1,821,267           |  
|Proceeds from issuance of preferred stock                                         |  |                    |   |  |                    |   |  | 1,000,000           |  
|Proceeds from notes payable                                                       |  |                    |   |  | 75,000              |   |  | 727,022             |  
|Repayment of notes payable                                                        |  |                    |   |  |                    |   |  | (81,250             | )
|Proceeds from related parties                                                     |  |                    |   |  | 81,472              |   |  | 561,935             |  
|Repayments to related parties                                                     |  |                    |   |  | (39,780             | ) |  | (84,780             | )
|Cash from disposition of
      subsidiary                                         |  | 15,000              |   |  |                    |   |  | 15,709              |  
|Share
      issuance costs                                                        |  |                    |   |  |                    |   |  | (8,000              | )
|Net Cash Provided By Financing Activities                                         |  | 15,000              |   |  | 116,692             |   |  | 3,951,903           |  
|Effects of
      Exchange Rate Changes on Cash                                    |  |                    |   |  | 18,780              |   |  | 54,862              |  
|Net Cash (Used in) Provided by Discontinued
      Operations:                     |  |                     |   |  |                     |   |  |                     |  
|Operating Activities                                                              |  |                    |   |  |                    |   |  | (119,701            | )
|Investing Activities                                                              |  |                    |   |  |                    |   |  | (661,509            | )
|Financing Activities                                                              |  |                    |   |  |                    |   |  | 779,687             |  
|                                                                                  |  |                    |   |  |                    |   |  | (1,523              | )
|(Decrease) Increase in Cash                                                       |  | (6,945              | ) |  | (360                | ) |  | 613                 |  
|Cash - Beginning of Period                                                        |  | 7,558               |   |  | 473                 |   |  |                    |  
|Cash - End of
      Period                                                        |  | 613                 |   |  | 113                 |   |  | 613                 |  
|Supplemental Disclosures                                                          |  |                     |   |  |                     |   |  |                     |  
|Interest paid                                                                     |  |                    |   |  |                    |   |  |                    |  
|Income taxes paid                                                                 |  |                    |   |  |                    |   |  |                    |  

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

F-3

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On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|1. | Nature of Operations and Continuance of
      Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Sound Revolution Inc. (the "Company"), was incorporated
      on June 4, 2001 under the laws of the State of Delaware and on July 2,
      2009 changed its name to On4 Communications, Inc. On May 1, 2009, the
      Company merged with On4 Communications, Inc. (On4), an Arizona
      corporation incorporated on June 5, 2006. Pursuant to the terms of the
      merger agreement, the Company acquired all assets and liabilities of On4
      by issuing new shares to all former shareholders of On4 on a 1-to-1 basis.
      The Company issued 27,955,089 common shares to the former shareholders of
      On4 and the merger was accounted for as a reverse merger using the
      purchase method of accounting, with the former shareholders of On4
      controlling 68% of the issued and outstanding common shares of the Company
      after the closing of the transaction. Accordingly, On4 was deemed to be
      the acquirer for accounting purposes and the consolidated financial
      statements are presented as a continuation of On4 and include the results
      of operations of On4 since incorporation on June 5, 2006, and the results
      of operations of the Company since the date of acquisition on May 1,
      2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | On4 is in the business of manufacturing two-way
      communication and location devices with applications that include tracking
      people, pets, assets, and inventory, among others. The Company had two
      wholly-owned subsidiaries: (i) Sound Revolution Recordings Inc., which was
      incorporated in British Columbia, Canada on June 20, 2001, for the purpose
      of carrying on music marketing services in British Columbia, and (ii)
      Charity Tunes Inc., which was incorporated in the State of Delaware on
      June 27, 2005, for the purpose of operating a website for the distribution
      of songs online. On March 16, 2011, the Company disposed its two wholly
      owned subsidiaries, Sound Revolution Recordings Inc., and Charity Tunes
      Inc., in consideration for $15,000 and 6,300 shares of the acquirers
      common stock. The Company is a Development Stage Company, as defined by
      Financial Accounting Standards Board (FASB) Accounting Standards
      Codification (ASC) 915, Development Stage Entities, and has not
      yet generated significant revenues from their intended business
      activities.                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These financial statements have been prepared on a going
      concern basis, which implies that the Company will continue to realize its
      assets and discharge its liabilities in the normal course of business. The
      Company has not generated significant revenues since inception and is
      unlikely to generate significant revenue or earnings in the immediate or
      foreseeable future. The continuation of the Company as a going concern is
      dependent upon the continued financial support from its shareholders, the
      ability of the Company to obtain necessary equity financing to continue
      operations, and the attainment of profitable operations. As at July 31,
      2011, the Company has a working capital deficiency of $1,650,717 and has
      accumulated losses totaling $13,592,943 since inception. These factors
      raise substantial doubt regarding the Companys ability to continue as a
      going concern. These consolidated financial statements do not include any
      adjustments to the recoverability and classification of recorded asset
      amounts and classification of liabilities that might be necessary should
      the Company be unable to continue as a going concern     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company will need additional working capital to
      continue or to be successful in any future business activities. Therefore,
      continuation of the Company as a going concern is dependent upon obtaining
      the additional working capital necessary to accomplish its objective.
      Management plans to seek debt or equity financing, or a combination of
      both, to raise the necessary working capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|2. | Summary of Significant Accounting
  Principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Basis of Presentation and Principles of
      Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | These financial statements are prepared in conformity
      with accounting principles generally accepted in the United States and are
      presented in US dollars, unless otherwise noted. The Companys fiscal year
      end is October 31.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Interim Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The interim financial statements have been prepared by
      the Company pursuant to the rules and regulations of the U.S. Securities
      and Exchange Commission (the "SEC"). Certain information and footnote
      disclosure normally included in consolidated financial statements prepared
      in accordance with accounting principles generally accepted in the United
      States have been condensed or omitted pursuant to such SEC rules and
      regulations. The interim financial statements should be read together with
      the audited consolidated financial statements and accompanying notes
      included in the Company's audited consolidated financial statements for
      the year ended October 31, 2010. In the opinion of the Company, the
      unaudited financial statements contained herein contain all adjustments
      (consisting of a normal recurring nature) necessary to present a fair
      statement of the results of the interim periods
  presented.                                                                                                                                                                                                                                                          

