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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K/A(AMENDMENT NO. 1)

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

For the Fiscal Year EndedJuly 31, 2009

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

For the transition period from ________________ to
________________.

Commission file number **000-52827**

OMNICITY CORP.(Exact name of registrant as specified in its charter)

|Nevada                                                               | 98-0512569                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation of
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|807 S State Rd 3, Rushville, Indiana, U.S.A.                         | 46173                               
|(Address of Principal Executive Offices)                             | (Zip Code)                          

(317) 903-8178(Registrants telephone
number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
None

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

Common Stock, $0.001 Par Value(Title
of class)

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

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 of Section 15(d) of the Act. Yes
[   ]    No [X]

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).

  Yes [_] No [_]

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

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

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

Indicate by checkmark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). 
Yes [ ] No [X]

The aggregate
  market value of the voting and non-voting common equity held by non-affiliates
  computed by reference to the price at which the common equity was last sold, as
  of October 22, 2009 was approximately $10,683,000.

The registrant had 38,517,055 shares of common stock outstanding
as of October 23, 2009.

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EXPLANATORY NOTE

This Form 10-K/A (Amendment No. 1) is being filed by the
Company in response to certain comments from the U.S. Securities and Exchange
Commission (the SEC) to the Company regarding the Companys Annual Report on
Form 10-K for its fiscal year ended July 31, 2009, as originally filed with the
SEC on October 23, 2009. This Form 10-K/A (Amendment No. 1) is sometimes
referred to herein as Form 10-K, and any references herein to Form 10-K or
10-K should be read to refer to this Form 10-K/A unless otherwise specified or
as required based on the context in which the term Form 10-K or 10-K is
used.

FORWARD LOOKING STATEMENTS

This annual report contains forward-looking statements that
involve risks and uncertainties. Any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements. In
some cases, you can identify forward-looking statements by terminology such as
may, will, should, expect, plan, intend, anticipate, believe,
estimate, predict, potential or continue, the negative of such terms or
other comparable terminology. In evaluating these statements, you should
consider various factors, including the assumptions, risks and uncertainties
outlined in this annual report under Risk Factors. These factors or any of
them may cause our actual results to differ materially from any forward-looking
statement made in this annual report. Forward-looking statements in this annual
report include, among others, statements regarding:

- our capital needs;
- business plans; and
- expectations.

While these forward-looking statements, and any assumptions
upon which they are based, are made in good faith and reflect our current
judgment regarding future events, our actual results will likely vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested herein. Some of the risks and assumptions include:

- our need for additional financing;
- our limited operating history;
- our history of operating losses;
- the competitive environment in which we operate;
- changes in governmental regulation and administrative practices;
- our dependence on key personnel;
- conflicts of interest of our directors and officers;
- our ability to fully implement our business plan;
- our ability to effectively manage our growth; and
- other regulatory, legislative and judicial developments.

We advise the reader that these cautionary remarks expressly
qualify in their entirety all forward-looking statements attributable to us or
persons acting on our behalf. Important factors that you should also consider,
include, but are not limited to, the factors discussed under Risk Factors in
this annual report.

The forward-looking statements in this annual report are made
as of the date of this annual report and we do not intend or undertake to update
any of the forward-looking statements to conform these statements to actual
results, except as required by applicable law, including the securities laws of
the United States.

AVAILABLE INFORMATION

Omnicity Corp. files annual, quarterly and current reports,
proxy statements, and other information with the Securities and Exchange
Commission (the SEC). You may read and copy documents referred to in this
Annual Report on Form 10-K that have been filed with the SEC at the SECs Public
Reference Room, 450 Fifth Street, N.W., Washington, D.C. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. You can also obtain copies of our SEC filings by going to the
SECs website at http://www.sec.gov.

ii

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REFERENCES

As used in this annual report: (i) the terms we, us, our,
Omnicity and the Company mean Omnicity Corp.; (ii) SEC refers to the
Securities and Exchange Commission; (iii) Securities Act refers to the United
States Securities Act of 1933, as amended; (iv) Exchange Act refers to
the United States Securities Exchange Act of 1934, as amended; and (v)
all dollar amounts refer to United States dollars unless otherwise indicated.

iii

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TABLE OF CONTENTS

|ITEM 1.     | BUSINESS                                                                                                                 | 5 
|----------- | ------------------------------------------------------------------------------------------------------------------------ | --
|ITEM 1A.    | RISK FACTORS                                                                                                             | 12
|ITEM 1B.    | UNRESOLVED
      STAFF COMMENTS                                                                                          | 15
|ITEM 2.     | PROPERTIES                                                                                                               | 15
|ITEM 3.     | LEGAL
      PROCEEDINGS                                                                                                  | 15
|ITEM 4.     | SUBMISSION OF MATTERS TO A
      VOTE OF SECURITY HOLDERS                                                                | 15
|ITEM 5.     | MARKET FOR
      REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES | 16
|ITEM 6.     | SELECTED FINANCIAL DATA                                                                                                  | 17
|ITEM 7.     | MANAGEMENTS
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                              | 17
|ITEM 7A.    | QUANTITATIVE AND QUALITATIVE
      DISCLOSURES ABOUT MARKET RISK                                                         | 27
|ITEM 8.     | FINANCIAL
      STATEMENTS                                                                                               | 27
|ITEM 9.     | CHANGES IN AND DISAGREEMENTS
      WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE                               | 50
|ITEM 9A(T). | CONTROLS AND
      PROCEDURES                                                                                            | 50
|ITEM 9B.    | OTHER INFORMATION                                                                                                        | 50
|ITEM 10.    | DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE                                                             | 51
|ITEM 11.    | EXECUTIVE COMPENSATION                                                                                                   | 54
|ITEM 12.    | SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS               | 55
|ITEM 13.    | CERTAIN RELATIONSHIPS AND
      RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE                                           | 56
|ITEM 14.    | PRINCIPAL
      ACCOUNTING FEES AND SERVICES                                                                             | 57
|ITEM 15.    | EXHIBITS                                                                                                                 | 58

_______________________

iv

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PART I

ITEM
1.              
BUSINESS

Name, Incorporation and Principal Offices

We were incorporated under the laws of the State of Nevada on
October 12, 2006 under the name "Bear River Resources Inc.". On October 21,
2008, we effected a forward split of our shares of common stock on the basis of
7.7 new shares of our common stock for each one share of common stock
outstanding on that date and increased our authorized share capital from
200,000,000 shares of common stock to 1,540,000,000 shares of common stock. Also
on October 21, 2008, in contemplation of the acquisition of Omnicity,
Incorporated, we merged with our wholly-owned subsidiary incorporated under the
laws of the State of Nevada, and changed our name to "Omnicity Corp."

Our principal and operations office and registered and records
office is located at 807 S State Rd 3, Rushville, Indiana, U.S.A. Tel: (317)
903-8178; Fax: (866) 567-3897.

Our Prior Business

Up to July 29, 2008, Omnicity Corp. (formerly Bear River
Resources, Inc.) was an exploration stage company engaged in the acquisition and
exploration of mineral properties. Omnicity Corp. received a geologist report on
February 6, 2008, the results of which were not as expected. Given the
prospects, management determined to allow the claims to lapse on July 29, 2008.
See Omnicity Corps (formerly Bear River Resources, Inc.) annual report filed on
Form 10-KSB for the year ended June 30, 2008 for more information relating to
our business prior to the acquisition of Omnicity, Incorporated.

The Acquisition of Omnicity, Incorporated

On February 16, 2009, Omnicty Corp. closed the acquisition (the
"Acquisition") of Omnicity, Incorporated, effected by way of merger pursuant to
an Agreement and Plan of Merger (the "Agreement"), dated December 29, 2008,
among Omnicity Corp., Omnicity, Incorporated, and MergerSub, our wholly-owned
subsidiary incorporated under the laws of the State of Indiana in connection
with the Acquisition ("MergerSub").

Omnicity, Incorporated was a private company incorporated under
the laws of the State of Indiana pursuant to the Indiana Business Corporation
Law on August 14, 2003. In August 2003, Omnicity, Incorporated began acquiring
the rights to and constructing wireless internet service infrastructure in the
State of Indiana, USA. In September 2003, Omnicity, Incorporated acquired the
assets of the Circle City Wireless Division of Hi-Tech Business Machines, LLC in
exchange for common stock of Omnicity, Incorporated.

Omnicity, Incorporated convened a special meeting of its
shareholders on January 17, 2009 to obtain approval of the adoption of the
Agreement, the Acquisition and all other transactions contemplated thereby (the
"Special Meeting"). At the Special Meeting, Omnicity, Incorporated obtained the
required approvals of the holders of a majority of its common shares.

The merger was effective on February 17, 2009 and time at which
the merger became effective is referred to herein as the "Effective Time". At
the Effective Time, MergerSub merged with and into Omnicity, Incorporated,
pursuant to which the identity and separate corporate existence of MergerSub
ceased and Omnicity, Incorporated became the surviving corporation in the merger
(the "Surviving Corporation") and a wholly-owned subsidiary of the Company.

Under the terms of the Agreement, at closing, (i) all of the
issued and outstanding Omnicity, Incorporated shares, totaling 8,256,240, were
converted and exchanged for 23,000,000 shares of the Company, or 2.7858 common
shares of the Company for each Omnicity, Incorporated share held; each common
share issued had a deemed fair value of $0.35 per share, in accordance with the
procedures set out in the Agreement, (ii) each share of Omnicity, Incorporated
issued and outstanding immediately prior to the Effective Time and owned by
Omnicity Corp. or MergerSub was cancelled and extinguished without any
conversion thereof and no payment was made with respect thereto, and (iii) all
issued and outstanding shares of common stock of MergerSub held by Omnicity
Corp. immediately prior to the Effective Time were converted into and became one
validly issued, fully paid and non-assessable share of common stock of Omnicity,
Incorporated.

5

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Pursuant to the terms of the Agreement on and after the
Effective Time, (i) until surrendered for exchange, each outstanding share
certificate representing shares of Omnicity, Incorporated's common stock (except
for shares cancelled pursuant to the provisions of the Agreement) were deemed to
evidence ownership of and represent the number of shares of the Company into
which such Omnicity, Incorporated common shares shall convert pursuant to the
Agreement, and (ii) each holder of such outstanding certificates representing
shares of Omnicity, Incorporateds common stock were entitled to vote on any
matters on which the holders of record of the Company's common shares having
voting rights are entitled to vote.

At closing, (i) all the property, rights, privileges, powers
and franchises of Omnicity Incorporated and MergerSub vested in the Surviving
Corporation, and all debts, liabilities and duties of Omnicity Incorporated and
MergerSub became the debts, liabilities and duties of the Surviving Corporation,
(ii) the articles of incorporation of MergerSub became the articles of
incorporation of the Surviving Corporation, (iii) the bylaws of MergerSub became
the bylaws of the Surviving Corporation, and (v) the name of the Surviving
Corporation became "Omnicity, Incorporated".

The closing of the Acquisition represented a change in control
of our Company. For accounting purposes, this change in control constituted a
re-capitalization of Omnicity, Incorporated, and the acquisition has been
accounted for as a reverse merger whereby Omnicity Corp., as the legal acquirer,
are treated as the acquired entity, and Omnicity Incorporated, as the legal
subsidiary, is treated as the acquiring company with the continuing operations.

Omncity Corp. had a fiscal year end of June 30. Pursuant to a
Directors Resolution and 8K filed on March 20, 2009 and amended 8K filed on May
21, 2009, the Company changed its fiscal year end to July 31 to coincide with
the fiscal year end of Omnicity, Incorporated, being the accounting acquirer.
All reporting periods, starting with April 30, 2009, is filed on a basis
consistent with the Companys new fiscal year end of July 31. As a transitional
matter, the Company supplied quarterly information for the quarter ended January
31, 2009 in its April 30, 2009 10Q filed on June 15, 2009.

Our Current Business

Overview

Omnicity Corp., through its wholly-owned subsidiary Omnicity,
Incorporated, collectively the Company or Omnicity, provides broadband
access via wireless and fiber infrastructure to business, government and
residential customers in rural markets in the Midwest. Omnicitys strategy is to
become a premier broadband and communications services provider in rural and
urban cluster markets, beginning in the Midwest and extending nationally. These
markets, consisting of over 40 million homes and 500,000 businesses, have been
underserved or un-served by existing providers, creating an opening for Omnicity
to offer high-speed and broadband-enabled services to customers with pent-up
demand, and taking advantage of key industry developments, including:

- The forecasted increase of demand for broadband and broadband-enabled
  services, including: web use and social networking; video (TV, movies, and
  personal video); software-as-a-service (SaaS); and cloud computing;
- The availability of high-speed 4G Worldwide Interoperability for Microwave
  Access (WIMAX) equipment;
- Weakness of existing service providers in Omnicitys target markets,
  primarily small telephone companies and Wireless Internet Service Providers
  (WISPs);
- A push by the federal government, Congress, and state governments to
  increase the availability of broadband services in rural and underserved
  markets, including $7.2 billion in stimulus funds earmarked for rural
  broadband services.

The Companys operating plan is to grow by:

- Consolidating WISPs in rural and urban cluster markets initially within the
  Midwestern United States;
- Developing and expanding, through organic growth, the subscriber base
  through disciplined sales and marketing programs;

6

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- Partnering with Rural Electric Membership Cooperatives (REMCs), local and
  state governments, rural telephone companies (Telcos) and Original Equipment
  Manufacturers (OEMs) to efficiently and cost effectively expand its network
  across rural America;
- Developing and expanding its service offerings to become a total broadband
  solution provider, including VOIP, IPTV and Satellite Internet, to increase
  value and average revenue per subscriber unit (ARPU);
- Completing further debt and equity offerings, in stages, of $15m by July
  31, 2010.

Description of Business and Business Strategy

Omnicitys business strategy, as mentioned above, is to become
a premier broadband and communications services provider in rural and small
urban cluster markets, beginning in the Midwest by: acquiring and consolidating
WISPs into regional market clusters; driving organic growth in acquired markets
through uniform sales and marketing and product offerings; layering on new
services (voice/VoIP, video distribution) that attract additional customers and
drive up ARPU; building marketing and sales partnerships with REMCs, local
governments, and telcos that can accelerate penetration; and creating and
leveraging economies of scale that cannot be easily matched by competitors.

By acquiring existing WISPs, Omnicity believes it can enter new
geographies quickly with an established revenue base and build meaningful
revenue and market share ahead of competitors, while taking advantage of
economies of scale in operations, sales, marketing, and network build-outs.
Further, the Company believes that delivering services using wireless technology
(both licensed and unlicensed) provides it several competitive advantages,
including:

- Wireless costs about $300 per acquired subscriber making it cost effective
  in low-density markets where new wired services (fiber, high-speed CATV)
  cannot be easily justified;
- Wireless infrastructure can be deployed in about 3 months vs. years for new
  wired services;
- Wireless can cover an entire geographic area with high-speed service vs.
  only structures passed by wired infrastructure.

Generally, the Company plans to target WISPs for acquisition in
contiguous areas to create regional market clusters. Due to capital and other
constraints, many WISPs have penetrated only a small percentage of homes and
businesses that can be serviced by their existing antennas, creating the
opportunity for organic growth post acquisition. Using disciplined sales and
marketing programs and a uniform product set, Omnicity believes it can increase
demand in these markets, while taking advantage of economies of scale, to drive
cash flow positive operations.

Currently, Omnicity uses standards-based wireless equipment in
the license-exempt 700Mhz, 900MHz, 2.4GHz and 5.8GHz spectrum bands, providing
multiple paths to cover subscribers in its markets. The Company deploys its
wireless networks by installing antennas on cellular and other commercial
towers, and municipally or privately owned structures such as tall silos and
rooftops. Customers receive the wireless signal via customer premise equipment
(CPE) that currently costs $180 per unit. The Company is evolving its technology
and spectrum strategy as it becomes more opportune and cost effective to utilize
licensed spectrum and related equipment.

The Company plans to target multiple customer segments,
including: business and healthcare providers (both local and regional/national
entities that require bandwidth at multiple locations); local and state
government entities; and residential customers. To reach these customers,
Omnicity expects to sell through a variety of channels including: direct sales
to business and local/state government customers; direct mail and web-based
sales to residential customers with affiliate sales through local school
systems; agency sales through local retailers; and through marketing
partnerships with REMCs and telcos. The Company also plans to undertake
marketing programs, such as providing web pages for the communities it serves
that feature local content such as news, sports - video broadcasts of
high-school football and businesses information. The Company has been providing
hands-on, experiential marketing at community events through its Experiential
Marketing Unit (EMU).

Marketing partnerships with REMCs form a core part of
Omnicitys business strategy. REMCs are cooperatives that provide electricity to
about 40 million homes and operate in 80% of counties in the U.S. The Company
has partnered and expects to partner with many REMCs to provide broadband
services to REMC customers, and to provide the REMCs value-added services, such
as remote meter reading and fiber construction. To date, Omnicity has formed an
exclusive partnership with Service Concepts, a marketing organization that
packages products and services for sale by REMCs, to offer Omnicity wireless
broadband services to its REMC customers. Service Concepts is owned by 29
Indiana-based REMCs and serves more than 300 of the 800 REMCs located in the
United States.