F-4

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|2. | Summary of Significant Accounting Principles(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The preparation of financial statements in conformity
      with US generally accepted accounting principles requires management to
      make estimates and assumptions that affect the reported amounts of assets
      and liabilities and disclosure of contingent assets and liabilities at the
      date of the financial statements and the reported amounts of revenues and
      expenses during the reporting period. The Company regularly evaluates
      estimates and assumptions related to the useful life and recoverability of
      long-lived assets, recoverability of goodwill and intangible assets, fair
      value of convertible debt, stock-based compensation, bad debt expenses,
      and deferred income tax asset valuation allowances. The Company bases its
      estimates and assumptions on current facts, historical experience and
      various other factors that it believes to be reasonable under the
      circumstances, the results of which form the basis for making judgments
      about the carrying values of assets and liabilities and the accrual of
      costs and expenses that are not readily apparent from other sources. The
      actual results experienced by the Company may differ materially and
      adversely from the Companys estimates. To the extent there are material
      differences between the estimates and the actual results, future results
      of operations will be affected.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company considers all highly liquid instruments with
      maturity dates of three months or less at the time of issuance to be cash
      equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Property and equipment, consisting primarily of computer
      hardware and office equipment, is stated at cost and is amortized using
      the straight-line method over the estimated lives of the related assets of
      three and five years, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Intangible Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Intangible assets consist of patents and trademarks
      related to the TX200 mobile communication device. Intangible assets
      acquired are initially recognized and measured at cost and is being
      amortized straight-line over the estimated useful life of ten years.
      Impairment tests are conducted annually or more frequently if events or
      changes in circumstances indicate that the asset may be impaired. The
      impairment test compares the carrying amount of the intangible asset with
      its fair value, and an impairment loss is recognized in income for the
      excess, if any. The amortization methods and estimated useful lives of
      intangible assets are reviewed annually.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In accordance with ASC 350, Intangibles  Goodwill and
      Other, goodwill is required to be tested for impairment on an annual
      basis, or more frequently if certain indicators arise, using the guidance
      specifically provided.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Management reviews goodwill at least annually, and on an
      interim basis when conditions require, evaluates events or changes in
      circumstances that may indicate impairment in the carrying amount of such
      assets. An impairment loss is recognized in the statement of operations in
      the period that the related asset is deemed to be impaired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Website Development Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Website development costs consist of costs incurred to
      develop internet websites to promote, advertise, and earn revenue with
      respect to the Companys business operations. Costs are capitalized in
      accordance with ASC 350-50, Web Site Development Costs, and are
      amortized on a straight-line basis over the estimated useful life of three
      years commencing when the internet web site has been completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Impairment of Long-Lived Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In accordance with ASC 360, Property, Plant, and
      Equipment, the Company tests long-lived assets or asset groups for
      recoverability when events or changes in circumstances indicate that their
      carrying amount may not be recoverable. Circumstances which could trigger
      a review include, but are not limited to: significant decreases in the
      market price of the asset; significant adverse changes in the business
      climate or legal factors; accumulation of costs significantly in excess of
      the amount originally expected for the acquisition or construction of the
      asset; current period cash flow or operating losses combined with a
      history of losses or a forecast of continuing losses associated with the
      use of the asset; and current expectation that the asset will more likely
      than not be sold or disposed significantly before the end of its estimated
      useful life. Recoverability is assessed based on the carrying amount of
      the asset and its fair value which is generally determined based on the
      sum of the undiscounted cash flows expected to result from the use and the
      eventual disposal of the asset, as well as specific appraisal in certain
      instances. An impairment loss is recognized when the carrying amount is
      not recoverable and exceeds fair value.                                                                    

F-5

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|2. | Summary of Significant Accounting Principles(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Research and Development Expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Research and development costs are expensed as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Advertising Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company expenses advertising costs as incurred. For
      the nine month period ended July 31, 2011, advertising costs were $nil
      (2010 - $5,648).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company accounts for the investment described in Note
      4 pursuant to ASC 320, Debt and Equity Securities. As the fair
      value of the investment is nominal, not readily determinable, and the
      estimation of fair value is not practicable, the Company has recorded the
      fair value at $1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Earnings Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company computes net loss per share in accordance
      with ASC 260, Earnings per Share,which requires presentation of
      both basic and diluted earnings per share (EPS) on the face of the
      consolidated statements of operations. Basic EPS is computed by dividing
      net loss available to common shareholders (numerator) by the weighted
      average number of shares outstanding (denominator) during the period.
      Diluted EPS gives effect to all dilutive potential common shares
      outstanding during the period using the treasury stock method and
      convertible preferred stock using the if-converted method. In computing
      diluted EPS, the average stock price for the period is used in determining
      the number of shares assumed to be purchased from the exercise of stock
      options or warrants. Diluted EPS excludes all dilutive potential shares if
      their effect is anti-dilutive.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Foreign Currency Translation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Companys functional currency and its reporting
      currency is the United States dollar and foreign currency transactions are
      primarily undertaken in Canadian dollars. Monetary balance sheet items
      expressed in foreign currencies are translated into US dollars at the
      exchange rates in effect at the balance sheet date. Non-monetary assets
      and liabilities are translated at historical rates. Revenues and expenses
      are translated at average rates for the period, except for amortization,
      which is translated on the same basis as the related asset. Gains and
      losses arising on translation or settlement of foreign currency
      denominated transactions or balances are included in the determination of
      income.                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Comprehensive Income/Loss                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | ASC 220, Comprehensive Income, establishes
      standards for the reporting and display of comprehensive loss and its
      components in the consolidated financial statements. As at July 31, 2011
      and 2010, the Company had no items representing comprehensive
      income/loss.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company records stock-based compensation in
      accordance with ASC 718, Compensation  Stock Based Compensationand ASC 505-50 - Equity-Based Payments to Non-Employees. All
      transactions in which goods or services are the consideration received for
      the issuance of equity instruments are accounted for based on the fair
      value of the consideration received or the fair value of the equity
      instrument issued, whichever is more reliably
measurable.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F-6

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|2. | Summary of Significant Accounting Principles(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Financial Instruments and Fair Value
    Measures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | ASC 820, Fair Value Measurements, requires an
      entity to maximize the use of observable inputs and minimize the use of
      unobservable inputs when measuring fair value. ASC 820 establishes a fair
      value hierarchy based on the level of independent, objective evidence
      surrounding the inputs used to measure fair value. A financial
      instruments categorization within the fair value hierarchy is based upon
      the lowest level of input that is significant to the fair value
      measurement. ASC 820 prioritizes the inputs into three levels that may be
      used to measure fair value:                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Level 1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Level 1 applies to assets or
      liabilities for which there are quoted prices in active markets for
      identical assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Level 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Level 2 applies to assets or
      liabilities for which there are inputs other than quoted prices that are
      observable for the asset or liability such as quoted prices for similar
      assets or liabilities in active markets; quoted prices for identical
      assets or liabilities in markets with insufficient volume or infrequent
      transactions (less active markets); or model- derived valuations in which
      significant inputs are observable or can be derived principally from, or
      corroborated by, observable market data.                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Level 3                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Level 3 applies to assets or
      liabilities for which there are unobservable inputs to the valuation
      methodology that are significant to the measurement of the fair value of
      the assets or liabilities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Companys financial instruments consist primarily of
      cash, investment securities, accounts payable, accrued interest payable,
      amounts due to related parties, and notes payable. Pursuant to ASC 820,
      the fair value of our cash is determined based on Level 1 inputs, which
      consist of quoted prices in active markets for identical assets. We
      believe that the recorded values of all of our other financial instruments
      approximate their current fair values because of their nature and
      respective maturity dates or durations.                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In January 2010, the FASB issued an amendment to ASC 505,
      Equity, where entities that declare dividends to shareholders that
      may be paid in cash or shares at the election of the shareholders are
      considered to be a share issuance that is reflected prospectively in EPS,
      and is not accounted for as a stock dividend. This standard is effective
      for interim and annual periods ending on or after December 15, 2009 and is
      to be applied on a retrospective basis. The adoption of this standard did
      not have a significant impact on the Companys consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | In January 2010, the FASB issued an amendment to ASC 820,
      Fair Value Measurements and Disclosure, to require reporting
      entities to separately disclose the amounts and business rationale for
      significant transfers in and out of Level 1 and Level 2 fair value
      measurements and separately present information regarding purchase, sale,
      issuance, and settlement of Level 3 fair value measures on a gross basis.
      This standard, for which the Company is currently assessing the impact, is
      effective for interim and annual reporting periods beginning after
      December 15, 2009 with the exception of disclosures regarding the
      purchase, sale, issuance, and settlement of Level 3 fair value measures
      which are effective for fiscal years beginning after December 15, 2010.
      The adoption of this standard did not have a significant impact on the
      Companys consolidated financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company has implemented all new accounting
      pronouncements that are in effect and that may impact its financial
      statements and does not believe that there are any other new accounting
      pronouncements that have been issued that might have a material impact on
      its consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-7

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|3. | Discontinued Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On April 30, 2010, a company controlled by the former
      President of the Company acquired certain assets including Pets911.com
      from the Company's wholly owned subsidiary, PetsMobility, in consideration
      for the return and cancellation of 2,000,000 shares of the Company's
      common stock. As at April 30, 2010, the date of disposition, the assets
      disposed of had a carrying value of $nil. On October 29, 2010, the
      agreement was amended to include the Companys interest in
      PetsMobility.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As a result of the Companys disposal of PetsMobility,
      all operations related to the former subsidiary have been classified as
      discontinued operations. Cash flows from discontinued operations were not
      material and were combined with cash flows from continuing operations
      within the consolidated statement of cash flows categories                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The results of PetsMobilitys discontinued operations are
      summarized as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                    

For The
    
    
    For The
    
    
    For The
    
    
    For The
    
    
    Accumulated fromThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine Months
    
    
    June 5, 2006Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    (Inception)July 31,
    
    
    July 31,
    
    
    July 31,
    
    
    July 31,
    
    
    To July 31,2011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Revenue
    
    
    
    
    
    
    
    
    
    
    6,744
    
    
    6,744ExpensesAdvertising and marketing
    
    
    
    
    
    
    
    
    
    
    
    
    
    44,748Amortization of property and
      equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,709Consulting fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    262,523Foreign exchange loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    27General and administrative
    