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Omnicity also expects to work with municipalities and other
governmental entities to provide broadband services in their often under-served
communities, and to provide these entities with mobile broadband for emergency
vehicles, high-speed networks for government offices, and remote meter reading
for municipal-owned utilities. On March 24, 2009, Omnicity announced the
installation of a First Responder emergency mobile and fixed wireless
broadband network in Parker City, Indiana. This network will provide mobile data
connections for police vehicles and broadband connectivity to water and sewer
systems, and to town-owned buildings. Using this model, Omnicity plans to
provide communications infrastructure to small towns and municipalities that can
become anchor tenants on its networks.

Finally, Omnicity is currently reviewing the opportunities for
accessing and utilizing funds under various Federal, and State broadband
stimulus programs and governmental grants.

Target Market: Rural Areas and Urban Clusters

The Company expects to target rural and small urban cluster
markets, defined by the U.S. Census Bureau (Census Bureau) as areas with less
than 10,000 people. These markets historically have had fewer service options
and competitors than urban and metropolitan areas. Nationally, these markets
account for 115.8 million people, about 41% of the total population, according
to the U.S. Department of Agriculture, and about 40 million occupied housing
units. Within the Midwest, these areas account for about 28 million people,
about 44% of the population, and 11 million occupied housing units. Consumer
demand for broadband-enabled services (Internet access, telephone services and
video services) is estimated to be $17.6 billion per year in Midwest states and
$64.1 billion per year in rural and small markets nationally.

While many choices are available to urban and large-cluster
market consumers for broadband and advanced services (such as Internet TV,
business and SaaS solutions), consumers and businesses in the Companys target
market have had limited options for broadband services due to the high cost of
building wired networks (copper, fiber, CATV) in sparsely populated areas, and
the fragmented service areas of small market telcos and WISPs, which limit the
ability of these firms to build scale and access capital. About 30% of consumers
are estimated to have no access to broadband services, according to the Rural
Broadband Policy Brief published by The Rural Policy Research Institute in
December 2008. Concerns about the availability of broadband in rural and
under-served markets led Congress to direct the Federal Communications
Commission (FCC) to create a comprehensive rural broadband
strategy, which the FCC released on May 22, 2009 in a report entitled Bringing
Broadband to Rural America: Report On A Rural Broadband Strategy.In
that report, the FCC noted that only about 38% of rural residents have broadband
connections at home compared with 57%-60% of urban and
suburban residents. Additionally,$7.2 billion was allocated under The
American Recovery and Reinvestment Act of 2009 to fund various broadband
programs in small and rural markets.

Acquisitions Completed during the year ended July 31, 2009

The Company initialized its business strategy with the
completion of asset purchase agreements with four WISPs through the year ended
July 31, 2009 including NDWave, Inc, Forepoints Networks Inc., Cue Connex and
North Central Communications, Inc. in consideration for cash, short-term notes,
and common shares of Omnicity Corp. as disclosed in the Table below. These four
acquisitions added approximately 3,200 subscribers to Omnicitys subscriber
base, which, combined with organic growth, totaled approximately 5,200
subscribers as of July 31, 2009. This represents approximately 3% penetration of
homes passed by our signal. Including these acquisitions, the Company now has
its network infrastructure across over 200 towers and is positioned to offer
services to approximately 173,000 homes, over 1/3 of the geography of Indiana.
The Company is targeting in excess of a 15% penetration in all its rural
markets.

Net consideration for these completed asset acquisitions during
the years ended July 31:

$Cash
    
    482,200Cash received in sale leaseback of acquired equipment
    
    (689,368
    )Extinguishment of debt
    
    10,000Vendor notes payable
    
    1,063,800Assumption of debt
    
    62,000Capital stock to be issued
    
    164,000Capital stock issued
    
    892,700Total Consideration Paid
    
    1,985,332


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The purchase price was allocated as follows:$Equipment, net of sale leaseback
    
    45,632Customers Relationships
    
    1,939,700Assets Acquired
    
    1,985,332


The Company also, subsequent to July 31, 2009, completed the
acquisition of Rushville Internet Services, LLC (RIS). The shareholders of RIS
agreed to wind-up RIS and sell RISs assets to Omnicity for $125,000. The
Company will receive their assets, being wireless equipment and tower
infrastructures, having a fair value of $68,706 and to settle the inter-company
debt of $56,294. All shareholders of RIS accepted to receive restricted common
shares of the Company. Subsequent to July 31, 2009 the Company issued 268,818
restricted common shares to the shareholders of RIS at a fair value of $0.465
per common share.

Competition

Traditionally, customers in Omnicitys target markets had four
primary options for broadband service, though not all options are available to
all customers, and about 30% of homes are estimated to have no option for
broadband. Each of these options has limitations and cannot be quickly upgraded
to high-speed (>10 Mbps), leaving a gap for Omnicity to offer high-speed and
broadband-enabled services to underserved customers. See Table below.

- Telcos  telcos offer digital subscriber line (DSL), where available, that
  supports download speeds of up to 6Mbps. DSL (including ADSL, IDSL) has an
  effective serving range of less than 2 miles from the telco central office
  (CO) for high-speed service, and is very dependent on the quality of the
  existing copper plant. Small and rural market telcos may lack capital to
  overbuild/improve the plant, especially as these companies lose traditional
  phone service customers to mobile phone providers.
- Cable  cable TV companies provide broadband over cable lines, where
  available, that supports download speeds of up to about 10Mbps. While cable
  generally is faster than DSL, cable broadband speed degrades based on user
  load since the service is shared among all users on a particular cable run. In
  some cases, cable plant must be overbuilt to support broadband services,
  requiring significant capital outlay.
- Satellite - Satellite broadband has the advantage of being available to any
  customer with a line of sight to the satellite, making the service attractive
  for very remote users. However, broadband over satellite is relatively slow
  (up to 1.5Mbps), and can suffer from latency associated with a long cycle time
  of bouncing signal to the satellite. The Company now offers Omnicity Satellite
  Internet through a re-branding agreement.
- WISPs - offer broadband using wireless technology. Wireless technology can
  support speeds of up to 100Mbps and has omni-directional antennas so that
  users in all directions can see the signal. Wireless services are available
  to any subscriber within range of the tower (about 5 miles) versus wired
  solutions that are available only to structures passed by the wire.

**Rural and Small Urban Cluster Broadband Options**

|Broadband Service                              | Speed                                          | Comments                                                                                                                                                                                     
|---------------------------------------------- | ---------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|DSL (Telcos)                                   | Up to 6 Mbps                                   | Speed depends on quality of copper plant; limited speeds
      if customer located >1 mile from telco central office (CO); very
      limited/no service if customer located >2 miles from CO
|Cable (Cable companies)                        | Up to 10 Mbps                                  | Depends on age of CATV plant - may require overbuild;
      capital expense may not justified in small markets; speed depends on
      number of users                                       
|Satellite (Satellite & Satellite TV companies) | Up to 1.5 Mbps                                 | Suffers latency in data transfer; poor quality for
      video applications; relatively expensive                                                                                          
|Wireless (WISPs)                               | Up to 3 Mbps residential; up to 100
      Mbps | Can be deployed quickly; covers large geographic areas;
      high-speed                                                                                                                     

Source: Rural Broadband Policy Brief, The Rural Policy
Research Institute, December 2008; Company estimates.

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Although Omnicity will compete with telcos in some instances,
many telcos in Omnicitys target markets are small (a few hundred to a few
thousand customers), and are frequently undercapitalized, limiting their ability
to provide higher-speed broadband and new services and build scale. Moreover,
smaller telcos are losing revenues as users shift to mobile phones and
disconnecting landlines. As a result, Omnicity expects to partner with telcos,
providing these companies with high-speed broadband and new broadband-enabled
services that can be marketed to the telco customer base, accelerating
Omnicitys market penetration and helping telcos stem revenue loss.

In addition to telcos and cable companies, Omnicity will
compete with WISPs in its target footprints that Omnicity cannot, or chooses
not, to acquire, and with WISPs pursuing similar strategies. Like telcos, many
WISPs operating in Omnicitys markets are small and are often under capitalized
limiting the ability to grow, provide high-speed services, and gain scale.
Nonetheless, the presence of a competitive WISP may impact Omnicitys ability to
penetrate a given market and reach profitability in the area. In addition to
individual WISPs, three other companies are known by Omnicity to be pursuing a
wireless strategy in smaller markets, including ERF Wireless, DigitalBridge
Communications Corp., and Open Range Communications. See Table below. Clearwire
Corporation also is pursuing a national wireless services strategy, but is
focusing on metropolitan markets to date.

Companies Pursuing Wireless/4G Services Businesses

Company
      Status
      Market Focus
      Direct CompetitorERF Wireless
      Public (OTC BB: ERFW)
      Similar to Omnicity, but focused in Texas, Louisiana,
        New Mexico
      Not at this timeDigitalBridge Communications Corp.
      Private
      Focused in on metro-edge and small metro markets
        with up to 150,000 people. Serving 4 cities in Indiana
      Not at this timeOpen Range Communications
      Private
      Similar to Omnicity, focused on 17 states including
        4 in Midwest
      Possible competitor in some markets


ERF Wireless is a publicly traded company (OTC BB: ERFW)
focused on providing wireless services to customers in Texas, Louisiana, and New
Mexico. According to ERF Wireless press releases, the company has completed 15
WISP acquisitions in Texas, Louisiana, and New Mexico and reported having 9,000
residential customers as of December 31, 2008. ERF Wireless also specializes in
providing services to banks in Texas and has signed an agreement with
Schlumberger to market its wireless services and products to the oil and gas
industry in the United States, Canada and the Gulf of Mexico. While ERF Wireless
is pursuing a similar strategy to Omnicity the company has thus far limited its
business to Texas, Louisiana, and New Mexico, and to oil installations serviced
by Schlumberger, and therefore is not a direct competitor to the Company at this
time.

DigitalBridge Communications is a private company that is
pursuing metro-edge markets and smaller metropolitan areas with populations up
to 150,000 people, according to the companys web site. On April 29, 2009,
DigitalBridge announced that the National Rural Telecommunications Cooperative
had made an undisclosed investment in the company. DigitalBridge currently
serves 14 markets, including 4 markets in Indiana. Because DigitalBridge is
focused on metro areas the Company does believe it is a direct competitor at
this time.

Open Range Communications is a private company that is focused
on delivering wireless broadband services to up to 500 small markets in 17
states (including Illinois, Indiana, Nebraska, Ohio, and Wisconsin in the
Midwest) with an average of 10,000 people, according to the companys web site
and press releases. The services are to be provided on licensed spectrum held by
Globalstar, Inc. (NASDAQ:GSAT) under Globalstars Ancillary Terrestrial
Component (ATC) authority, according to a company press release issued March 27,
2008. On March 25, 2008, the company announced that it was approved for a $267
million Broadband Access Loan by the United States Department of Agriculture's
Rural Development Utilities Program (RDUP) and on January 9, 2009, Open Range
announced an investment of $100 million from One Equity Partners (terms not
disclosed), which the companys web site indicates satisfies the RDUP
requirements for making the loan available. Based on available information, the
Company believes that Open Range may compete with it in some markets in the
Midwest.

Clearwire Corporation also is pursuing a nationwide network
rollout using wireless/4G technology. Clearwire is a publically traded company
(NASDAQ: CLWR) developing networks for large metropolitan areas. While it is
significantly larger than Omnicity, because Clearwire is focused on metro areas,
the Company does not believe it is a direct competitor at this time.

Omnicity believes it will be competitively differentiated from
telcos, cable companies, and small WISPs in several ways, including:

10

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- Telcos - able to deliver higher speeds than telco DSL and able to serve
  customers that cannot be served by DSL. Omnicity is positioned to partner with
  telcos to service telco phone customers that cannot receive DSL due to plant
  constraints;
- Cable companies - able to deliver higher speeds than cable data service and
  able to serve customers that cannot be served by cable data service;
- WISPs - leveraging scale, able to create wide market footprint that
  attracts customers; able to develop and offer a larger set of services to
  better meet customer needs.

The Company also believes it is positioned to compete with
other national WISP companies should they enter Omnicitys target markets by:

- Entering markets quickly through acquisitions, gaining an ongoing revenue
  stream vs. starting with new operations, sales and branding;
- Leveraging its status as a public company to make acquisitions vs. making
  cash outlays to build systems and operations from scratch;
- Partnering with REMCs, local governments, and telcos to accelerate
  Omnicitys market penetration and help these entities expand services,
  products and revenues;
- Utilizing available unlicensed radio technology to build revenue and market
  share. Several potential competitors are focused on using licensed spectrum to
  operate.

Networks and Technology

Service is delivered by antennas deployed on cellular and other
commercial towers, municipally or privately owned structures such as water
towers, tall silos and rooftops. Customers receive the wireless signal via
customer premise equipment (CPE) that currently costs $180 per unit and that is
mounted on rooftops. Any customer with line of sight to the antenna that is
within 5 miles can receive the signal. Each tower can support 100-150 customers
depending on the mix of bandwidth subscriptions and antenna equipment. Antennas
are connected to Internet access points via point-to-point radio and fiber
connections through agreements with fiber carriers and telcos where traffic is
backhauled to the Internet backbone. Networks generally are designed in a ring
topology to mitigate service failures in the event that a tower or network
connection is lost. The Companys operations are managed through a Network
Operations Center (NOC) in Rushville, Indiana, which also handles customer
support. Omnicity can currently offer services to homes in about 1/3 of the
geography of Indiana.

Currently, Omnicity uses standards-based wireless equipment in
the license-exempt 700Mhz, 900MHz, 2.4GHz and 5.8GHz spectrum bands, providing
multiple paths to cover subscribers in its markets. The Company is evolving its
technology and spectrum strategy as it becomes more opportune and cost effective
to utilize licensed spectrum and related equipment and is evaluating options for
using the 2.5GHz band for WIMAX-based services. Backhaul from wireless
distribution points is provided via point-to-point radio, and fiber connections
through agreements with backhaul carriers.

Milestones

Upon completion of Omnicitys reverse merger transaction on
February 17, 2009, a number of milestones have been achieved in the execution of
Omnicitys business strategy:

- Completed five WISP asset purchases. Including acquisitions, Omnicity
  currently has a portfolio of transmission rights in six small to mid-size WISP
  markets located principally in Indiana. These markets represent approximately
  225,000 households, approximately 173,000 of which are believed to be
  serviceable by line-of-sight transmissions from Omnicity antenna locations;
- The Company's revenues for 2009 increased by $655,000 to $1,689,000 (2008 -
  $1,034,000), an increase of 63%. More importantly, revenue for Q4 2009
  increased by $288,000 to $611,000 (2008 - $322,000), an increase of 89%.
  Additionally, Q4 2009 revenues increased by $186,000 to $611,000 (Q3 2009 -
  $425,000), an increase of 44%. This is after a 46% increase Q3 2009 compared
  to Q2 2009. These significant increases reflect an increase in recurring
  service revenue from our four acquisitions. Revenues from our first acquisition began in February,
  2009. The numbers of subscribers increased from 1,800 to 5,200 by virtue of
  these acquisitions;

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- Completed its first local government project, providing mobile data
  connections for the police vehicles and broadband connectivity to the water,
  sewer and town hall buildings in Parker City, Indiana;
- Entered into a $1 million master lease facility with Agility Ventures, LLC
for operating leases of radio and other equipment to expand its business.

Cost Factors

Traditional hard-wire systems typically cost significantly more
to build than wireless systems. Hardwire systems must install a network of cable
and amplifiers in order to deliver signals to their subscribers. This
considerable cost is not incurred by wireless operators and is only partially
offset by the cost a wireless operator incurs to purchase and install the
wireless radios and related equipment necessary for each subscriber's location.
These lower system development costs typically result in lower debt burdens per
subscriber for wireless operators as compared to comparably sized traditional
hard wire systems.

The system operating costs for wireless systems also are
generally lower than those for comparable hard-wire systems. This is
attributable to lower system network maintenance and depreciation expense.

We anticipate that each additional wireless subscriber will
require an incremental capital expenditure by us. This amount consists of
material and installation labor and overhead charges. These per subscriber
capital costs will not be incurred until a subscriber has been added and is
about to generate revenue for us and will be offset in part by installation fees
paid by the subscriber at the time of installation.

Employees

As of July 31, 2009, we had a total of 36 full time employees
and as of October 23, 2009 we had a total of 38 full time employees. None of our
employees is subject to a collective bargaining agreement. We have experienced
no work stoppages and believe that we have good relations with our employees. We
also utilize the services of independent contractors to build and install our
wireless systems and market our services.

Subsidiaries

We own 100% of Omnicity, Incorporated, a company organized
under the laws of the State of Indiana.

Patents and Trademarks

We have no patents or patents pending. We have trademarked the
following: Bringing Broadband to the Heartland.

**ITEM
1A.** **RISK FACTORS**

An investment in our common stock involves a number of
very significant risks. You should carefully consider the following risks and
uncertainties in addition to other information in this annual report in
evaluating our company and its business before purchasing shares of our common
stock. Our business, operating results and financial condition could be
seriously harmed due to any of the following risks. The risks described below
may not be all of the risks facing our company. Additional risks not presently
known to us or that we currently consider immaterial may also impair our
business operations. You could lose all or part of your investment due to any of
these risks.

Risks Relating to Our Business

We have limited operating history and lack profitable
operations.

Omnicitys business commenced in 2003 and substantially all of
its revenues have been generated by the six Indiana systems, which began serving
subscribers in March 2004. Prospective investors, therefore, have limited
historical financial information about us upon which to base an evaluation of
our performance and an investment in our common stock. Omnicity has also recorded net losses in each of
the last two fiscal years and April 30, 2009 fiscal year to date, due primarily
to administrative costs, interest expense and charges for depreciation and
amortization of capital expenditures to develop its wireless systems. We may
continue to experience net losses while we develop and expand our wireless
systems even if mature individual systems of our company are profitable.
Prospective investors should be aware of the difficulties encountered by
enterprises in the early stages of development, particularly in light of
potential competition. There can be no assurance that an increase in the number
of subscribers or the launch of additional wireless systems will result in
profitability for our company in future years.

12

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Our business depends on leases and material agreements
with unaffiliated third parties for a significant portion of our customer
premises equipment and our wireless tower transmission rights.

We are dependent on leases with unaffiliated third parties for
most of our wireless transmission rights. The remaining terms of most of
Omnicitys site leases are approximately three years. Most of these leases
provide for automatic renewal of the lease term, grant a right of first refusal
to the sites and/or require the parties to negotiate lease renewals in good
faith. The termination of or failure to renew our operating leases would result
in Omnicity being unable to deliver services from such site to the households in
its footprint. For customer premises equipment, after three years, we have the
option of acquiring the equipment at the then fair market value. Such a
termination or failure in a market that we actively serve could have a material
adverse effect on Omnicity.

In connection with our distribution of wireless Internet
service, we are dependent on third party agreements for high-speed return path
access (Backhaul). Although we have no reason to believe that any such
agreement will be cancelled or will not be renewed upon expiration, if such
contracts are cancelled or not renewed, we will have to seek Backhaul from other
sources. There is no assurance that other Backhaul will be available to us on
acceptable terms or at all or, if so available, that it will be of a grade and
speed acceptable to our subscribers.

We will need additional financing in order for our
company to grow.

The growth of our business will require substantial investment
on a continuing basis to finance capital expenditures and related expenses for
subscriber growth and system development. We may require additional financing to
continue to add significant numbers of subscribers to our systems, develop our
markets, and make critical acquisitions of additional wireless transmission
assets. These activities may be financed in whole or in part through debt or
equity financings, joint ventures or other arrangements. There is no assurance
that any additional funds necessary to finance the development and expansion of
our wireless systems will be available on satisfactory terms and conditions, if
at all. To the extent that any future financing requirements are satisfied
through the issuance of equity securities, investors may experience significant
dilution in the net tangible book value per share of the common stock offered
hereby. The amount and timing of our future capital requirements will depend
upon a number of factors, many of which are not within our control, including
service costs, capital costs, marketing expenses, staffing levels, subscriber
growth and competitive conditions. Failure to obtain any required additional
financing could adversely affect the growth of the Company.

Our company is dependent on the knowledge and experience
of our existing management and key employees.

We are dependent in large part on the experience and knowledge
of existing management. The loss of the services of any one or more of our
current executive officers could have a material adverse effect upon Omnicity.
Our success is also dependent upon its ability to attract and retain qualified
employees to develop and operate its wireless systems.

Risks Relating to Our Industry

The wireless broadband service provider industry is
highly competitive.

The wireless broadband service provider industry is
competitive. Wireless systems face or may face competition from several sources,
such as traditional hard-wire companies, telephone companies, satellite
providers, and other alternative methods of distributing and receiving Internet
and voice transmissions. In addition, within each market, we may compete with
others to acquire rights to transmission sites. Legislative, regulatory and
technological developments may result in additional and significant competition,
including competition from local telephone companies. In our existing systems,
we have targeted our marketing to households that are not served or underserved
by traditional hard-wire providers and that have limited access to high speed
internet service from other sources (primarily having access only to dial-up
internet access, if any). Accordingly, we have not encountered significant
direct competition from traditional hard-wire companies. No assurance can be
given, however, that we will not face direct competition from traditional
hard-wire companies in the future. The standard service offering package offered in each of the Existing Systems is comparable
to that offered by traditional hard-wire operators. Many actual and potential
competitors have greater financial, marketing and other resources than our
company. No assurance can be given that we will compete successfully.

13

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There are physical limitations of wireless transmission.

Wireless broadband service is transmitted through the air via
microwave frequencies from radios at a transmission facility to a small
receiving radio at each subscribers location, which generally requires a direct
line-of-sight from the transmission facility to the subscribers receiving
radio. Therefore, in communities with tall trees, hilly terrain, tall buildings
or other obstructions in the transmission path, wireless transmission can be
difficult or impossible to receive at certain locations without the use of
signal repeaters. Based on our installation and operating experience, we believe
that our signal can be received directly by approximately 85% of the households
within our expected signal patterns for such markets. The terrain in most of our
markets is generally conducive to wireless transmission and we do not presently
anticipate any material use of beam benders or repeater stations. In addition,
in limited circumstances, extremely adverse weather can damage transmission
facilities and receiving radios. However, we do not believe such potential
damage is a material risk.

We are subject to government regulation.

Although much of the microwave spectrum used by our company for
transmission of our services is not required to be licensed by the FCC, many of
the frequencies that we use in the future are highly regulated. We cannot
predict precisely what effect any potential regulations may have on our company.

Wireless operators are also subject to regulation by the
Federal Aviation Administration with respect to the use and construction of
transmission towers and to certain local zoning regulations affecting
construction of towers and other facilities. There may also be restrictions
imposed by local authorities. There can be no assurance that we will not be
required to incur additional costs in complying with such regulations and
restrictions.

Risks Relating to Our Common Stock

Our stockholders may experience dilution as a result of
our issuance of additional common stock or the exercise of outstanding
options.

We may enter into commitments in the future, which would
require the issuance of additional common stock, and we may grant share purchase
warrants and stock options. The exercise of such share purchase warrants or
options and the subsequent resale of such common stock in the public market
could adversely affect the prevailing market price and our ability to raise
equity capital in the future at a time and price which we deem appropriate. Any
share issuances from our treasury will result in immediate dilution to our
existing stockholders.

We have never declared or paid cash dividends on our
common stock.

We do not anticipate paying cash dividends on our common stock
in the foreseeable future. Payment of future cash dividends, if any, will be at
the discretion of our board of directors and will depend on our financial
condition, results of operations, contractual restrictions, capital
requirements, business prospects and other factors that our board of directors
considers relevant. Accordingly, investors may only see a return on their
investment if the value of our securities appreciates.

There is a limited trading market for our common stock,
and our investors may be unable to sell their shares.

We have a limited trading market for our common stock on the
National Association of Securities Dealers Inc.s OTC Bulletin Board. As a
result, investors may not be able to sell the shares of our common stock that
they have purchased and may lose all of their investment.

Our common stock is subject to the Penny Stock Rules of
the SEC, which will make transactions in our common stock cumbersome and may
reduce the value of an investment in our common stock.

Our common stock is quoted on the Financial Industry Regulatory
Authoritys OTC Bulletin Board, which is generally considered to be a less
efficient market than markets such as NASDAQ or other national exchanges, and
which may cause difficulty in conducting trades and obtaining future financing.
Further, our securities are subject to the penny stock rules adopted pursuant
to Section 15(g) of the Securities Exchange Act of 1934, as amended. The penny
stock rules apply generally to companies whose common stock trades at less than
US$5.00 per share, subject to certain limited exemptions. Such rules require, among other
things, that brokers who trade penny stock to persons other than established
customers complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in
the security, including a risk disclosure document and quote information under
certain circumstances. Many brokers have decided not to trade penny stock
because of the requirements of the penny stock rules and, as a result, the
number of broker-dealers willing to act as market makers in such securities is
limited. In the event that we remain subject to the penny stock rules for any
significant period, there may develop an adverse impact on the market, if any,
for our securities. Because our securities are subject to the penny stock
rules, investors will find it more difficult to dispose of our securities.
Further, it is more difficult: (i) to obtain accurate quotations, (ii) to obtain
coverage for significant news events because major wire services, such as the
Dow Jones News Service, generally do not publish press releases about such
companies, and (iii) to obtain needed capital.

14

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Our independent auditors have expressed substantial doubt
about our ability to continue as a going concern, which may hinder our ability
to obtain future financing.

Our companys consolidated financial statements include a
statement that our financial statements are prepared on a going concern basis,
and therefore that certain reported carrying values are subject to our company
receiving the future continued support of our stockholders, obtaining additional
financing and generating revenues to cover our operating costs. The going
concern assumption is only appropriate provided that additional financing
continues to become available.

A decline in the price of our common stock could affect
our ability to raise further working capital and adversely impact our
operations.

A decline in the price of our common stock could result in a
reduction in the liquidity of our common stock and a reduction in our ability to
raise additional capital for our operations. Because our operations to date have
been principally financed through the sale of equity securities, a decline in
the price of our common stock could have an adverse effect upon our liquidity
and our continued operations. A reduction in our ability to raise equity capital
in the future would have a material adverse effect upon our business plan and
operations, including our ability to continue our current operations. If our
stock price declines, we may not be able to raise additional capital or generate
funds from operations sufficient to meet our obligations.

ITEM
1B.             UNRESOLVED
STAFF COMMENTS

None.

ITEM
2.              
PROPERTIES

Our executive and operations offices are located at 807 South
State Rd 3, Rushville, Indiana, U.S.A.

ITEM
3.              
LEGAL PROCEEDINGS

We are not a party to any material legal proceedings nor are we
aware of any legal proceedings pending or threatened against us or our
properties.

ITEM
4.              
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted during the fourth quarter of our
fiscal year to a vote of security holders, through the solicitation of proxies
or otherwise.

15

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PART II

|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
      STOCKHOLDER **MATTERS AND ISSUER PURCHASES OF EQUITY
      SECURITIES**
|------- | ----------------------------------------------------------------------------------------------------------------------------

Market Information

Our shares of common stock were quoted for trading on the OTC
Bulletin Board under the symbol BRVR.OB on September 8, 2008. Effective
October 21, 2008 our symbol was changed to OMCY.OB. The market for our common
stock is limited, volatile and sporadic. The following table sets forth the high
and low bid prices relating to our common stock for the periods indicated, as
provided by the OTC Bulletin Board. These quotations reflect inter-dealer prices
without retail mark-up, mark-down, or commissions, and may not reflect actual
transactions.

QUARTER ENDED
    HIGH BID
    LOW BIDJuly 31, 2009
    $0.95
    $0.50April 30, 2009
    $0.73
    $0.51January 31, 2009
    $0.61
    $0.46October 31, 2008
    $0.50
    $0.50


Holders

As of October 23, 2009, we had approximately 650 shareholders
of record.

Dividend Policy

No dividends have been declared or paid on our common stock. We
have incurred recurring losses and do not currently intend to pay any cash
dividends in the foreseeable future.

Recent Sales of Unregistered Securities

In connection with the closing of the Acquisition, we issued
23,000,000 shares of common stock in the capital of our Company to shareholders
of Omnicity, Incorporated. These securities were issued pursuant to Rule 506 of
Regulation D under the United States Securities Act of 1933, as amended (the "US
Securities Act") to non-accredited and accredited investors (as defined in Rule
501 under Regulation D under the US Securities Act) based upon representations
made by the acquirers.

Effective on April 29, 2009, we issued a total of 1,428,571
common shares from treasury to 2 individuals to complete the common share
portion to complete an Asset Purchase Agreement dated October 7, 2008 and
amended February 26, 2009 at an agreed price of $0.35 per common share. We
relied on exemptions from registration under the Securities Act provided by Rule
506 for U.S. accredited investors based on representations and warranties
provided by the individuals.

Effective on June 9, 2009, we issued a total of 545,417 common
shares from treasury to 11 individuals to complete the common share portion to
complete an Asset Purchase Agreement dated October 7, 2008 and amended March 25,
2009 at an agreed price of $0.72 per common share. We relied on exemptions from
registration under the Securities Act provided by Rule 506 for U.S. accredited
investors based on representations and warranties provided by the individuals.

Effective on May 8, 2009 and June 24, 2009, we completed a
non-brokered private placement pursuant to which we issued from treasury to 33
subscribers 1,928,029 units at a subscription price of $0.35 per unit for
proceeds of $674,810. Effective on May 8, 2009 and June 24, 2009, we completed a
non-brokered units-for-debt private placement pursuant to which we issued from
treasury to 8 subscribers 679,358 units at a deemed issuance price of $0.35 per
unit in retirement of an aggregate of $237,775 of Company debt. Stock issuance
costs of $52,595 was charged as a reduction of proceeds. The proceeds of the
combined Unit and Unit for debt non-brokered private placement, net of stock
issuance costs, were $859,990. Each unit consisted of one share of common stock
and one-half of one share purchase warrant. Each whole warrant entitles the
holder to acquire an additional share of common stock at an exercise price of
$0.50 per share until May 8, 2011 as to 1,199,408 shares and June 24, 2009 as to
100,000 shares and September 17, 2009 as to 4,287 shares. We relied on
exemptions from registration under the Securities Act provided by (i) Regulation
S (with respect to two of the subscribers), and (ii) Rule 506 for U.S.
accredited investors (with respect to 24 of the subscribers), and (iii) Rule 506
for non-accredited investors (with respect to 15 of the subscribers) in each case based on
representations and warranties provided by the subscribers in their respective
subscription agreements entered into between each subscriber and the Company.

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Effective on May 26, 2009, we issued a total of 350,000 common
shares from treasury to a company pursuant to an Investor Relations Consulting
Agreement dated May 25, 2009. We relied on exemptions from registration under
the Securities Act provided by Rule 506 for U.S. accredited investors based on
representations and warranties provided by the Company.

No Repurchases

Neither we nor any of our affiliates have made any purchases of
our equity securities during the fourth quarter of our fiscal year ended July
31, 2009.

ITEM
6.              
SELECTED FINANCIAL DATA

We are a smaller reporting company as defined by Rule 12b-2 of
the Exchange Act and are not required to provide the information required under
this item.

|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
      CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------------

The following discussion of our financial condition, changes in
financial condition, plan of operations and results of operations should be read
in conjunction with (i) our audited consolidated financial statements as at July
31, 2009 and 2008 and (ii) the section entitled Business, included in Item 1
in this Form 10-K Annual Report. The discussion contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of many factors, including, but not limited to, those set forth
under Risk Factors and elsewhere in this Annual Report.

Plan of Operations

Our business plan is to be a rural wireless internet service
provider in the United States through a consolidation strategy and organic
growth of all acquired business units and to partner with REMCs, Telcos and
local governments for nationwide marketing. We also plan to partner with
regional and national telecommunication companies for the delivery of voice
services and complete negotiations and logistics of DirecTV resell agreements.
We further plan to partner with local governments to provide essential services,
including mobile internet for emergency mobile communications, fire and police
and to establish new utility applications such as automated meter reading. We
plan to bring WISP based services to rural America through three distinct market
channels: (1) REMC partnerships, (2) strategic acquisitions, (3) local
government and private enterprise partnerships.

Utilizing our relationship with the REMCs and "value added"
institutional services and facilities we provide for municipalities and local
governments, we plan to organize and consolidate within the rural broadband
market initially in Indiana and then in the Midwestern United States and
ultimately nationwide. Collaborations with both the REMCs and municipalities may
act as effective barriers for competition and provide additional sources of
revenue and customer service for both the REMCs and municipalities as well as
income and cash flow for our company. The bundling of broadband services,
including internet, voice, and video, in partnership with rural electric and/or
municipal services provides an opportunity to imbed, cross promote, and extend
services in collaboration with these institutional providers.

Future Financing Requirements

We estimate that approximately $6,000,000 will be required in
fiscal 2010 to finance the expansion of, and the addition of subscribers through
acquisition to, our existing and to be acquired network infrastructures. A total
of $1,130,000 has been raised as at October 22, 2009. A minor portion will be
used to finance our negative operational cash flow to the end of December 31,
2009. Once targeted acquisitions are complete, by the end of 2009, we will be
operationally cash flow positive and will require no additional funds to finance
these deficits. A portion of these funds will also be used to finance the
acquisition of additional transmission rights, the purchase and installation of
transmission and tower equipment and the cost of customer premises equipment. A
portion of the funds will be earmarked to pay down existing debt that has a high
cost of capital associated with it and to make principal and interest payments
of our long-term and short term debt as required.

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Current Financing Arrangements

- 8% Senior Subordinated Redeemable Debenture - to raise up to $2,000,000 by
  issuing long-term debentures with interest paid quarterly;
- Equity Unit Private Placement - to raise up to $2,000,000 pursuant to a
  unit private placement being sold to accredited investors of which $1,130,000
  has been raised as at October 22, 2009;
- Equipment Leasing Arrangement - Master Lease Agreement with Agility
  Leasing for a $1,000,000 equipment leasing facility. This facility will be
  used to help finance customer premise equipment needs for 2009 and 2010. The
  Company has used $727,368 of this leasing facility. The Company is in
  discussions to increase this Master Lease Agreement;
- Private Investment Public Entity ("PIPE") - we have signed an engagement
  letter with Bowen Advisors, Inc. out of Boston to assist us in raising up to
  $10m in stages over the next fifteen months with the first stage being
  $2,500,000. Marketing of this offering has begun and the Company is discussing
  with various financial institutions under Non-disclosure Agreements.