    
    
    
    
    
    
    
    
    
    5,311
    
    
    45,505Impairment of intangible
      assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    651,800Management fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,000Professional fees
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,802Payroll
    
    
    
    
    
    
    
    
    
    
    16,838
    
    
    16,838Research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    79,354Total Expenses
    
    
    
    
    
    
    
    
    
    
    22,149
    
    
    1,190,306Operating Income (Loss)
    
    
    
    
    
    
    
    
    
    
    (15,405
    )
    
    (1,183,562
    )Other Income (Expenses)Loss on settlement of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,120
    )Interest and other income
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,166Net Income (Loss) from DiscontinuedOperations
    
    
    
    
    
    
    
    
    
    
    (15,405
    )
    
    (1,181,516
    )


On March 16, 2011, the Company disposed
of its wholly owned subsidiaries, Sound Revolution Recordings Inc., and Charity
Tunes Inc., in consideration for $15,000 and 6,300 shares of the acquirers
common stock.

As a result of the Companys disposal
of Sound Revolution Recordings Inc., and Charity Tunes Inc., all operations
related to the former subsidiaries have been classified as discontinued
operations.

F-8

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|3. | Discontinued Operations                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                      
|   | The results of Sound Revolution Recordings Inc., and
      Charity Tunes Inc., discontinued operations are summarized as
    follows:

For The
    
    
    For The
    
    
    For The
    
    
    For The
    
    
    Accumulated fromThree Months
    
    
    Three Months
    
    
    Nine Months
    
    
    Nine Months
    
    
    June 5, 2006Ended
    
    
    Ended
    
    
    Ended
    
    
    Ended
    
    
    (Inception)July 31,
    
    
    July 31,
    
    
    July 31,
    
    
    July 31,
    
    
    To July 31,2011
    
    
    2010
    
    
    2011
    
    
    2010
    
    
    2011$
    
    
    $
    
    
    $
    
    
    $
    
    
    $Revenue
    
    
    
    
    47,617
    
    
    
    
    
    172,091
    
    
    222,866Cost of sales
    
    
    
    
    6,241
    
    
    
    
    
    65,460
    
    
    97,230Gross margin
    
    
    
    
    41,376
    
    
    
    
    
    106,631
    
    
    125,636ExpensesAdvertising and marketing
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,298Amortization of property and equipment
    
    
    
    
    747
    
    
    1,121
    
    
    2,264
    
    
    4,162Consulting fees
    
    
    
    
    
    
    
    5,534
    
    
    20,042
    
    
    15,218Foreign exchange loss
    
    
    
    
    (1,575
    )
    
    1,430
    
    
    5,660
    
    
    6,025General and administrative
    
    
    
    
    156
    
    
    
    
    
    1,104
    
    
    12,961Professional fees
    
    
    
    
    
    
    
    
    
    
    (2,799
    )
    
    35,783Payroll
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,950Total Expenses
    
    
    
    
    (672
    )
    
    8,085
    
    
    26,271
    
    
    109,397Operating Income (Loss)
    
    
    
    
    42,048
    
    
    (8,085
    )
    
    80,360
    
    
    16,239Other Income (Expenses)Gain on settlement of debt
    
    
    
    
    
    
    
    
    
    
    4,442
    
    
    4,442Interest expense
    
    
    
    
    
    
    
    
    
    
    (121,782
    )
    
    (121,782
    )Net Income (Loss) from DiscontinuedOperations
    
    
    
    
    42,048
    
    
    (8,085
    )
    
    (36,980
    )
    
    (101,101
    )


|4. | Investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On March 16, 2011, the Company acquired 6,300 common
      shares of a private company in conjunction with the disposal of two of its
      subsidiaries. The investment represents less than 1% of the outstanding
      shares of the private company. The investment is recorded at a nominal
      amount of $1 as the value of the shares is nominal, there are no quoted
      market prices for this investment and a reasonable estimate of the fair
      value was not practicable.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|5. | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

| |                    |  |        |  |  |              |  |  | July 31,     |  |  | October 31,  | 
| | ------------------ |  | ------ |  |  | ------------ |  |  | ------------ |  |  | ------------ | 
| |                    |  |        |  |  |              |  |  | 2011         |  |  | 2010         | 
| |                    |  |        |  |  | Accumulated  |  |  | Net Carrying |  |  | Net Carrying | 
| |                    |  | Cost   |  |  | Amortization |  |  | Value        |  |  | Value        | 
| |                    |  | $      |  |  | $            |  |  | $            |  |  | $            | 
| | Computer equipment |  |       |  |  |             |  |  |             |  |  | 1,502        | 
| | Office equipment   |  | 26,037 |  |  | 24,669       |  |  | 1,368        |  |  | 2,092        | 
| |                    |  | 26,037 |  |  | 24,669       |  |  | 1,368        |  |  | 3,594        | 

F-9

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|6. | Related Party Transactions
|-- | --------------------------
|   |                           
|   | a)                        
|   |                           
|   | b)                        
|   |                           
|7. | Notes Payable             

| |                                                                                                       |  | July 31, |  |  | October 31, | 
| | ----------------------------------------------------------------------------------------------------- |  | -------- |  |  | ----------- | 
| |                                                                                                       |  | 2011     |  |  | 2010        | 
| |                                                                                                       |  | $        |  |  | $           | 
| | Bling Capital Corp., unsecured, and due on
      demand.                                              |  | 26,210   |  |  | 24,538      | 
| | Scottsdale Investment Corporation, unsecured, due interest
      at 12% per annum, and due on demand. |  | 319,980  |  |  | 319,980     | 
| | Ed Aaronson, unsecured, due interest at 10%
      per annum, and due on demand.                       |  | 115,000  |  |  | 115,000     | 
| | Troy Rice, unsecured, due interest at 10% per annum, and
      due on demand.                         |  | 7,500    |  |  | 7,500       | 
| |                                                                                                       |  | 468,690  |  |  | 467,018     | 

|8. | Share Purchase Warrants                                                                                
|-- | -------------------------------------------------------------------------------------------------------
|   |                                                                                                        
|   | As at July 31, 2011 and October 31, 2010, the following
      share purchase warrants were outstanding:

Number of Warrants
    
    Exercise Price
    
    Expiry Date1,300,000
    
    $0.50
    
    July 23, 201278,000
    
    $0.50
    
    February 28, 201378,000
    
    $0.50
    
    February 28, 20131,456,000


|9. | Stock Options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | On March 3, 2010, the Company granted a consultant
      options to purchase 2,000,000 shares of common stock at $0.15 per share
      for five years. Pursuant to the option agreement, 1,500,000 options vested
      immediately, 250,000 options vested on June 1, 2010 and the remaining
      250,000 options vested on December 1, 2010. The fair value of the options
      was estimated at the date of grant using the Black-Scholes option pricing
      model using the following weighted average assumptions: risk-free interest
      rate of 2.27%, expected volatility of 161%, an expected option life of 5
      years and no expected dividends. The fair value of options granted was
      $0.19 per option. During the nine month period ending July 31, 2011,
      stock-based compensation expense was reduced by $3,691.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The following table summarizes stock option plan
      activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

Weighted
    WeightedAverage
    Average
    AggregateExercise
    Remaining
    IntrinsicNumber of
    Price
    Contractual Life
    ValueOptions
    $
    (years)
    $Outstanding, October 31, 2009
    625,000
    0.78Granted
    2,000,000
    0.15Outstanding, October 31, 2010 and July 31, 2011
    2,625,000
    0.30
    4.22
    


F-10

---

On4 Communications Inc. (A Development Stage Company)
Notes to the Financial Statements July 31, 2011 (Expressed in US
dollars) (unaudited)

|9. | Stock Options (continued)                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                             
|   | A summary of the status of the Companys non-vested
      shares as of July 31, 2011, and changes during the nine month period ended
      July 31, 2011 is presented below:

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

Additional information regarding stock
options as of July 31, 2011, is as follows:

ExerciseNumber of
    
    PriceOptions
    
    $
    
    Expiry Date275,000
    
    0.50
    
    July 23, 2017350,000
    
    1.00
    
    December 18, 20172,000,000
    
    0.15
    
    March 3, 20152,625,000


|    | At July 31, 2011, the Company had no unvested options or
      unrecognized compensation expense.
|--- | -------------------------------------------------------------------------------------------------
|    |                                                                                                  
|10. | Commitments                                                                                      
|    |                                                                                                  
|    | a)                                                                                               
|    |                                                                                                  
|    |                                                                                                  
|    |                                                                                                  
|    | b)                                                                                               

F-11

---

Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements that
involve risks and uncertainties. These statements relate to future events or our
future financial performance. In some cases, you can identify forward-looking
statements by terminology such as "may", "should", "expect", "plan",
"anticipate", "believe", "estimate", "predict", "potential" or "continue" or the
negative of these terms or other comparable terminology. These statements are
only predictions. Actual events or results may differ materially.

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

Our unaudited financial statements are stated in U.S. dollars
and are prepared in accordance with generally accepted accounting principles in
the United States. The following discussion should be read in conjunction with
our financial statements and the related notes that appear elsewhere in this
quarterly report.

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to "common
shares" refer to the common shares in our capital stock.

As used in this quarterly report and unless otherwise
indicated, the terms "we", "us", "our" and "our company" mean On4 Communications
Inc., a Delaware corporation, unless otherwise indicated.

Business Overview

We were incorporated as a Delaware company on June 4, 2001
under the name Sound Revolution Inc. On July 2, 2009 we changed our name to On4
Communications, Inc. Our fiscal year end is October 31. Our address is 16413 N.
91 Street, C 100, Scottsdale, AZ 85260. Our telephone number is (480) 619-5510.

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

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

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

4

---

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

Results of Operations

Our results of operations are presented below:

AccumulatedfromThree
    Three
    Nine
    Nine
    June 5, 2006Months
    Months
    Months
    Months
    (Date ofEnded
    Ended
    Ended
    Ended
    Inception) toJuly 31,
    July 31,
    July 31,
    July 31,
    July 31,2011
    2010
    2011
    2010
    2011(unaudited)
    (unaudited)
    **(unaudited)**
    (unaudited)
    (unaudited)($)
    ($)
    ($)
    ($)
    ($)Revenue
    Nil
    Nil
    Nil
    Nil
    NilTotal Expenses
    22,230
    130,191
    90,582
    816,165
    11,358,650Net Income (Loss)
    (55,871)
    368,376
    (99,142)
    (585,767 )
    (13,509,471)


Three Months Ended July 31, 2011 and July 31, 2010, and the
Period from June 5, 2006 (Date of Inception) to July 31, 2011

From our inception on June 5, 2006 to July 31, 2011, we did not
generate any revenue.

Our total expenses during the three months ended July 31, 2011
were $22,230, compared to total expenses of $130,191 during the same period in
fiscal 2010. Our total expenses from our inception on June 5, 2006 to April 30,
2011 were $11,358,650.