We will continue to seek traditional cash flow and asset backed
financing to supplement our efforts discussed above and to reduce our overall
cost of capital. Additionally, in order to accelerate our growth rate and to
finance general corporate activities, we may supplement our existing sources of
funds with financing arrangements at the operating system level or through
additional borrowings, joint ventures or other off balance sheet arrangements.
As a further capital resource, we may sell or lease certain wireless rights or
assets from our portfolio as appropriate opportunities become available.
However, there can be no assurance that we will be able to obtain any additional
financing, on acceptable terms or at all.

Plan of Operations for the Next Twelve Months

Our plan of operations for the next twelve months through
our fiscal year ending July 31, 2010 is to:

| | 1. | complete further debt and equity offerings of $5m by
      December 31, 2009;                                                                                                                                                                                
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | develop and expand, through organic growth, the
      subscriber base through our sales and marketing program;                                                                                                                                               
| | 3. | acquire and transition into our operations assets of
      competing WISP operators and expand our network into all of Midwest
      USA;                                                                                                                    
| | 4. | reach operationally cash flow positive and build a
      liquidity floor under operations of $100,000 minimum by December 31,
      2009;                                                                                                                    
| | 5. | build a current ratio of 2:1 by December 31,
  2009;                                                                                                                                                                                                         
| | 6. | continue to partner with Rural Electric Membership
      Cooperatives "REMCs", local and State governments, Rural Telcos and
      Original Equipment Manufacturers "OEMs" to efficiently and cost
      effectively expand our network across rural America;
| | 7. | develop and expand our service offerings to become a
      total broadband solution including VOIP and IPTV; and                                                                                                                                             
| | 8. | complete a further equity offering, in stages, of $10m by
      July 31, 2010.                                                                                                                                                                               

Results of Operations

The following table sets forth certain financial information
relating to the Company for the years ended July 31, 2009 (2009) and July 31,
2008 (2008). The financial information presented is derived from the audited
consolidated financial statements included under Item 8 in this 10-K.

18

---

Years ended July 31, 2009 and 2008

$
    
    
    $Sales, net
    
    1,688,944
    
    
    1,034,310Expenses:Service costs
    
    30,712
    
    
    26,465Plant and signal delivery
    
    967,406
    
    
    566,613Marketing and sales
    
    45,375
    
    
    26,487General and administration
    
    744,616
    
    
    535,604Salaries and benefits
    
    1,276,016
    
    
    482,579Stock based compensation
    
    289,629
    
    
    Depreciation and amortization
    
    536,113
    
    
    352,425Total expenses
    
    3,889,867
    
    
    1,989,627Loss from
      operations
    
    (2,200,923
    )
    
    (955,317
    )Other income (expense):Other income
    
    
    
    
    57,883Forgiveness of interest
    
    
    
    
    121,889Interest expense
    
    (241,096
    )
    
    (204,316
    )Financing expense
    
    (190,039
    )
    
    Total other income
      (expense)
    
    (431,135
    )
    
    (24,544
    )Net loss
    
    (2,632,058
    )
    
    (979,861
    )Net loss per share
       basic and diluted
    
    (.08
    )
    
    (.03
    )


The following discussion should be read in conjunction with the
audited consolidated financial statements (including the notes thereto) included
under Item 8 in this 10-K.

Revenues

The Company's revenues for 2009 increased by $655,000 to
$1,689,000 (2008 - $1,034,000), an increase of 63%. More importantly, revenue
for Q4 2009 increased by $288,000 to $611,000 (2008 - $322,000), an increase of
89%. Additionally, Q4 2009 revenues increased by $186,000 to $611,000 (Q3 2009 -
$425,000), an increase of 44%. This is after a 46% increase Q3 2009 compared to
Q2 2009. These significant increases reflect an increase in recurring service
revenue from our four acquisitions. Revenues from our first acquisition in 2009
began in February, 2009. The numbers of subscribers increased from 1,800 to
5,200 by virtue of these acquisitions. For the first six months of 2009 and all
of 2008, subscriber counts were not significantly different. The Company
receives revenue mainly from monthly service and modem rental fees collected
from its subscribers. The Company also receives web hosting fees, installation
fees, fiber construction projects fees and late fees, this is less than 8% of
total revenue. The Company expects revenues to increase over the next fiscal
year as a result of organic growth, planned acquisitions and increase in ARPU.

Operational Expenses

Operational expenses include service costs, plant and signal
delivery, marketing and sales, general and administration and salaries and
benefits.

Service costs include the cost of billing and collection.
Service costs for 2009 increased by $4,000 to $31,000 (2008 - $26,000). This
increase was due mainly to the increase in the number of customers accounts
offset by a decrease in the cost of collection. Service costs are not expected
to increase significantly in 2010.

Plant and signal delivery expenses include the rental of tower
infrastructures, the purchase of internet transmission (backhaul) the cost of
installations at customers premises and the customer premises equipment
operating lease costs. Plant and signal delivery expenses for 2009 increased by
$401,000 to $967,000 (2008 - $566,000), an increase of 71% which is in line with
the increase in revenues. This increase was due mainly to the increase in the
number of towers under rental arrangements, the amount of backhaul needed to
service the increase in customers, the increase in customer premises equipment
being leased pursuant to operating lease arrangements and the increase in
customer installations. Plant and signal delivery costs per customer will
significantly decrease once the Company populates its towers with customers. The
Company, on average, has a penetration of approximately 4% of homes passed
whereas the minimum target penetration is greater than 20% which is the
penetration rate in the Wabash REMC coverage area.

19

---

Marketing and sales expenses include REMC fees, advertising,
preparation of marketing materials, commissions paid to our VP of corporate
sales and commissions paid to Service Concepts, a company responsible for
marketing to the REMCs on the Companys behalf. Marketing and sales for 2009
increased by $19,000 to $45,000 (2008 -$26,000). This increase was due mainly to
the hiring of salesperson and Service Concepts beginning their marketing
campaign targeted at the REMCs. Marketing and sales expenses are expected to
significantly increase during 2010 as the Company increases its marketing plan
to significantly increase organic growth.

General and administration expenses include professional fees
(including legal, accounting and outside professional consulting), investor
relations fees, office expenses (including rent, telephone and office), software
fees and fees associated with late payments and bank charges. General and
administration expenses for 2009 increased by $210,000 to $745,000 (2008 -
$535,000). This increase is mainly due to becoming a public company on February
17, 2009 and the additional costs associated with this transaction and investor
relations expenses, transfer agent expenses and regulatory fees. General and
administration expenses are not expected to increase significantly in 2010 in
relation to increased revenue.

Salaries and benefits for 2009 have increased by $793,000 to
$1,276,000 (2008 - $483,000). This increase is mainly due to becoming a public
company on February 17, 2009 and the additional costs associated with hiring
senior management such as a Chief Financial Officers, VP of Corporate
Development, VP of Sales and Marketing, VP of Acquisitions, VP of Field
Services, VP of Customer Support and a corporate sales person. The Company went
from 10 employees as at July 31, 2008 to 38 employees currently. The Company
does not expect to increase its number of employees significantly during 2010 as
it has now contracted out its installations to an independent contractor and the
Companys current number of employees is expected to be able to maintain a
customer base at least double its current 5,200 customers.

Stock based compensation for 2009 increased by $290,000 to
$290,000 (2008 - $nil). This was a result of an Omnicity, Incorporated Board of
Directors Resolution dated January 2, 2009 to issue shares to current employees,
including its then Chief Executive Officer and Chief Operating Officer, to
compensate them for all services performed up to the end of December 31,
2008.

Depreciation and amortization for 2009 increased by $184,000 to
$536,000 (2008 - $352,000). A total of $80,000 of this increase was as a
function of adding signal delivery equipment on towers through acquisitions,
developing the Companys Customer Relationship Management software package,
acquiring additional office furniture and equipment and acquiring customer
premises equipment. $98,000 of the increase was attributed to the amortization,
over a period of seven years, the customers relationships acquired in
conjunction with the four completed asset acquisitions.

Other Income and Expense

Interest expense for 2009 increased by $37,000 to $241,000
(2008 - $204,000). The increase was a result of increased short-term and
long-term debt and the additional interest and late fees charged by Wabash REMC
totaling $44,000. Interest expense is not expected to increase substantially in
2010 as the Company plans to pay down short-term and long-term debt and to
finance growth through the issuance of equity instruments.

Financing expense for 2009 increased by $190,000 to $190,000
(2008 - $nil). The Company acquires, either new or as part of asset
acquisitions, certain fixed and wireless tower and customer premises equipment.
Pursuant to a Master Lease Agreement with Agility Venture Fund I, LLC
(Agility) dated November 6, 2006, the Company sells this equipment to Agility
and then leases the equipment back pursuant to operating lease agreements. On
December 1, 2006 the Company received $233,333 pursuant to a sale leaseback
arrangement.

Pursuant to a new Master Lease Agreement with Agility Venture
Fund II, LLC (Agility II) dated December 24, 2008, the Company and Agility
agreed to provide funding under new sale lease back arrangements totalling
$1,000,000. This new facility is in addition to and in conjunction with the
November 6, 2006 agreement. On February 17, 2009, March 27, 2009, July 9, 2009
and July 14, 2009 the Company received an aggregate of $749,749 pursuant to four
sale leaseback schedules completed ($689,368 in connection with sale leaseback
arrangements pursuant to the Master Lease Agreements and an aggregate of $60,381
in connection with sale leaseback arrangements with various unrelated
vendors).

20

---

Each sale leaseback transaction requires a 10% deposit as
additional security for the stream of lease payments and 30% warrant coverage as
a financing expense. Each lease agreement is for a period of 36 months with a
buy-out at the end of the lease equal to the fair value of the equipment at that
time. Our Chief Executive Officer and Chairman of the Board of the Company have
provided personal guarantees for all remaining lease payments.

Pursuant to Warrant Agreements appended to the Master Lease
Agreements with Agility and Agility II, the Company was obligated to provide the
Lessor with 30% warrant coverage. On June 24, 2009, the Company settled the
commitment to issue warrants under the November 6, 2006 Master Lease Agreement
and issued 155,556 warrants exercisable at $0.45 per common share expiring
December 1, 2011 and recorded the value of these warrants, being $70,000, as a
financing expense. This expense was not recognized on December 1, 2006 and the
Company has restated its July 31, 2007 financial statements to charge this
expense to the appropriate period. Also on June 24, 2009 the Company settled the
commitments to issue warrants on the first two of four sale leaseback schedules.
The Company issued 77,569 warrants exercisable at $0.51 per common share
expiring February 17, 2019 and issued 184,914 warrants exercisable at $0.58 per
common share expiring March 27, 2019. These warrants were valued at $126,907 and
charged as a financing expense. Subsequently, on October 13, 2009 the Company
settled commitments to issue warrants on the final two sale leaseback schedules.
The Company issued 139,490 warrants exercisable at $0.56 per common share
expiring October 13, 2019. These warrants were valued at $63,132 and charged as
a financing expense during the year ended July 31, 2009.

Other income and forgiveness of interest for 2009 was $nil
(2008 - $180,000) as result of not incurring these items in 2009.

Net Loss

The net loss for 2009 increased by $1,652,000 to $2,632,000
(2008 - $980,000). This increase in loss was due to increases in operational
expenses of $1,900,000 offset by an increase in revenue of $655,000 for a net
increase in loss from operations of $1,246,000. This net increase is mainly
associated with building internal infrastructure and the costs of being a public
company. Non-cash items such as stock based compensation and financing expense,
totaling $489,000, were not incurred in 2008. Depreciation also increased by
$184,000. Additionally, the Company did not receive the benefit of $179,000 of
other income and forgiveness of interest in 2009 as compared to 2008.

Liquidity and Capital Resources

July 31, 2009
      
      
      July 31, 2008$
      
      
      $Cash
      
      159,000
      
      
      nilWorking Capital (Deficiency
      
      (2,585,000
      )
      
      (2,056,000
      )Total Assets
      
      3,350,000
      
      
      1,243,000Total Liabilities
      
      4,424,000
      
      
      2,906,000Stockholders Deficit
      
      (1,074,000
      )
      
      (1,663,000
      )


Included in working capital deficiency are short-term notes
totaling $1,222,716. These notes are all standard unsecured promissory notes due
on demand or within one year at rates varying from 5% on $625,800, 7% on
$365,000, 8% on $8,416, 10% on $10,000 and 20% on $203,500. Also included in
working capital deficiency are long-term obligations totaling $1,947,574. The
long-term debt principal payments due over the next five years and beyond are as
follows:

Year
    $2010
    511,5212011
    284,5302012
    224,4322013
    194,4262014
    182,133Thereafter
    550,532


Long-term debt is made up of many smaller debt agreements. The
material debt agreements are as follows:

21

---

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | July 31,  |  |  | July 31,  | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  |  | --------- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | 2009      |  |  | 2008      | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  | $         |  |  | $         | 
|Notes payable to Jay County Development
      Corporation. Non-interest bearing, repayable monthly based on the number
      of subscribers in Jay County, Indiana. Collateralized by certain equipment
      located in Jay County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 296,911   |  |  | 300,099   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |           |  |  |           | 
|Notes payable to Wabash Rural Electric
      Membership Cooperative (Wabash). Six separate notes were renewed
      pursuant to a Memorandum of Understanding effective September 24, 2009.
      Accrued interest and penalties to this date, totalling $115,111, were
      added to the principal amounts outstanding. Interest rates are between
      5.7% and 7.45% annually and are collateralized by certain equipment in
      Wabash County, Indiana. Monthly payments of $448 begin on January 31, 2010
      on one note with final payment due December 31, 2015. Quarterly payments
      of $23,469 begin on December 31, 2009 on three notes with final payments
      due between September, 2016 and August, 2017. Quarterly payments of $945
      begin on December 31, 2009 on one note with final payment due July 31,
      2014 and quarterly payments of $835 on one note begins on January 31, 2010
      with final payment due July 31, 2017. |  | 629,388   |  |  | 490,040   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |           |  |  |           | 
|Note payable to Muncie Industrial Revolving
      Loan Fund Board. Interest of 5% only was paid to July 13, 2009. Monthly
      principal and interest of $4,570 payments start August 13, 2009 and end
      December 13, 2011, at which time the loan will be reviewed by Muncies
      Board of Directors. This note is collateralized by certain equipment in
      Muncie County and Delaware County, Indiana.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 283,741   |  |  | 247,361   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |           |  |  |           | 
|Note payable to Star Financial Bank.
      Interest is paid monthly at 8.6% per annum. This note is due February,
      2010 and is collateralized by certain equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 193,170   |  |  | 193,170   | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |           |  |  |           | 
|Notes payable to the son of the Chairman of
      the Board of the Company and to Insul Reps Profit Sharing Plan, a company
      controlled by the Chairman. Repayable in monthly instalments of principal
      and interest at 8%, totalling $5,199, to December, 2010, $4,845 from
      January, 2010 to May, 2012 and $3,492 from June, 2012 to April 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 217,663   |  |  | -         | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |           |  |  |           | 
|Senior subordinated redeemable debenture owing to William
      Herdrich, a director of the Company  8% interest per annum payable
      quarterly. Due January 2, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | 20,000    |  |  | -         | 
|In addition to the
      debt agreements described above, we have additional long-term debt payable
      pursuant to a number of smaller debt agreements with monthly payments of
      principal and interest ranging from 5% to 10%, unsecured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 306,701   |  |  | 83,797    | 
|Total long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 1,947,574 |  |  | 1,314,467 | 

Liquidity Overview

We completed our going public transaction on February 17, 2009.
Since then, the Company's acquisition and transition teams have acquired and
folded in four WISP's increasing our subscriber base from 1,800 to over 5,200 as
at July 31, 2009. See discussion under Revenues above for our increase in cash
flow from our customers.

At July 31, 2009 we had cash of $159,000. Subsequent to July
31, 2009 we deposited $1,130,000 relating to issuance of equity and debentures.
Our payroll is currently $120,000 per month and we now have 36 employees
including contractors. We manage our cash in a strict manner with a daily,
weekly and multi-weekly cash forecast prepared by our controller and circulated
to the three senior officers for their review, discussion and direction. From
February 17, 2009 to October 22, 2009 our creditors have been substantially paid
down or brought more current, paid off, converted into equity or converted into
long-term debt.

Cash to Operating Activities

During the year ended July 31, 2009, operating activities used
cash of $1,127,000 (2008 - $264,000). Our loss for the year was $2,632,000 (2008
- $980,000) which included non-cash items: Depreciation and amortization of
$536,000 (2008 - $352,000), stock based compensation of $290,000 (2008 - $nil),
financing expense paid through issuance of warrants of $190,000 (2008 - $nil)
and expenses and services paid by issuing equity and notes totaling $82,000
(2008 - $nil) for a net cash outflow of $1,534,000 before changes in working
capital items. Our accounts receivable have increased by $23,000 (2008 
decrease of $83,000) due to doubling our customer base. Our expenses were financed by our vendors as to $485,000 (2008 -
$283,000). Our prepaid expenses increased by $34,000 due to a cash advance of
$27,000 to a financial consultant.

22

---

Cash to Investing Activities

The WISP business is a capital intensive business. Since
inception, the Company has expended funds to lease or otherwise acquire
transmission site rights in various locations and markets, to construct the
existing systems and to finance initial operating losses. The Company intends to
expand the existing systems and launch additional wireless systems and will
require additional funds. The Company estimates that a launch by it of a
wireless internet provider system in a typical new tower location will involve
the expenditures for wireless internet system transmission equipment and
incremental installation costs per subscriber for customer premise equipment. As
a result of these costs, operating losses are likely to be incurred by a system
during the roll-out period.

During the year ended July 31, 2009, investing activities used
net cash of $146,000 (2008 - $216,000), primarily related to our four
acquisitions. During fiscal 2009 we acquired $1,119,000 of wireless equipment
and tower infrastructures (2008 - $91,000) of which we sold, and leased back,
wireless equipment totaling $689,000 from Agility Ventures Fund II in four sale
operating leaseback transactions. We also financed $247,000 of equipment
purchases through vendor notes, and $7,000 of equipment through capital lease
agreements for a net cash investment of $166,000. We paid operating lease
deposits to Agility Lease Fund II of $75,000 and used deposits of $115,000 paid
in fiscal 2008 to complete the four asset purchase agreements. We also increased
our equipment deposits by $20,000. An additional deposit of $10,000 paid in
fiscal 2008 remains at July 31, 2009. We acquired customers relationships
(subscribers) at a cost of $1,940,000. These customers were acquired without a
cash outlay. To acquire these customers relationships we issued $893,000 in
common stock, $164,000 in common stock to be issued, $71,000 assumption of debt
and $812,000 in vendor notes.

From a non-financial viewpoint we have also invested in systems
upgrades, hiring and training of our 36 member workforce, and developed a
strategic and operating plan for the next five years. We have invested in going
public and in developing our acquisition and transition teams which are not
necessarily operational functions.

Cash from Financing Activities

During the year ended July 31, 2009, financing activities
provided cash of $1,432,000 (2008 - $480,000) not including cash of $689,000
received from Agility Ventures Fund II, $1,068,000 of vendor note financing, and
$1,057,000 of common shares issued and to be issued relating to the four
acquisitions referenced under Cash from Investing Activities. Net proceeds of
$1,100,000, after issuance costs of $53,000, was received from common stock
subscriptions or common stock issued during the year (2008 - $nil). During the
year cash proceeds of $411,000 (2008 - $645,000) were received from short-term
loans and $145,000 (2008 - $nil) from long-term debt. We repaid $219,000 (2008 -
$165,000) of short-term and long-term debt. The Company advanced $5,000 to our
Chief Executive Officer as loan against expenses. Subsequent to July 31, 2009 we
received an additional $1,130,000 through an equity placement of our securities
and our 8% senior subordinated redeemable debenture.

Non-cash Financing Activities

Non-cash investing and financing activities during the year
ended July 31, 2009 and 2008 included the following:

|                                                                                          |  | $         |   |  | $       | 
|----------------------------------------------------------------------------------------- |  | --------- | - |  | ------- | 
|Net liabilities assumed in corporate
      reorganization                                 |  | (168,352  | ) |  |        | 
|Net assets acquired in exchange for common stock                                          |  |          |   |  | 124,938 | 
|Current liabilities transferred to
      long-term debt                                   |  | 556,327   |   |  |        | 
|Equipment acquired under capital leases                                                   |  | 6,800     |   |  | 95,800  | 
|Warrants issued pursuant to a Master Lease
      Agreement                                |  | 196,907   |   |  |        | 
|Conversion of debt and accrued interest into common stock                                 |  | 409,421   |   |  | 682,918 | 
|Customer relationships acquired in exchange
      for assumption of debt                  |  | 60,945    |   |  |        | 
|Customer relationships acquired in exchange for common
      stock issued or to be issued |  | 1,056,700 |   |  |        | 
|Net liabilities assumed in corporate
      reorganization                                 |  | (168,352  | ) |  |        | 
|Net assets acquired in exchange for common stock                                          |  |          |   |  | 124,938 | 

23

---

Off-Balance Sheet Arrangements

As of the date of this report, Omnicity Incorporated does not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on its financial condition, changes of financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that are material to investors.

Application of Critical Accounting Policies

Our consolidated financial statements and accompanying notes
are prepared in accordance with generally accepted accounting principles used in
the United States. Preparing financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our consolidated financial statements is critical
to an understanding of our financials.

Use of Estimates

The preparation of financial statements in accordance with
United States generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue and expenses in the reporting period. The Company regularly evaluates
estimates and assumptions related to the useful life and recoverability of
long-lived assets, stock-based compensation, 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.

Property and Equipment

Property and equipment is stated at cost, less accumulated
depreciation based on estimated useful lives utilizing the straight-line method.
The Company capitalizes costs associated with the construction of new
transmission facilities. Capitalized construction costs include materials,
labour and interest. The Companys methodology for capitalization of internal
construction labour and internal and contracted third party installation costs
(including materials) utilizes actual costs. Materials and external labour costs
associated with construction activities are capitalized based on amounts
invoiced to the Company by third parties.

Computers and wireless equipment also consists of spare
equipment and supplies not put in use such as radios, antennas, cable and wire
and is stated at the lower of cost (first-in, first-out basis) or market. The
carrying value of such equipment was $234,867 (2008 - $163,743). The spare
electronic equipment is maintained to provide replacement parts when and if
needed in a short time period to provide minimal service disruption to customers
in the event of a parts failure and to install new customers premises equipment
quickly when ordered. Spare equipment and supplies are not depreciated until put
into use.

Improvements that extend asset lives are capitalized. Other
repairs and maintenance costs are charged to operations as incurred. Estimated
useful lives for property and equipment are as follows:

Description
    LifeComputer and wireless equipment
    3 yearsTowers and infrastructures
    5 yearsFurniture and fixtures
    7 yearsVehicles
    5 yearsSoftware
    3 years


The Company periodically evaluates the useful lives of its
property and equipment. The Companys property and equipment is reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability is measured
by comparison of the carrying amount to the future net undiscounted cash flows
expected to be generated by the related assets. If such assets are considered to
be impaired, the impairment to be recognized is measured by the
amount the carrying value exceeds the fair market value of the assets. No
impairment was recorded at July 31, 2009 or 2008.

24

---

Customers Relationships

Customers relationships represent the value attributed to
customers relationships acquired in asset acquisitions and are amortized over a
7-year period.

Long-lived Assets

Pursuant to SFAS No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets, the Company evaluates property and equipment
and amortizable intangible assets for impairment whenever current events and
circumstances indicate the carrying amounts may not be recoverable. The
evaluation of long-lived assets for impairment requires a high degree of
judgment and involves the use of significant estimates and assumptions. If the
carrying amount is greater than the expected future undiscounted cash flows to
be generated, the Company recognizes an impairment loss equal to the excess, if
any, of the carrying value over the fair value of the asset. The Company
generally measures fair value based upon the present value of estimated future
net cash flows of an asset group over its remaining useful life.

Revenue Recognition

The Company charges a recurring subscription fee for providing
wireless broadband services to its subscribers. Revenue from service is
recognized as monthly services are rendered in accordance with individual
customer arrangements. Credit risk is managed by disconnecting services to
customers whose accounts are delinquent for a specified number of days.
Consistent with SFAS No. 51, installation revenue obtained from the connection
of subscribers to the system is recognized in the period installation services
are provided to the extent of related direct selling costs. Any remaining amount
is deferred and recognized over the estimated average period that customers are
expected to remain connected to the system. From time to time, the Company
enters into barter arrangements whereby it provides certain customers with
wireless broadband services in exchange for use of towers and equipment owned by
customers. Revenue and expenses recorded under barter arrangements was $66,851
(2008 -$42,000) for the year ended July 31, 2009.

Stock-based Compensation

The Company accounts for stock-based compensation in accordance
with the provisions of SFAS No. 123(R), Share Based Payments. The
Company measures the cost of employee services in exchange for an award of
equity instruments based on the grant-date fair value. On January 2, 2009 the
Company issued 1,655,009 Omnicity, Incorporated common shares valued at $289,629
to certain employees as a performance bonus. There is no stock option plan
adopted.

Recently Adopted Accounting Pronouncements

Effective this quarter, the Company implemented SFAS No. 165,
"Subsequent Events" ("SFAS 165"). This standard establishes general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued. The adoption of
SFAS 165 did not impact the Company's financial position or results of
operations. The Company evaluated all events or transactions that occurred after
July 31, 2009 up through October 23, 2009, the date the Company issued these
financial statements. During this period, the Company did not have any material
recognizable subsequent events, other than as disclosed in Note 16.

Recently Issued Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 168, "The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles - A Replacement of FASB Statement No. 162". The FASB
Accounting Standards Codification ("Codification") will become the source of
authoritative U.S. generally accepted accounting principles ("GAAP") recognized
by FASB to be applied by nongovernmental entities. Rules and interpretive
releases of the Securities and Exchange Commission "SEC" under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. On the effective date of this statement, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become non-authoritative. This statement is effective for
financial statements issued for interim and annual periods ending after
September 30, 2009. The adoption of this statement is not expected to have a
material effect on the Company's financial statements.

In June 2009, the FASB issued SFAS No. 167, "Amendments to
FASB Interpretation No. 46(R)". The objective of this statement is to
improve financial reporting by enterprises involved with variable interest
entities. This statement addresses (1) the effects on certain provisions of FASB
Interpretation No. 46 (revised December 2003), "Consolidation of Variable
Interest Entities", as a result of the elimination of the qualifying
special-purpose entity concept in SFAS No. 166, "Accounting for Transfers of
Financial Assets", and (2) concern about the application of certain key provisions of FASB Interpretation No. 46(R),
including those in which the accounting and disclosures under the Interpretation
do not always provide timely and useful information about an enterprise's
involvement in a variable interest entity. This statement is effective as of the
beginning of each reporting entity's first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual reporting periods thereafter. Earlier
application is prohibited. The adoption of this statement is not expected to
have a material effect on the Company's financial statements.

25

---

In June 2009, the FASB issued SFAS No. 166, "Accounting for
Transfers of Financial Assets  an Amendment of SFAS No. 140. The object of
this statement is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferor's continuing involvement, if any, in transferred financial assets.
This statement addresses (1) practices that have developed since the issuance of
SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities", that are not consistent with the original
intent and key requirements of that statement and (2) concerns of financial
statement users that many of the financial assets (and related obligations) that
have been derecognized should continue to be reported in the financial
statements of transferors. SFAS No. 166 must be applied as of the beginning of
each reporting entity's first annual reporting period that begins after November
15, 2009, for interim periods within that first annual reporting period and for
interim and annual reporting periods thereafter. Earlier application is
prohibited. This statement must be applied to transfers occurring on or after
the effective date. Additionally, on and after the effective date, the concept
of a qualifying special-purpose entity is no longer relevant for accounting
purposes. The disclosure provisions of this statement should be applied to
transfers that occurred both before and after the effective date of this
statement. The adoption of this statement is not expected to have a material
effect on the Company's financial statements.

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1,
"Determining whether Instruments Granted in Share-Based Payment Transactions
are Participating Securities. FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting, and therefore need to be included in the computation of earnings per
share under the two-class method as described in FASB Statement of Financial
Accounting Standards No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective
for financial statements issued for fiscal years beginning on or after December
15, 2008 and earlier adoption is prohibited. The adoption of this statement is
not expected to have a material effect on the Company's financial statements.

In May 2008, the Financial Accounting Standards Board (FASB)
issued SFAS No. 163, Accounting for Financial Guarantee Insurance Contracts
 An interpretation of FASB Statement No. 60 (SFAS 163). SFAS 163
requires that an insurance enterprise recognize a claim liability prior to an
event of default when there is evidence that credit deterioration has occurred
in an insured financial obligation. It also clarifies how Statement 60 applies
to financial guarantee insurance contracts, including the recognition and
measurement to be used to account for premium revenue and claim liabilities, and
requires expanded disclosures about financial guarantee insurance contracts. It
is effective for financial statements issued for fiscal years beginning after
December 15, 2008, except for some disclosures about the insurance enterprises
risk-management activities. SFAS 163 requires that disclosures about the
risk-management activities of the insurance enterprise be effective for the
first period beginning after issuance. Except for those disclosures, earlier
application is not permitted. The adoption of this statement is not expected to
have a material effect on the Companys financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of
Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies
the sources of accounting principles and the framework for selecting the
principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States. It is effective 60 days
following the SECs approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, The Meaning of Present Fairly in Conformity
With Generally Accepted Accounting Principles. The adoption of this
statement is not expected to have a material effect on the Companys financial
statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures
about Derivative Instruments and Hedging Activities  an amendment to FASB
Statement No. 133 (SFAS 161). SFAS 161 is intended to improve financial
standards for derivative instruments and hedging activities by requiring
enhanced disclosures to enable investors to better understand their effects on
an entity's financial position, financial performance, and cash flows. Entities
are required to provide enhanced disclosures about: (a) how and why an entity
uses derivative instruments; (b) how derivative instruments and related hedged
items are accounted for under FASB Statement No. 133 and its related
interpretations; and (c) how derivative instruments and related hedged items
affect an entitys financial position, financial performance, and cash flows. It
is effective for financial statements issued for fiscal years beginning after
November 15, 2008, with early adoption encouraged. The Company is currently
evaluating the impact of SFAS No. 161 on its financial statements, and the
adoption of this statement is not expected to have a material effect on the
Companys financial statements.

26

---

In December 2007, the FASB issued SFAS No. 141 (revised 2007),
Business Combinations (SFAS 141 revised). This statement replaces SFAS No.
141 and defines the acquirer in a business combination as the entity that
obtains control of one or more businesses in a business combination and
establishes the acquisition date as the date that the acquirer achieves control.
SFAS 141 revised requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any non-controlling interest in the acquired at the
acquisition date, measured at their fair values as of that date. SFAS 141
revised also requires the acquirer to recognize contingent consideration at the
acquisition date, measured at its fair value at that date. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008. Earlier adoption is prohibited. The
adoption of this statement is not expected to have a material effect on the
Company's financial statements.

In December 2007, the FASB issued SFAS No. 160,
Non-controlling Interests in Consolidated Financial Statements Liabilities an
Amendment of ARB No. 51. This statement amends ARB 51 to establish accounting
and reporting standards for the Non-controlling interest in a subsidiary and for
the deconsolidation of a subsidiary. This statement is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. Earlier adoption is prohibited. The adoption of this
statement is not expected to have a material effect on the Company's financial
statements.

The Company does not expect the adoption of any other recently
issued accounting pronouncements to have a material effect on the Companys
financial statements.

ITEM
7A.           QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of
the Exchange Act and are not required to provide the information required under
this item.

ITEM
8.              
FINANCIAL STATEMENTS

27

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Report of Independent Registered Public Accounting
Firm

To the Board of Directors and Stockholders Omnicity Corp.
(formerly Bear River Resources, Inc.)
  Rushville, Indiana

We have audited the accompanying consolidated balance sheet of
Omnicity Corp, (formerly Bear River Resources, Inc.) (the Company) as of July
31, 2009 and the related consolidated statements of operations, changes in
shareholders deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

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

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of Omnicity
Corp. as of July 31, 2009, and the results of their operations and their cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company has suffered recurring losses and had
negative cash flows from operations that raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in the Note 1. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.

/s/ Weaver & Martin LLCWeaver & Martin LLC
Kansas City, Missouri 
  October 23, 2009

28

---

Independent Auditors Report

Board of DirectorsOmnicity, Inc. 
  Carmel, Indiana

We have audited the accompanying balance sheets of Omnicity,
Inc. (the Company) as of July 31, 2008 and 2007, and the related statements of
operations, changes in stockholders deficit, and cash flows for the years then
ended. These financial statements are the responsibility of the Companys
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform our audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion the financial statements referred to above
present fairly, in all material respects, the financial position of Omnicity,
Inc. at July 31, 2008 and 2007, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1, the Company has suffered recurring losses from operations, has negative
working capital, and has relied on cash inflows from private investors to fund
working capital deficits. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regards
to these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.



/s/ BGBC Partners, LLPIndianapolis, Indiana 
  December 4, 2008

29

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Omnicity Corp. (formerly Bear River Resources, Inc.)