Our total expenses during the three months ended June 31, 2011
consisted of $242 in amortization of property and equipment, $7,288 in general
and administrative expenses and $15,366 in professional fees, offset by the
recovery of $666 in foreign exchange loss. During this period we also incurred
$33,641 in other expenses, the majority of which were in the form of interest
expenses.

Our total expenses during the three months ended July 31, 2010
consisted of $1,739 in amortization of intangible assets, $32,653 in general and
administrative expenses, $45,000 in management fees, $51,011 in professional
fees and $1,749 in research and development expenses offset by the recovery of
$546 in amortization of property and equipment, $5 in consulting fees and $1,410
in foreign exchange loss. During this period we also incurred $456,519 in other
expenses, including $12,987 in interest expenses offset by the recovery of
$469,506 from the settlement of debt.

Our total expenses from our inception on June 5, 2006 to July
31, 2011 consisted of $182,182 in advertising and marketing expenses, $17,989 in
amortization of intangible assets, $34,007 in amortization of property and
equipment, $2,136,862 in consulting fees, $265,000 in foreign exchange loss,
$1,078,042 in general and administrative expenses, $3,274,110 in impairment of
goodwill, $2,219,724 in impairment of intangible assets, $1,162,596 in
management fees, $3,566 in payroll expenses, $666,212 in professional fees and
$318,360 in research and development expenses.

5

---

Our general and administrative expenses consisted of travel,
meals and entertainment, office maintenance, communication expenses (cellular,
internet, fax and telephone), office supplies and courier and postage costs. Our
professional fees consisted of legal, accounting and auditing fees.

The decrease in our operating expenses during the three months
ended July 31, 2011 was primarily due to decreases in amortization of intangible
assets, general and administrative expenses, management fees, professional fees
and research and development.

During the three months ended July 31, 2011 we incurred a
$22,230 operating loss, and a net loss of $55,871. During the same period in
fiscal 2010 we incurred a net income of $368,376. We did not experience any net
loss per share during the three months ended July 31, 2011 and we experienced a
net income per share from continuing operations of $0.01 during the same period
in our prior fiscal year. From our inception on June 5, 2006 to July 31, 2011 we
incurred a $12,303,689 loss from continuing operations, incurred a $1,205,782
loss from discontinued operations and incurred a net loss $13,509,471.

Nine Months Ended July 31, 2011 and July 31, 2010

Our total expenses during the nine months ended July 31, 2011
were $90,582, compared to total expenses of $816,165 during the same period in
fiscal 2010.

Our total expenses during the nine months ended July 31, 2011
consisted of $725 in amortization of property and equipment, $15,395 in foreign
exchange loss, $22,789 in general and administrative expenses and $53,864 in
professional fees, as offset by the recovery of $2,191 in consulting fees.
During this period we also incurred $77,309 in other expenses, all of which was
in the form of interest expenses offset by the recovery of $1,985 gain on
settlement of debt.

Our total expenses during the nine months ended July 31, 2010
consisted of $5,648 in advertising and marketing expenses, $5,216 in
amortization of intangible assets, $3,374 in amortization of property and
equipment, $323,034 in consulting fees, $26,134 in foreign exchange loss,
$101,014 in general and administrative expenses, $135,000 in management fees,
$209,313 in professional fees and $7,432 in research and development expenses.
During this period, we recorded $425,595 in gain on settlement of debt, offset
by $142,812 in interest expenses.

The decrease in our operating expenses during the nine months
ended July 31, 2011 was primarily due to a decrease in amortization of
intangible assets, amortization of property and equipment, foreign exchange
loss, general and administrative expenses, management fees, professional fees
and research and development.

During the nine months ended July 31, 2011 we incurred a
$167,891 loss from continuing operations, received a gain of $68,749 from
discontinued operations and incurred a net loss of $99,142. During the same
period in fiscal 2010 we incurred a net loss of $585,767. We did not experience
any net loss per share during the nine months ended July 31, 2011, whereas we
experienced a net loss per share from continuing operations of $0.01 during the
same period in our prior fiscal year.

6

---

Liquidity and Capital Resources

Working Capital

|                          | At          | At          | Change between    
|------------------------- | ----------- | ----------- | ------------------
|                          | July 31,    | October 31, | October 31, 2010  
|                          | 2011        | 2010        | and July 31 , 2011
|                          | ($)         | ($)         | ($)               
|Current Assets            | 613         | 7,558       | (6,945)           
|Current Liabilities       | 1,651,330   | 1,557,667   | 93,663            
|Working Capital/(Deficit) | (1,650,717) | (1,550,109) | (100,608)         

Cash Flows

|                                                    |               |               | Period from       
|--------------------------------------------------- | ------------- | ------------- | ------------------
|                                                    | Nine Months   | Nine Months   | Inception (June 5,
|                                                    | Ended         | Ended         | 2006) to          
|                                                    | July 31, 2011 | July 31, 2010 | July 31, 2011     
|                                                    | ($)           | ($)           | ($)               
|Net Cash used in Operating Activities               | (21,945)      | (132,935)     | (2,675,721)       
|Net Cash provided by/(used in) Investing Activities | Nil           | (2,897)       | (1,328,908)       
|Net Cash provided by Financing Activities           | 15,000        | 116,592       | 3,951,903         
|Net Increase (Decrease) in Cash During Period       | (6,945)       | (360)         | 613               

As of July 31, 2011 we had $613 in cash, $1,982 in total
assets, $1,651,330 in total liabilities and a working capital deficit of
$1,650,717. As of July 31, 2011 we had an accumulated deficit of $13,592,943.