  Consolidated Balance Sheets

|                                                                                                                                                    |  |               |   |  | (Restated    |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | - |  | ------------- | -
|                                                                                                                                                    |  |               |   |  | Note15 )      |  
|                                                                                                                                                    |  | July 31, 2009 |   |  | July 31, 2008 |  
|                                                                                                                                                    |  | $             |   |  | $             |  
|Assets                                                                                                                                              |  |               |   |  |               |  
|Current Assets:                                                                                                                                     |  |               |   |  |               |  
|Cash                                                                                                                                                |  | 159,119       |   |  |              |  
|Accounts receivable, net                                                                                                                            |  | 78,007        |   |  | 54,655        |  
|Other receivable
      (Note 9 (e))                                                                                                                 |  | 5,000         |   |  | 10,000        |  
|Prepaid expenses and deposits (Note 10 (e))                                                                                                         |  | 114,173       |   |  | 2,353         |  
|Total Current Assets                                                                                                                                |  | 356,299       |   |  | 67,008        |  
|Property and Equipment (Note 3)                                                                                                                     |  | 1,022,675     |   |  | 1,024,625     |  
|Deposits and Other Assets (Note 4)                                                                                                                  |  | 129,886       |   |  | 151,088       |  
|Customers
      Relationships (Note 5)                                                                                                             |  | 1,841,247     |   |  |              |  
|Total Assets                                                                                                                                        |  | 3,350,107     |   |  | 1,242,721     |  
|Liabilities and Stockholders' Deficit                                                                                                               |  |               |   |  |               |  
|Current Liabilities:                                                                                                                                |  |               |   |  |               |  
|Amount due bank                                                                                                                                     |  |              |   |  | 909           |  
|Accounts payable
      (Note 9)                                                                                                                     |  | 838,336       |   |  | 386,137       |  
|Accrued liabilities (Note 6)                                                                                                                        |  | 213,431       |   |  | 456,918       |  
|Notes payable
      (Note 7)                                                                                                                        |  | 1,222,716     |   |  | 560,000       |  
|Current portion of long-term
      debt (Note 8)                                                                                                    |  | 511,521       |   |  | 575,258       |  
|Current portion
      of capital lease obligations (Note 12)                                                                                        |  | 50,147        |   |  | 11,874        |  
|Reserve for customer credits                                                                                                                        |  |              |   |  | 20,000        |  
|Deferred revenue                                                                                                                                    |  | 42,000        |   |  | 42,000        |  
|Other liabilities (Note 11)                                                                                                                         |  | 63,132        |   |  | 70,000        |  
|Total Current Liabilities                                                                                                                           |  | 2,941,283     |   |  | 2,123,096     |  
|Capital Lease Obligations (Note 12)                                                                                                                 |  | 46,868        |   |  | 43,465        |  
|Long-term Debt (Note 8)                                                                                                                             |  | 1,436,053     |   |  | 739,209       |  
|Total Liabilities                                                                                                                                   |  | 4,424,204     |   |  | 2,905,770     |  
|                                                                                                                                                    |  |               |   |  |               |  
|Nature of Operations and Continuance of Business (Note 1)                                                                                           |  |               |   |  |               |  
|Commitments (Note 12)                                                                                                                               |  |               |   |  |               |  
|                                                                                                                                                    |  |               |   |  |               |  
|Stockholders' Deficit:                                                                                                                              |  |               |   |  |               |  
|                                                                                                                                                    |  |               |   |  |               |  
|Common Stock, par value $.001,
      1,540,000,000 shares authorized, 38,018,382 and 5,501,355 issued and
      outstanding, respectively (Note 10) |  | 38,018        |   |  | 3,383,487     |  
|Common Stock Subscribed and/or Reserved (Notes 5 and 10)                                                                                            |  | 637,000       |   |  |              |  
|Additional Paid-in Capital                                                                                                                          |  | 5,929,479     |   |  |              |  
|Deficit                                                                                                                                             |  | (7,678,594    | ) |  | (5,046,536    | )
|Total Stockholders' Deficit                                                                                                                         |  | (1,074,097    | ) |  | (1,663,049    | )
|Total Liabilities
      and Stockholders' Deficit                                                                                                   |  | 3,350,107     |   |  | 1,242,721     |  

(See accompanying notes to these consolidated financial
statements)

30

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Omnicity Corp. (formerly Bear River Resources, Inc.)

  Consolidated Statements of Operations

|                                       |  |               |   |  | (Restated    |  
|-------------------------------------- |  | ------------- | - |  | ------------- | -
|                                       |  |               |   |  | Note 15)      |  
|                                       |  | Year Ended    |   |  | Year Ended    |  
|                                       |  | July 31, 2009 |   |  | July 31, 2008 |  
|                                       |  | $             |   |  | $             |  
|Sales, net                             |  | 1,688,944     |   |  | 1,034,310     |  
|Expenses:                              |  |               |   |  |               |  
|Service costs                          |  | 30,712        |   |  | 26,465        |  
|Plant and signal delivery              |  | 967,406       |   |  | 566,067       |  
|Marketing and sales                    |  | 45,375        |   |  | 26,487        |  
|General and administration             |  | 744,616       |   |  | 535,604       |  
|Salaries and benefits                  |  | 1,276,016     |   |  | 482,579       |  
|Stock based compensation               |  | 289,629       |   |  |              |  
|Depreciation and amortization          |  | 536,113       |   |  | 352,425       |  
|Total Expenses                         |  | 3,889,867     |   |  | 1,989,627     |  
|Loss from Operations                   |  | (2,200,923    | ) |  | (955,317      | )
|Other Income (Expense):                |  |               |   |  |               |  
|Other income                           |  |              |   |  | 57,883        |  
|Forgiveness of interest                |  |              |   |  | 121,889       |  
|Interest expense                       |  | (241,096      | ) |  | (204,316      | )
|Financing expense (Note 11)            |  | (190,039      | ) |  |              |  
|Total Other Income (Expense)           |  | (431,135      | ) |  | (24,544       | )
|Net Loss                               |  | (2,632,058    | ) |  | (979,861      | )
|Net Loss per Share  Basic and Diluted |  | (.08          | ) |  | (.03          | )

(See accompanying notes to these consolidated financial
statements)

31

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Omnicity Corp. (formerly Bear River Resources, Inc.)

  Consolidated Statement of Changes in Stockholders Deficit

|                                                                                                     |  |             |   |  |            |   |  | Additional |   |  | Common     |  |  |             |   |  |            |  
|---------------------------------------------------------------------------------------------------- |  | ----------- | - |  | ---------- | - |  | ---------- | - |  | ---------- |  |  | ----------- | - |  | ---------- | -
|                                                                                                     |  | Common      |   |  |            |   |  | Paid-in    |   |  | Stock      |  |  | Accumulated |   |  |            |  
|                                                                                                     |  | Stock       |   |  | Amount     |   |  | Capital    |   |  | Subscribed |  |  | Deficit     |   |  | Total      |  
|                                                                                                     |  | #           |   |  | $          |   |  | $          |   |  | $          |  |  | $           |   |  | $          |  
|                                                                                                     |  |             |   |  |            |   |  |            |   |  |            |  |  |             |   |  |            |  
|Balance, July 31, 2007
      (Restated  Note 15)                                                    |  | 3,353,999   |   |  | 2,575,631  |   |  |           |   |  |           |  |  | (4,066,675  | ) |  | (1,491,044 | )
|Stock issued to settle debt                                                                          |  | 1,797,357   |   |  | 682,918    |   |  |           |   |  |           |  |  |            |   |  | 682,918    |  
|Stock issued in acquisition
      of net assets                                                      |  | 349,999     |   |  | 124,938    |   |  |           |   |  |           |  |  |            |   |  | 124,938    |  
|Net
      loss (Restated  Note 15)                                                                  |  |            |   |  |           |   |  |           |   |  |           |  |  | (979,861    | ) |  | (979,861   | )
|Balance, July 31, 2008
      (Restated  Note 15)                                                    |  | 5,501,355   |   |  | 3,383,487  |   |  |           |   |  |           |  |  | (5,046,536  | ) |  | (1,663,049 | )
|Stock issued for cash on September 19, 2008                                                          |  | 11,112      |   |  | 5,000      |   |  |           |   |  |           |  |  |            |   |  | 5,000      |  
|Stock issued for cash on
      October 16, 2008                                                      |  | 1,429       |   |  | 500        |   |  |           |   |  |           |  |  |            |   |  | 500        |  
|Stock issued to settle debt on October 31,
      2008                                                |  | 1,087,335   |   |  | 383,386    |   |  |           |   |  |           |  |  |            |   |  | 383,386    |  
|Stock awards to employees on
      January 2, 2009                                                   |  | 1,655,009   |   |  | 289,629    |   |  |           |   |  |           |  |  |            |   |  | 289,629    |  
|Recapitalization Transactions - February 17,
      2009 (Note 1)                                     |  |            |   |  |           |   |  |           |   |  |           |  |  |            |   |  |           |  
|Shares acquired
      by Omnicity Corp.                                                              |  | (8,256,240  | ) |  | (4,062,002 | ) |  | 4,062,002  |   |  |           |  |  |            |   |  |           |  
|Shares of Omnicity Corp.                                                                             |  | 43,967,007  |   |  | 43,967     |   |  | (43,967    | ) |  |           |  |  |            |   |  |           |  
|Cancellation of
      founders shares                                                                |  | (33,880,000 | ) |  | (33,880    | ) |  | 33,880     |   |  |           |  |  |            |   |  |           |  
|Shares issued to shareholders of
      Omnicity,                                                     |  |             |   |  |            |   |  |            |   |  |            |  |  |             |   |  |            |  
|Incorporated to effect the
      recapitalization                                                    |  | 23,000,000  |   |  | 23,000     |   |  | (23,000    | ) |  |           |  |  |            |   |  |           |  
|Net liabilities assumed of
      Omnicity Corp.                                                      |  |            |   |  |           |   |  | (168,352   | ) |  |           |  |  |            |   |  | (168,352   | )
|Stock issued for acquisition
      of assets                                                         |  | 1,973,988   |   |  | 1,974      |   |  | 890,726    |   |  |           |  |  |            |   |  | 892,700    |  
|Stock issued for cash pursuant to a Unit and
      Unit for debt private placement at $0.35 per Unit |  | 2,607,387   |   |  | 2,607      |   |  | 909,978    |   |  |           |  |  |            |   |  | 912,585    |  
|Stock issued pursuant to an
      investor relations contract                                        |  | 350,000     |   |  | 350        |   |  | 123,900    |   |  |           |  |  |            |   |  | 124,250    |  
|Share issuance costs                                                                                 |  |            |   |  |           |   |  | (52,595    | ) |  |           |  |  |            |   |  | (52,595    | )
|Warrants issued pursuant to a
      Master Lease Agreement                                           |  |            |   |  |           |   |  | 196,907    |   |  |           |  |  |            |   |  | 196,907    |  
|Asset acquisition consideration to be paid in
      common shares                                    |  |            |   |  |           |   |  |           |   |  | 164,000    |  |  |            |   |  | 164,000    |  
|Common stock subscribed for                                                                          |  |            |   |  |           |   |  |           |   |  | 473,000    |  |  |            |   |  | 473,000    |  
|Net
      loss                                                                                       |  |            |   |  |           |   |  |           |   |  |           |  |  | (2,632,058  | ) |  | (2,632,058 | )
|Balance, July 31, 2009                                                                               |  | 38,018,382  |   |  | 38,018     |   |  | 5,929,479  |   |  | 637,000    |  |  | (7,678,594  | ) |  | (1,074,097 | )

(See accompanying notes to these consolidated financial
statements)

32

---

Omnicity Corp. (formerly Bear River Resources, Inc.)

  Consolidated Statements of Cash Flows

|                                                                                          |  |               |   |  | (Restated  Note |  
|----------------------------------------------------------------------------------------- |  | ------------- | - |  | ---------------- | -
|                                                                                          |  |               |   |  | 15)              |  
|                                                                                          |  | Year Ended    |   |  | Year Ended       |  
|                                                                                          |  | July 31, 2009 |   |  | July 31, 2008    |  
|                                                                                          |  | $             |   |  | $                |  
|Cash flows from (to) operating activities:                                                |  |               |   |  |                  |  
|Net loss                                                                                  |  | (2,632,058    | ) |  | (979,861         | )
|Adjustments to reconcile net loss to net cash
      used in operating activities:         |  |               |   |  |                  |  
|Depreciation and
      amortization                                                       |  | 536,113       |   |  | 352,425          |  
|Financing expense  warrants
      issued                                                 |  | 190,039       |   |  |                 |  
|Stock based
      compensation                                                            |  | 289,629       |   |  |                 |  
|Consulting services paid and
      expenses settled by issuing common stock               |  | 60,157        |   |  |                 |  
|Expenses settled
      through short-term borrowings                                      |  | 22,105        |   |  |                 |  
|(Increase) decrease in:                                                                   |  |               |   |  |                  |  
|Accounts and
      other receivable                                                       |  | (23,352       | ) |  | 83,270           |  
|Prepaid expenses                                                                          |  | (34,289       | ) |  | 19,641           |  
|Increase (decrease) in:                                                                   |  |               |   |  |                  |  
|Accounts payable and accrued
      liabilities                                            |  | 484,625       |   |  | 260,367          |  
|Customer deposits                                                                         |  | (20,000       | ) |  |                 |  
|                                                                                          |  |               |   |  |                  |  
|Net cash used in operating activities                                                     |  | (1,127,031    | ) |  | (264,158         | )
|Cash flows from (to) investing activities:                                                |  |               |   |  |                  |  
|(Increase) decrease in
      deposits                                                     |  | 19,677        |   |  | (125,000         | )
|Proceeds from sale leaseback of property and
      equipment                              |  | 689,368       |   |  |                 |  
|Acquisition of property and equipment                                                     |  | (854,706      | ) |  | (90,810          | )
|                                                                                          |  |               |   |  |                  |  
|Net cash used in investing activities                                                     |  | (145,661      | ) |  | (215,810         | )
|Cash flows from (to) financing activities:                                                |  |               |   |  |                  |  
|Proceeds from short-term notes                                                            |  | 411,000       |   |  | 645,000          |  
|Repayment of short-term notes                                                             |  | (128,173      | ) |  |                 |  
|Related party advance                                                                     |  | (5,000        | ) |  |                 |  
|Repayment of bank borrowings                                                              |  | (909          | ) |  |                 |  
|Proceeds from long-term debt                                                              |  | 145,000       |   |  |                 |  
|Repayment of long-term debt and capital lease
      obligations                           |  | (80,822       | ) |  | (165,032         | )
|Proceeds from issuance of
      common stock                                              |  | 680,310       |   |  |                 |  
|Proceeds from common stock subscriptions                                                  |  | 473,000       |   |  |                 |  
|Common stock issuance costs                                                               |  | (52,595       | ) |  |                 |  
|                                                                                          |  |               |   |  |                  |  
|Net cash provided by financing activities                                                 |  | 1,431,811     |   |  | 479,968          |  
|Increase in cash                                                                          |  | 159,119       |   |  |                 |  
|Cash, beginning of year                                                                   |  |              |   |  |                 |  
|Cash, end of year                                                                         |  | 159,119       |   |  |                 |  
|                                                                                          |  |               |   |  |                  |  
|Supplemental cash flow information:                                                       |  |               |   |  |                  |  
|Cash paid for interest                                                                    |  | 52,711        |   |  | 17,707           |  
|Cash paid for income taxes                                                                |  |              |   |  |                 |  
|Supplemental disclosure of non-cash
      investing and financing activities:             |  |               |   |  |                  |  
|Net liabilities assumed in corporate
      reorganization                                 |  | (168,352      | ) |  |                 |  
|Net assets acquired in
      exchange for common stock                                    |  |              |   |  | 124,938          |  
|Current liabilities transferred to long-term
      debt                                   |  | 556,327       |   |  |                 |  
|Equipment acquired under
      capital leases                                             |  | 6,800         |   |  | 95,800           |  
|Warrants issued pursuant to a Master Lease
      Agreement                                |  | 196,907       |   |  |                 |  
|Conversion of debt and accrued
      interest into common stock                           |  | 409,421       |   |  | 682,918          |  
|Customer relationships acquired in exchange
      for assumption of debt                  |  | 60,945        |   |  |                 |  
|Customer relationships
      acquired in exchange for common stock issued or to be issued |  | 1,056,700     |   |  |                 |  

(See accompanying notes to these consolidated financial
statements)

33

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|1. | Nature of Operations and Continuance of
Business                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company was incorporated as Bear River Resources,
      Inc. in the State of Nevada on October 12, 2006 and was registered as an
      extra-provincial company under the Business Corporations Act of British
      Columbia on November 6, 2006. Prior to February 17, 2009 the Company was a
      Development Stage Company, as defined by Statement of Financial Accounting
      Standard (SFAS) No.7 Accounting and Reporting for Development Stage
      Enterprises. The Companys principal business was the acquisition and
      exploration of mineral resources.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company filed a Registration Statement with the
      United States Securities and Exchange Commission to register 10,087,000
      post-forward split common shares for sale by existing shareholders. The
      Company did not receive any proceeds from the resale of common stock by
      existing shareholders. The Registration Statement was declared effective
      on September 18, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On October 21, 2008 the Company changed its name to
      Omnicity Corp. and increased its issued share capital on a 7.7 new for 1
      old basis. The Company increased its authorized share capital to 1,540,000
      common shares and changed its trading symbol to OMCY.OB. All share and
      per share amounts have been retroactively restated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | On February 17, 2009, the Company acquired, by way of an
      Agreement and Plan of Merger with Omnicity Acquisition Co. (a wholly-owned
      Indiana subsidiary) and Omnicity, Incorporated, an Indiana company, all of
      the issued and outstanding shares of Omnicity, Incorporated. Omnicity,
      Incorporated (incorporated on August 13, 2003) provides broadband access,
      including advanced services of voice, video and data, in un-served and
      underserved small and rural markets and is planning to be a consolidator
      of rural market broadband nationwide. The Companys strategy is to provide
      a total broadband solution and continue growth through acquisitions,
      organic growth and partner with rural electric membership co-ops (REMCs)
      and rural telephone companies. The total purchase price was 23,000,000
      post-forward split restricted common shares of the Company. In addition
      the Company caused 33,880,000 post-forward split restricted common shares
      of the Company to be cancelled leaving 33,087,007 post-forward split
      common shares issued and outstanding, of which 10,087,000 were not
      restricted.                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These financial statements have been prepared on a going
      concern basis, which implies the Company will continue to realize its
      assets and discharge its liabilities in the normal course of business. The
      Company has generated substantial revenues but has sustained losses since
      inception and has never paid any dividends and is unlikely to pay
      dividends in the immediate or foreseeable future. The continuation of the
      Company as a going concern is dependent upon the continued cooperation
      from its creditors and the ability of the Company to obtain necessary debt
      and/or equity financing to repay overdue obligations, to fund its growth
      strategy and to continue operations, and the attainment of profitability.
      As at July 31, 2009, the Company had a working capital deficit of
      $2,584,984 and a stockholders deficit of $1,074,097. All of these factors
      combined raises substantial doubt regarding the Companys ability to
      continue as a going concern. These financial statements do not include any
      adjustments to the recoverability and classification of recorded asset
      amounts and classification of liabilities that might be necessary should
      the Company be unable to continue as a going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company has been addressing its liquidity and working
      capital issues and continues to raise additional capital through the
      issuance of vendor and short-term notes, a senior subordinated debenture
      offering and issuance of equity securities to private and institutional
      investors. Management believes this additional capital and the expanded
      customer base through acquisitions and organic growth will provide the
      Company the opportunity to be operationally cash flow positive and
      profitable over the next twelve months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|2. | Summary of Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | These financial statements and related notes are
      presented in accordance with accounting principles generally accepted in
      the United States, and are expressed in US dollars. The Companys fiscal
      year-end is July 31. Pursuant to a Board of Directors Resolution dated
      March 20, 2009 Omnicity Corp. changed its fiscal year end from June 30 to
      July 31 to coincide with the fiscal year end of its acquired operating
      subsidiary, Omnicity, Incorporated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