During the nine months ended July 31, 2011 we spent $21,945 on
operating activities, compared to spending of $132,935 on operating activities
during the same period in fiscal 2010. The decrease in our expenditures on
operating activities during the nine months ended July 31, 2011 was due to
decreased operating activity due to insufficient cash flows. Notably, our
accrued interest payable and accounts receivable decreased from $189,966 and
$64,737 during the nine months ended July 31, 2010, to $63,124 and $Nil during
the current period, respectively, while our accounts payable and accrued
liabilities similarly decreased from $126,298 to $33,557. From our inception on
June 5, 2006 to July 31, 2011 we spent $2,675,721 on operating activities.

During the nine months ended July 31, 2011 we did not spend any
money on investing activities, whereas we spent $2,897 on investing activities
during the same period in fiscal 2010. From our inception on June 5, 2006 to
July 31, 2011 we spent $1,328,908 on investing activities, the bulk of which was
in the form of advances for notes receivable of $1,114,182 and the acquisition
of intangible assets of $182,687.

During the nine months ended July 31, 2011 we received $15,000
from financing activities, all of which was in the form of proceeds from the
disposition of our former subsidiaries, whereas we received $116,692 from
financing activities during the same period in fiscal 2010. The decrease in our
receipts from financing activities during the nine months ended July 31, 2011
was primarily due to decreases of $75,000 in proceeds from notes payable and
$81,371 in proceeds from related parties, as offset by spending of $39,789 on
repayments to related parties. From our inception on June 5, 2006 to July 31,
2011 we received $3,951,903 from financing activities, primarily in the form of
proceeds from the issuance of our common stock and preferred stock.

7

---

For the next 12 months (beginning August 2011), we estimate our
planned expenses to be approximately $1,700,000, as summarized in the table
below:

|                                    |                 | Estimated
|----------------------------------- | --------------- | ---------
|                                    | **Potential**   | Expenses 
|**Description**                     | Completion Date | ($)      
|General and administrative expenses | 12 months       | 250,000  
|Research and development            | 12 months       | 100,000  
|Sales and marketing                 | 12 months       | 200,000  
|Professional fees                   | 12 months       | 150,000  
|Unallocated working capital         | 12 months       | 100,000  
|Debt repayment                      | 12 months       | 900,000  
|Total                               |                 | 1,700,000

Based on our planned expenditures, we require additional funds
of approximately $1,700,000 to proceed with our business plan over the next 12
months. If we are not able to obtain additional financing on a timely basis, we
will be unable to conduct our operations as planned, and we will not be able to
meet our obligations as they become due. In such event, we will be forced to
scale down or perhaps even cease our operations.

Future Financings

We have not generated significant revenues since inception and
are unlikely to generate significant revenues or earnings in the immediate or
foreseeable future. We rely upon the sale of our securities and proceeds from
related parties to fund our operations. We anticipate that we will incur
substantial losses for the foreseeable future, and we are dependent upon
obtaining outside financing to carry out our operations.

We will require approximately $1,700,000 over the next 12
months to enable us to proceed with our plan of operations, including paying our
ongoing expenses. These cash requirements are in excess of our current cash and
working capital resources. Accordingly, we intend to raise funds from private
placements, loans or possibly a registered public offering (either
self-underwritten or through a broker-dealer). At this time we do not have a
commitment from any broker-dealer to provide us with financing, and there is no
guarantee that any financing will be available to us or if available, on terms
that will be acceptable to us.

If we are unable to obtain the necessary additional financing,
then we plan to reduce the amounts that we spend on our operations, our
professional fees and our general and administrative expenses so as not to
exceed the amount of capital resources that are available to us. If we do not
secure additional financing our current cash reserves and working capital will
be not be sufficient to enable us to sustain our operations for the next 12
months, even if we do decide to scale them down.

Going Concern

Our financial statements for the nine months ended July 31,
2011 have been prepared on a going concern basis and contain an additional
explanatory paragraph in Note 1 which identifies issues that raise substantial
doubt about our ability to continue as a going concern. Our financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.

Off-Balance Sheet Arrangements

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

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Inflation

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

Employees

We do not currently have any employees, but we engage
consultants to provide us with legal, accounting, management, marketing, sales
and software development services.

Critical Accounting Policies

Our financial statements are affected by the accounting
policies used and the estimates and assumptions made by management during their
preparation. A complete summary of these policies is included in Note 2 of the
notes to our financial statements for the nine months ended July 31, 2011. We
have identified below the accounting policies that are of particular importance
in the presentation of our financial position, results of operations and cash
flows, and which require the application of significant judgment by management.

Use of Estimates

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

Foreign Currency Translation

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

Stock-based Compensation

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

Item 3. Quantitative and Qualitative Disclosure About Market
Risk

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

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Item 4. Controls and Procedures

Disclosure Controls

We maintain disclosure controls and procedures, as defined in
Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act
of 1934 (the "Exchange Act"), that are designed to ensure that information we
are required to disclose in the reports that we file or submit under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the rules and forms of the Securities and Exchange
Commission (the SEC) and that such information is accumulated and communicated
to our management, including our chief executive officer and chief financial
officer (also our principal executive officer, principal financial officer and
principal accounting officer), as appropriate to allow timely decisions
regarding required disclosure.

As of the end of the period covered by this report, our
management, with the participation of our chief executive officer and chief
financial officer (also our principal executive officer, principal financial
officer and principal accounting officer), carried out an evaluation of the
effectiveness of our disclosure controls and procedures. Based on this
evaluation, and in light of the material weaknesses in our internal control over
financial reporting, our management concluded that our disclosure controls and
procedures were not effective to ensure that information we are required to
disclose in the reports we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
rules and forms of the SEC, and that such information was not accumulated and
communicated to management, including our chief executive officer and chief
financial officer (also our principal executive officer, principal financial
officer and principal accounting officer), to allow timely decisions regarding
required disclosure.