34

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|2. | Summary of Significant Accounting Policies
  (cont.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The preparation of financial statements in accordance
      with United States generally accepted accounting principles requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities at the date of the financial statements
      and the reported amounts of revenue and expenses in the reporting period.
      The Company regularly evaluates estimates and assumptions related to the
      useful life and recoverability of long-lived assets, stock-based
      compensation, 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
      maturities of three months or less at the time of issuance to be cash
      equivalents. Amount due bank represents checks written and released but
      not yet presented to the bank for payment, effectively outstanding checks
      in excess of bank balances.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Concentration of Business and Credit Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Financial instruments which potentially subject the
      Company to concentrations of credit risk consist principally of accounts
      receivable. The Company reviews a customers credit history before
      extending credit. There were no individual customers with balances in
      excess of 10% of the accounts receivable or net sales balances at July 31,
      2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Allowance for Doubtful Accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company records an allowance for doubtful accounts
      based on specifically identified amounts that are believed to be
      uncollectible. An additional allowance is recorded based on certain
      percentages of aged receivables, which are determined based on historical
      experience and assessment of the general financial conditions affecting
      the Companys customer base. If actual collections experience changes,
      revisions to the allowance may be required. After all attempts to collect
      a receivable have failed, the receivable is written-off against the
      allowance. The allowance for doubtful accounts was $10,000 at July 31,
      2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Property and equipment is stated at cost, less
      accumulated depreciation based on estimated useful lives utilizing the
      straight-line method. The Company capitalizes costs associated with the
      construction of new transmission facilities. Capitalized construction
      costs include materials, labour and interest. The Companys methodology
      for capitalization of internal construction labour and internal and
      contracted third party installation costs (including materials) utilizes
      actual costs. Materials and external labour costs associated with
      construction activities are capitalized based on amounts invoiced to the
      Company by third parties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Computers and wireless equipment also consists of spare
      equipment and supplies not put in use such as radios, antennas, cable and
      wire and is stated at the lower of cost (first-in, first-out basis) or
      market. The carrying value of such equipment was $234,867 (2008 -
      $163,743). The spare electronic equipment is maintained to provide
      replacement parts when and if needed in a short time period to provide
      minimal service disruption to customers in the event of a parts failure
      and to install new customers premises equipment quickly when ordered.
      Spare equipment and supplies are not depreciated until put into
  use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

35

---

Omnicity Corp. (formerly Bear River Resources, Inc.) 
  Notes to Consolidated Financial Statements

|2. | Summary of Significant Accounting Policies
  (cont.)                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                 
|   | Improvements that extend asset lives are capitalized.
      Other repairs and maintenance costs are charged to operations as incurred.
      Estimated useful lives for property and equipment are as
  follows:

Description
    LifeComputer and wireless equipment
    3 yearsTowers and infrastructures
    5 yearsFurniture and fixtures
    7 yearsVehicles
    5 yearsSoftware
    3 years


The Company periodically evaluates the
useful lives of its property and equipment. The Companys property and equipment
is reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Recoverability is
measured by comparison of the carrying amount to the future net undiscounted
cash flows expected to be generated by the related assets. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount the carrying value exceeds the fair market value of the assets. No
impairment was recorded at July 31, 2009 or 2008.

Customers Relationships

Customers relationships represent the
value attributed to customers relationships acquired in asset acquisitions and
are amortized over a 7-year period.

Long-lived Assets

Pursuant to SFAS No. 144,
Accounting for the Impairment or Disposal of Long-lived Assets, the
Company evaluates property and equipment and amortizable intangible assets for
impairment whenever current events and circumstances indicate the carrying
amounts may not be recoverable. The evaluation of long-lived assets for
impairment requires a high degree of judgment and involves the use of
significant estimates and assumptions. If the carrying amount is greater than
the expected future undiscounted cash flows to be generated, the Company
recognizes an impairment loss equal to the excess, if any, of the carrying value
over the fair value of the asset. The Company generally measures fair value
based upon the present value of estimated future net cash flows of an asset
group over its remaining useful life.

Financial Instruments

The fair value of financial
instruments, which include cash and accounts payable, were estimated to
approximate their carrying values due to the immediate or short-term maturity of
these financial instruments. Foreign currency transactions are primarily
undertaken in Canadian dollars. The financial risk is the risk to the Companys
operations that arise from fluctuations in foreign exchange rates and the degree
of volatility of these rates. Currently, the Company does not use derivative
instruments to reduce its exposure to foreign currency risk.

Foreign Currency Transactions

The Companys functional and reporting
currency is the United States dollar. Monetary assets and liabilities
denominated in foreign currencies are translated in accordance with SFAS No. 52
Foreign Currency Translation, using the exchange rate prevailing at the
balance sheet date. Gains and losses arising on settlement of foreign currency
denominated transactions or balances are included in the determination of
income. Foreign currency transactions are minimal but primarily undertaken in
Canadian dollars. The Company has not, to the date of these financials
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.

36

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|2. | Summary of Significant Accounting Policies
  (cont.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Deferred Revenue                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Deferred revenue represents services billed but
      unearned.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Revenue Recognition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company charges a recurring subscription fee for
      providing wireless broadband services to its subscribers. Revenue from
      service is recognized as monthly services are rendered in accordance with
      individual customer arrangements. Credit risk is managed by disconnecting
      services to customers whose accounts are delinquent for a specified number
      of days. Consistent with SFAS No. 51, installation revenue obtained from
      the connection of subscribers to the system is recognized in the period
      installation services are provided to the extent of related direct selling
      costs. Any remaining amount is deferred and recognized over the estimated
      average period that customers are expected to remain connected to the
      system. From time to time, the Company enters into barter arrangements
      whereby it provides certain customers with wireless broadband services in
      exchange for use of towers and equipment owned by customers. Revenue and
      expenses recorded under barter arrangements was $66,851 (2008 - $42,000)
      for the year ended July 31, 2009.                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Advertising Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company incurs advertising costs in the normal course
      of business, which are expensed as incurred. Advertising costs were $3,459
      for the year ended July 31, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Stock-based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company accounts for stock-based compensation in
      accordance with the provisions of SFAS No. 123(R), Share Based
      Payments. The Company measures the cost of employee services in
      exchange for an award of equity instruments based on the grant-date fair
      value. On January 2, 2009 the Company issued 1,655,009 Omnicity,
      Incorporated common shares valued at $289,629 to certain employees as a
      performance bonus. There is no stock option plan adopted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Recently Adopted Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Effective this quarter, the Company implemented SFAS No.
      165, "Subsequent Events" ("SFAS 165"). This standard establishes
      general standards of accounting for and disclosure of events that occur
      after the balance sheet date but before financial statements are issued.
      The adoption of SFAS 165 did not impact the Company's financial position
      or results of operations. The Company evaluated all events or transactions
      that occurred after July 31, 2009 up through October 23, 2009, the date
      the Company issued these financial statements. During this period, the
      Company did not have any material recognizable subsequent events, other
      than as disclosed in Note 16.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Recently Issued Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In June 2009, the FASB issued SFAS No. 168, "The FASB
      Accounting Standards Codification and the Hierarchy of Generally Accepted
      Accounting Principles - A Replacement of FASB Statement No. 162". The
      FASB Accounting Standards Codification ("Codification") will become the
      source of authoritative U.S. generally accepted accounting principles
      ("GAAP") recognized by FASB to be applied by nongovernmental entities.
      Rules and interpretive releases of the Securities and Exchange Commission
      "SEC" under authority of federal securities laws are also sources of
      authoritative GAAP for SEC registrants. On the effective date of this
      statement, the Codification will supersede all then-existing non-SEC
      accounting and reporting standards. All other non-grandfathered non-SEC
      accounting literature not included in the Codification will become non-
      authoritative. This statement is effective for financial statements issued
      for interim and annual periods ending after September 30, 2009. The
      adoption of this statement is not expected to have a material effect on
      the Company's financial statements.

37

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|2. | Summary of Significant Accounting Policies
  (cont.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In June 2009, the FASB issued SFAS No. 167,
      "Amendments to FASB Interpretation No. 46(R)". The objective of
      this statement is to improve financial reporting by enterprises involved
      with variable interest entities. This statement addresses (1) the effects
      on certain provisions of FASB Interpretation No. 46 (revised December
      2003), "Consolidation of Variable Interest Entities", as a result
      of the elimination of the qualifying special- purpose entity concept in
      SFAS No. 166, "Accounting for Transfers of Financial Assets", and
      (2) concern about the application of certain key provisions of FASB
      Interpretation No. 46(R), including those in which the accounting and
      disclosures under the Interpretation do not always provide timely and
      useful information about an enterprise's involvement in a variable
      interest entity. This statement is effective as of the beginning of each
      reporting entity's first annual reporting period that begins after
      November 15, 2009, for interim periods within that first annual reporting
      period, and for interim and annual reporting periods thereafter. Earlier
      application is prohibited. The adoption of this statement is not expected
      to have a material effect on the Company's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In June 2009, the FASB issued SFAS No. 166,
      "Accounting for Transfers of Financial Assets  an Amendment of SFAS
      No. 140. The object of this statement is to improve the relevance,
      representational faithfulness, and comparability of the information that a
      reporting entity provides in its financial statements about a transfer of
      financial assets; the effects of a transfer on its financial position,
      financial performance, and cash flows; and a transferor's continuing
      involvement, if any, in transferred financial assets. This statement
      addresses (1) practices that have developed since the issuance of SFAS No.
      140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities", that are not consistent with the
      original intent and key requirements of that statement and (2) concerns of
      financial statement users that many of the financial assets (and related
      obligations) that have been derecognized should continue to be reported in
      the financial statements of transferors. SFAS No. 166 must be applied as
      of the beginning of each reporting entity's first annual reporting period
      that begins after November 15, 2009, for interim periods within that first
      annual reporting period and for interim and annual reporting periods
      thereafter. Earlier application is prohibited. This statement must be
      applied to transfers occurring on or after the effective date.
      Additionally, on and after the effective date, the concept of a qualifying
      special-purpose entity is no longer relevant for accounting purposes. The
      disclosure provisions of this statement should be applied to transfers
      that occurred both before and after the effective date of this statement.
      The adoption of this statement is not expected to have a material effect
      on the Company's financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In June 2008, the FASB issued FASB Staff Position EITF
      03-6-1, "Determining whether Instruments Granted in Share-Based Payment
      Transactions are Participating Securities. FSP EITF 03-6-1 addresses
      whether instruments granted in share-based payment transactions are
      participating securities prior to vesting, and therefore need to be
      included in the computation of earnings per share under the two-class
      method as described in FASB Statement of Financial Accounting Standards
      No. 128, "Earnings per Share." FSP EITF 03-6-1 is effective for financial
      statements issued for fiscal years beginning on or after December 15, 2008
      and earlier adoption is prohibited. The adoption of this statement is not
      expected to have a material effect on the Company's financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In May 2008, the Financial Accounting Standards Board
      (FASB) issued SFAS No. 163, Accounting for Financial Guarantee
      Insurance Contracts  An interpretation of FASB Statement No. 60
      (SFAS 163). SFAS 163 requires that an insurance enterprise recognize a
      claim liability prior to an event of default when there is evidence that
      credit deterioration has occurred in an insured financial obligation. It
      also clarifies how Statement 60 applies to financial guarantee insurance
      contracts, including the recognition and measurement to be used to account
      for premium revenue and claim liabilities, and requires expanded
      disclosures about financial guarantee insurance contracts. It is effective
      for financial statements issued for fiscal years beginning after December
      15, 2008, except for some disclosures about the insurance enterprises
      risk-management activities. SFAS 163 requires that disclosures about the
      risk-management activities of the insurance enterprise be effective for
      the first period beginning after issuance. Except for those disclosures,
      earlier application is not permitted. The adoption of this statement is
      not expected to have a material effect on the Companys financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

38

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|2. | Summary of Significant Accounting Policies
  (cont.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In May 2008, the FASB issued SFAS No. 162, The
      Hierarchy of Generally Accepted Accounting Principles (SFAS 162).
      SFAS 162 identifies the sources of accounting principles and the framework
      for selecting the principles to be used in the preparation of financial
      statements of nongovernmental entities that are presented in conformity
      with generally accepted accounting principles in the United States. It is
      effective 60 days following the SECs approval of the Public Company
      Accounting Oversight Board amendments to AU Section 411, The Meaning
      of Present Fairly in Conformity With Generally Accepted Accounting
      Principles. The adoption of this statement is not expected to have a
      material effect on the Companys financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In March 2008, the FASB issued SFAS No. 161,
      Disclosures about Derivative Instruments and Hedging Activities  an
      amendment to FASB Statement No. 133 (SFAS 161). SFAS 161 is intended
      to improve financial standards for derivative instruments and hedging
      activities by requiring enhanced disclosures to enable investors to better
      understand their effects on an entity's financial position, financial
      performance, and cash flows. Entities are required to provide enhanced
      disclosures about: (a) how and why an entity uses derivative instruments;
      (b) how derivative instruments and related hedged items are accounted for
      under FASB Statement No. 133 and its related interpretations; and (c) how
      derivative instruments and related hedged items affect an entitys
      financial position, financial performance, and cash flows. It is effective
      for financial statements issued for fiscal years beginning after November
      15, 2008, with early adoption encouraged. The Company is currently
      evaluating the impact of SFAS No. 161 on its financial statements, and the
      adoption of this statement is not expected to have a material effect on
      the Companys financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In December 2007, the FASB issued SFAS No. 141 (revised
      2007), Business Combinations (SFAS 141 revised). This statement
      replaces SFAS No. 141 and defines the acquirer in a business combination
      as the entity that obtains control of one or more businesses in a business
      combination and establishes the acquisition date as the date that the
      acquirer achieves control. SFAS 141 revised requires an acquirer to
      recognize the assets acquired, the liabilities assumed, and any
      non-controlling interest in the acquired at the acquisition date, measured
      at their fair values as of that date. SFAS 141 revised also requires the
      acquirer to recognize contingent consideration at the acquisition date,
      measured at its fair value at that date. This statement is effective for
      fiscal years, and interim periods within those fiscal years, beginning on
      or after December 15, 2008. Earlier adoption is prohibited. The adoption
      of this statement is not expected to have a material effect on the
      Company's financial statements.                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | In December 2007, the FASB issued SFAS No. 160,
      Non-controlling Interests in Consolidated Financial Statements
      Liabilities an Amendment of ARB No. 51. This statement amends ARB 51 to
      establish accounting and reporting standards for the Non-controlling
      interest in a subsidiary and for the deconsolidation of a subsidiary. This
      statement is effective for fiscal years, and interim periods within those
      fiscal years, beginning on or after December 15, 2008. Earlier adoption is
      prohibited. The adoption of this statement is not expected to have a
      material effect on the Company's financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|3. | Property and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Property and equipment consists of the
  following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

July 31, 2009
    
    
      July 31, 2008$
    
    
      $Computer and wireless equipment
    
      1,555,645
    
    
      1,464,210Towers and infrastructures
    
      785,970
    
    
      551,937Furniture and fixtures
    
      44,959
    
    
      28,754Vehicles
    
      74,529
    
    
      70,529Software
    
      57,719
    
    
      17,9062,518,822
    
    
      2,133,336Less: accumulated
      depreciation and amortization
    
      (1,496,147
    )
    