Changes in Internal Control

There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended July 31, 2011 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.

PART II  OTHER INFORMATION

Item 1. Legal Proceedings

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

We know of no material, existing or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, executive officers or affiliates, or any registered or beneficial
stockholder, is an adverse party or has a material interest adverse to our
interest.

Item 2. Unregistered Sales of Equity Securities

None.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. [Removed and Reserved]

Item 5. Other Information

Item 6. Exhibits

|Exhibit |                                                                                                                                                                                                                                                                  
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Description                                                                                                                                                                                                                                                      
|(3)     | (i) Articles of
      Incorporation; (ii) By-laws                                                                                                                                                                                                                
|3.1     | Articles of Incorporation (incorporated by reference to
      our Registration Statement filed on Form SB-2 on August 20, 2004)                                                                                                                                  
|3.2     | By-Laws (incorporated by reference to our Registration
      Statement filed on Form SB-2 on August 20, 2004)                                                                                                                                                    
|3.3     | Certificate of Merger dated May 1, 2009 (incorporated by
      reference to our Current Report on Form 8-K filed on May 7, 2009)                                                                                                                                 
|3.4     | Certificate of Amendment dated May 21, 2009 (incorporated
      by reference to our Current Report on Form 8-K filed on July 28, 2009)                                                                                                                           
|(10)    | Material Contracts                                                                                                                                                                                                                                               
|10.1    | Merger Agreement between Sound Revolution Inc. and On4
      Communications, Inc. dated March 12, 2009 (incorporated by reference to
      our Current Report on Form 8-K filed on March 16, 2009)                                                               
|10.2    | Merger Agreement Amendment between Sound Revolution Inc.
      and On4 Communications, Inc. dated March 26, 2009 (incorporated by
      reference to our Current Report on Form 8-K filed on April 13, 2009)                                                     
|10.3    | Convertible Note between our company and Bacchus
      Entertainment Ltd. dated April 30, 2009 (incorporated by reference to our
      Current Report on Form 8-K filed on April 13, 2009)                                                                       
|10.4    | Debt Conversion Agreement between our company and Bacchus
      Entertainment Ltd. dated April 30, 2009 (incorporated by reference to our
      Current Report on Form 8-K filed on April 13, 2009)                                                              
|10.5    | Loan Agreement between our company and DataTrail Inc.
      dated October 3, 2007 (incorporated by reference to our Current Report on
      Form 8-K filed on September 2, 2009)                                                                                 
|10.6    | Asset Purchase Agreement between our company and On4
      Communications, Inc. (Canada) dated April 29, 2010 (incorporated by
      reference to our Quarterly Report on Form 10-Q filed on June 22, 2010)                                                      
|10.7    | Asset Purchase Agreement between our company, Charity
      Tunes Inc., Bacchus Filings Inc., Bacchus Entertainment Ltd. and Penny
      Green dated April 30, 2010 (incorporated by reference to our Quarterly
      Report on Form 10-Q filed on June 22, 2010)
|10.8    | Debt Conversion Agreement between our company and Gord
      Jessop dated April 11, 2010 (incorporated by reference to our Quarterly
      Report on Form 10-Q filed on June 22, 2010)                                                                           
|10.9    | Debt Conversion Agreement between our company and Cameron
      Robb dated April 12, 2010 (incorporated by reference to our Quarterly
      Report on Form 10-Q filed on June 22, 2010)                                                                          

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|Exhibit |                                                                                                                                                                                                             
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|No.     | Description                                                                                                                                                                                                 
|10.10   | Debt Conversion Agreement between our company and On4
      Communications, Inc. (Canada) dated April 12, 2010 (incorporated by
      reference to our Quarterly Report on Form 10-Q filed on June 22, 2010)
|10.11   | Consulting Agreement between our company and Southwest
      Capital Partners, LLC dated May 7, 2010 (incorporated by reference to our
      Current Report on Form 8-K filed on September 2, 2010)         
|10.12   | Acquisition Agreement between our company and Empire
      Success, LLC dated March 16, 2011 (incorporated by reference to our
      Quarterly Report on Form 10-Q filed on June 17, 2011)                  
|(31)    | Rule 13a-14(a)/15d-14(a) Certifications                                                                                                                                                                     
|31.1*   | Section 302 Certification under Sarbanes-Oxley Act of
      2002 of the Principal Executive Officer, Principal Financial Officer and
      Principal Accounting Officer                                     
|(32)    | Section 1350 Certifications                                                                                                                                                                                 
|32.1*   | Section 906 Certifications under Sarbanes-Oxley Act of
      2002 of the Principal Executive Officer, Principal Financial Officer and
      Principal Accounting Officer                                    

* Filed herewith.

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SIGNATURES

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

|                         |     | On4 Communications, Inc.                               
|------------------------ | --- | -------------------------------------------------------
|                         |     |                                                        
|Date: September 19, 2011 | By: | /s/ Cameron Robb                                       
|                         |     |                                                        
|                         |     | Cameron Robb                                           
|                         |     |                                                        
|                         |     | Chief Executive Officer, Chief Financial               
|                         |     | Officer, Chief Operating Officer, Director             
|                         |     |                                                        
|                         |     | (Principal Executive Officer, Principal
      Financial
|                         |     | Officer, Principal Accounting Officer)                 

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