      (1,108,711
    )Property and equipment, net
    
      1,022,675
    
    
      1,024,625


39

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|4. | Deposits and Other Assets                            
|-- | -----------------------------------------------------
|   |                                                      
|   | Deposits and other assets consist of the
  following:

| |                                   |  | July 31, 2009 |  |  | July 31, 2008 | 
| | --------------------------------- |  | ------------- |  |  | ------------- | 
| |                                   |  | $             |  |  | $             | 
| | Asset Purchase Agreement deposits |  | 10,000        |  |  | 125,000       | 
| | Operating lease deposits          |  | 86,682        |  |  | 11,853        | 
| | Other long-term deposits          |  | 33,204        |  |  | 12,710        | 
| | Loan acquisition
      costs, net |  | -             |  |  | 1,525         | 
| |                                   |  | 129,886       |  |  | 151,088       | 

|   | The Company, as part of its growth strategy through
      acquisitions, enters into Asset Purchase Agreements to acquire certain net
      assets of businesses that provide wireless broadband services in rural
      areas of Midwestern, USA. A total of $10,000 (July 31, 2008 - $125,000) of
      non-refundable deposits paid were paid. See Note 5 for four Asset Purchase
      Agreements that closed between February, 2009 and July 31, 2009. As at
      July 31, 2009 the Company had one Agreement that had not closed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The Company and a leasing company agreed to add an
      additional $1,000,000 to their existing Master Lease Agreement facility.
      This new facility is in addition to and in conjunction with earlier
      agreements the companies signed in November, 2006. The Company has used
      $749,749 of this additional $1,000,000 facility. The Company acquires,
      either new or as part of asset acquisitions, certain fixed and wireless
      tower and customer premises equipment. The Lessor, in turn, acquires these
      assets and leases them back to the Company pursuant to operating equipment
      leases. Each sale leaseback transaction requires a 10% deposit as
      additional security for the stream of lease payments and each lease
      agreement is for a period of 36 months with a buy-out at the end of the
      lease equal to the fair value of the equipment at that time. Our Chief
      Executive Officer and Chairman of the Board of the Company have provided
      personal guarantees for all remaining lease payments. As at July 31, 2009
      a total of $86,682 was held by the Lessor as security deposits. The
      Company must also provide 30% warrant coverage as additional consideration
      pursuant to the Master Lease Agreement. See Note 11 regarding warrants
      issued and to be issued to the Lessor.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|5. | Acquisition of Assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Pursuant to Asset Purchase Agreements completed between
      March, 2009 and July 31, 2009, the Company acquired tower and network
      infrastructures, wireless tower and customer premises equipment and
      customers relationships of wireless internet service providers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Net consideration for completed asset acquisitions during
      the years ended July 31 was as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

| |                                                       |  | 2009      |   |  | 2008    | 
| | ----------------------------------------------------- |  | --------- | - |  | ------- | 
| |                                                       |  | $         |   |  | $       | 
| | Cash                                                  |  | 482,200   |   |  |        | 
| | Cash received in sale leaseback of acquired equipment |  | (689,368  | ) |  |        | 
| | Extinguishment of debt                                |  | 10,000    |   |  |        | 
| | Vendor notes payable                                  |  | 1,063,800 |   |  |        | 
| | Assumption of debt                                    |  | 62,000    |   |  |        | 
| | Capital stock to be issued                            |  | 164,000   |   |  |        | 
| | Capital stock issued                                  |  | 892,700   |   |  | 124,938 | 
| |                                                       |  |           |   |  |         | 
| | Total Consideration Paid                              |  | 1,985,332 |   |  | 124,938 | 

The consideration paid was allocated to
the following assets based on their fair values:

| |                                            |  | 2009      |  |  | 2008    | 
| | ------------------------------------------ |  | --------- |  |  | ------- | 
| |                                            |  | $         |  |  | $       | 
| | Current assets, net of current liabilities |  |          |  |  | 61,179  | 
| | Equipment, net of sale leaseback           |  | 45,632    |  |  | 63,759  | 
| | Customers Relationships                   |  | 1,939,700 |  |  |        | 
| | Assets Acquired                            |  | 1,985,332 |  |  | 124,938 | 

40

---

Omnicity Corp. (formerly Bear River Resources, Inc.) Notes
to Consolidated Financial Statements

|5. | Acquisition of Assets (cont.)                                                                 
|-- | ----------------------------------------------------------------------------------------------
|   |                                                                                               
|   | The carrying value of customers relationships acquired
      as at July 31, 2009 consists of:

| |                                      |  | $         |  
| | ------------------------------------ |  | --------- | -
| | Capitalized value                    |  | 1,939,700 |  
| | Less: accumulated
      amortization |  | (98,453   | )
| | Customers relationships, net        |  | 1,841,247 |  

|6. | Accrued Liabilities
|-- | -------------------

| |                                                            |  | July 31, |  |  | July 31, | 
| | ---------------------------------------------------------- |  | -------- |  |  | -------- | 
| |                                                            |  | 2009     |  |  | 2008     | 
| |                                                            |  | $        |  |  | $        | 
| | Accrued interest                                           |  | 65,822   |  |  | 80,069   | 
| | Professional fees accrued                                  |  |         |  |  | 140,437  | 
| | Due to Rushville Internet Services, LLC
      (Note 9 (a)) |  | 56,294   |  |  | 17,496   | 
| | Payroll and severance liabilities                          |  | 55,486   |  |  | 38,788   | 
| | Other current liabilities                                  |  | 35,829   |  |  | 139,197  | 
| | Credit cards
      payable                                 |  |         |  |  | 40,931   | 
| |                                                            |  | 213,431  |  |  | 456,918  | 

|7. | Notes Payable
|-- | -------------

| |                                                                                                                                                                                                                                                                                                                                                                                    |  | July 31,  |  |  | July 31, | 
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  |  | -------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  | 2009      |  |  | 2008     | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  | $         |  |  | $        | 
| | Notes payable, due on demand, unsecured and
      bearing interest at 20% per annum (2008 - 10% per annum.                                                                                                                                                                                                                                                                         |  | 150,000   |  |  | 150,000  | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Note payable, senior subordinated security
      position, interest at 20% per annum, due June, 2011.                                                                                                                                                                                                                                                                              |  | 53,500    |  |  |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Note payable due to the Chairman of the
      Board of the Company, on demand, unsecured and bearing interest at 8% per
      annum.                                                                                                                                                                                                                                               |  | 8,416     |  |  | 150,000  | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Notes payable, due on demand, unsecured and
      bearing interest at 10% per annum.                                                                                                                                                                                                                                                                                               |  | 10,000    |  |  | 260,000  | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Vendor Note  unsecured and bearing
      interest at 7%. Three quarterly payments of $121,667 starting May 26,
      2009. The May 26 and August 26, 2009 payments were postponed after a
      $5,000 payment was made on August 17, 2009.                                                                                                                                       |  | 365,000   |  |  |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Vendor Note  unsecured and bearing
      interest at 5%. Three quarterly payments of $166,600 starting June 30,
      2009. On June 30, 2009 the creditor accepted $50,000 as a partial payment
      and has postponed the balance of this payment, and the payment due
      September 30, 2009, until a future date to be determined by the Company
      and the note holder. |  | 449,800   |  |  |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Vendor Note  unsecured and bearing
      interest at 5%. A $23,000 payment was due on August 31, 2009. This payment
      has been postponed until a future date to be determined by the Company and
      the note holder. A final payment is due on November 30, 2009.                                                                                                          |  | 46,000    |  |  |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  |           |  |  |          | 
| | Vendor Note  unsecured and bearing interest at 5%. Three
      quarterly payments of $43,333 starting October 31, 2009.                                                                                                                                                                                                                                                           |  | 130,000   |  |  |         | 
| |                                                                                                                                                                                                                                                                                                                                                                                    |  | 1,222,716 |  |  | 560,000  | 

41

---

Omnicity Corp. (formerly Bear River Resources, Inc.) 
  Notes to Consolidated Financial Statements

|8. | Long-term Debt
|-- | --------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | July 31,  |  |  | July 31,  | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------- |  |  | --------- | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | 2009      |  |  | 2008      | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  | $         |  |  | $         | 
| | Notes payable to Jay County Development
      Corporation. Non-interest bearing, repayable monthly based on the number
      of subscribers in Jay County, Indiana. Collateralized by certain equipment
      located in Jay County.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 296,911   |  |  | 300,099   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Notes payable to Wabash Rural Electric
      Membership Cooperative (Wabash). Six separate notes were renewed
      pursuant to a Memorandum of Understanding effective September 24, 2009.
      Accrued interest and penalties to this date, totalling $115,111, were
      added to the principal amounts outstanding. Interest rates are between
      5.7% and 7.45% annually and are collateralized by certain equipment in
      Wabash County, Indiana. Monthly payments of $448 begin on January 31, 2010
      on one note with final payment due December 31, 2015. Quarterly payments
      of $23,469 begin on December 31, 2009 on three notes with final payments
      due between September, 2016 and August, 2017. Quarterly payments of $945
      begin on December 31, 2009 on one note with final payment due July 31,
      2014 and quarterly payments of $835 on one note begins on January 31, 2010
      with final payment due July 31, 2017. |  | 629,388   |  |  | 490,040   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Note payable to Muncie Industrial Revolving
      Loan Fund Board. Interest of 5% only was paid to July 13, 2009. Monthly
      principal and interest of $4,570 payments start August 13, 2009 and end
      December 13, 2011, at which time the loan will be reviewed by Muncies
      Board of Directors. This note is collateralized by certain equipment in
      Muncie County and Delaware County, Indiana.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 283,741   |  |  | 247,361   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Note payable to Star Financial Bank.
      Interest is paid monthly at 8.6% per annum. This note is due February,
      2010 and is collateralized by certain equipment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  | 193,170   |  |  | 193,170   | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Note payable to First Farmers Trust &
      Bank. Monthly principal payments of $6,092 plus variable interest at 4.5%,
      collateralized by certain equipment purchased in the acquisition of North
      Central Communications, Inc. Final payment is due December, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 24,419    |  |  | -         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Note payable to First Farmers Trust &
      Bank. Interest at 4.5% per annum, collateralized by certain equipment
      purchased in the acquisition of North Central Communications, Inc.
      Principal and interest payments of $912 are due monthly. Final payment due
      April, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | 18,657    |  |  | -         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Notes payable to the son of the Chairman of
      the Board of the Company and to companies controlled by the Chairman.
      Repayable in monthly instalments of principal and interest at 8%,
      totalling $5,199, to December, 2010, $4,845 from January, 2010 to May,
      2012 and $3,492 from June, 2012 to April 2014.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 217,663   |  |  | -         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Senior subordinated redeemable debenture
      owing to a director of the Company  8% interest per annum payable
      quarterly. Due January 2, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | 20,000    |  |  | -         | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |           |  |  |           | 
| | Notes payable with monthly payments of principal and
      interest ranging from 5% to 10%, unsecured. Total payments of principal
      and interest are $12,511 per month to January, 2010; $8,169 to April,
      2011; $5,169 to December, 2011; $3,556 to April, 2012; $2,102 to May,
      2013.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |  | 263,625   |  |  | 83,797    | 
| | Total long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | 1,947,574 |  |  | 1,314,467 | 
| | Less: current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | 511,521   |  |  | 575,258   | 
| | Long-term portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | 1,436,053 |  |  | 739,209   | 

Long-term debt principal payments due
over the next five years are as follows:

Year
    $2010
    511,5212011
    284,5302012
    224,4322013
    194,4262014
    182,133Thereafter
    550,532


42

---

Omnicity Corp. (formerly Bear River Resources, Inc.) Notes
to Consolidated Financial Statements

|9. | Related Party Transactions and
Balances
|-- | ---------------------------------------

| | a) | Included in accrued liabilities is $56,294 (2008 -
      $17,493) owing to Rushville Internet Services, LLC (RIS) which
      represents amounts due to RIS under certain lease agreements. The Company
      and RIS have shareholders in common. The shareholders of RIS agreed to
      wind-up RIS and sell RISs assets to Omnicity for $125,000. The Company
      will receive their assets, being wireless equipment and tower
      infrastructures, having a fair value of $68,706, and to settle
      inter-company debt of $56,294. All shareholders of RIS accepted to receive
      restricted common shares of the Company. Subsequent to July 31, 2009 the
      Company issued 268,818 restricted common shares to the shareholders of RIS
      at a fair value of $0.465 per common share.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | b) | The Companys capital lease obligations entirely relate
      to assets leased from a company beneficially owned by the Chairman of the
      Board of the Company (See note 12). During the year, a further $6,800 was
      received from this related party pursuant to two capital leases and
      interest of $11,212 and principal of $43,724 was paid during the
    year.                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | c) | Current liabilities owing to the son of the Chairman of
      the Board of the Company and to companies controlled by the Chairman,
      totalling $217,663, were converted into long-term debt during the year.
      These loans are repayable in monthly instalments of principal and
      interest, at 8%, totalling $5,199 to December 2010, $4,845 from January,
      2010 to April, 2012 and $3,492 from May, 2012 to April 2014. The Chairman
      of the Board also converted a $150,000 short-term note plus accrued
      interest into common stock of Omnicity, Incorporated prior to the reverse
      merger.                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | d) | The Company advanced $5,000 to its Chief Executive
      Officer as an advance for expenses. This advance is non-interest bearing,
      unsecured and due on demand. The Company advanced $10,000 to Cue Connex,
      LLC, a company owned the Companys VP of Sales and Marketing prior to the
      Company acquiring the assets of Cue Connex, LLC for $99,000. Consideration
      paid was the settlement of the $10,000 advance and 121,417 restricted
      common shares of the Company having a value of $89,000. These shares were
      issued on August 18, 2009.                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | e) | Wabash REMCs Chief Executive Officer is a director of
      the Company. See Note 8 for six loans owing to Wabash REMC and the related
      Memorandum of Understanding dated September 24, 2009. A loan of $30,000
      was received during the year and a total of $60,298 of interest and
      penalties was charged to operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | f) | A director and two companies controlled by two directors
      subscribed for 499,886 Units at $0.35 per Unit and received 499,886 common
      shares and warrants to acquire a further 249,943 common shares at $0.50
      per share expiring May 8, 2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | g) | A director loaned $20,000 pursuant to a senior
      subordinated redeemable debenture. 8% interest per annum is payable
      quarterly and matures January 2, 2011. The director can request settlement
      in common shares or cash on the maturity date. A company owned 1/3 by a
      director loaned the Company $15,000 during the year which was repaid
      including a $1,500 bonus.                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | h) | The Company recognized interest expense attributed to all
      related party debt of $95,820 (2008 - $61,082) for the years ended July
      31, 2009 and 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

43

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|10. | Common Stock
|--- | ------------
|    |             
|    | a)          
|    |             
|    | b)          
|    |             
|    | c)          
|    |             
|    | d)          
|    |             
|    | e)          
|    |             
|    | f)          
|    |             
|    | g)          
|    |             
|    | h)          
|    |             
|    | i)          

44

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|11. | Warrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | On December 1, 2006, pursuant to a Master Lease Agreement
      and related Warrant Agreement (the Agreements), the Company received
      $233,333 pursuant to a sale leaseback arrangement and was obligated to
      provide the Lessor with 30% warrant coverage. This liability was not
      recorded on December 1, 2006, in error, and therefore the Company has
      restated its comparative periods presented to increase liabilities and
      deficit as at July 31, 2007 and 2008 by $70,000. This amount was
      calculated using Black Scholes Option Pricing Model using the following
      assumptions: 5 year expected life, 0% expected dividends, 90% volatility
      and a risk-free interest rate of 1.65%.                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Pursuant to a new Master Lease Agreement with Agility
      Venture Fund II, LLC (Agility II) dated December 24, 2008, the Company
      and Agility agreed to provide funding under new sale lease back
      arrangements totaling $1,000,000. This new facility is in addition to and
      in conjunction with the November 6, 2006 agreement. On February 17, 2009,
      March 27, 2009, July 9, 2009 and July 14, 2009 the Company received an
      aggregate of $749,749 pursuant to four sale leaseback schedules completed
      ($689,368 in connection with sale leaseback arrangements pursuant to the
      Master Lease Agreements (See Note 5) and an aggregate of $60,381 in
      connection with sale leaseback arrangements for assets purchased from
      various unrelated vendors).                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Each sale leaseback transaction requires a 10% deposit as
      additional security for the stream of lease payments and 30% warrant
      coverage as a financing expense. Each lease agreement is for a period of
      36 months with a buy-out at the end of the lease equal to the fair value
      of the equipment at that time. Our Chief Executive Officer and Chairman of
      the Board of the Company have provided personal guarantees for all
      remaining lease payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Pursuant to Warrant Agreements appended to the Master
      Lease Agreements with Agility and Agility II, the Company was obligated to
      provide the Lessor with 30% warrant coverage. On June 24, 2009, the
      Company settled the commitment to issue warrants under the November 6,
      2006 Master Lease Agreement and issued 155,556 warrants exercisable at
      $0.45 per common share expiring December 1, 2011. Also on June 24, 2009
      the Company settled the commitments to issue warrants on the first two of
      four sale leaseback schedules. The Company issued 77,569 warrants
      exercisable at $0.51 per common share expiring February 17, 2019 and
      issued 184,914 warrants exercisable at $0.58 per common share expiring
      March 27, 2019. These warrants were valued at $126,907 and charged as a
      financing expense. This amount was calculated using Black Scholes Option
      Pricing Model using the following assumptions: 5 year expected life, 0%
      expected dividends, 90% volatility and an average risk-free interest rate
      of 1.75%.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | As at July 31, 2009 the following warrants are
      exercisable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company was committed to issuing 139,490 share
      purchase warrants to acquire 139,490 common shares at an exercise price of
      $0.56 per common share expiring July 14, 2019 pursuant to the July 9, 2009
      and July 14, 2009 sale leaseback arrangements. These warrants were issued
      on October 13, 2009. The Company recorded $63,132 as an other liability
      and financing expense. This amount was calculated using Black Scholes
      Option Pricing Model using the following assumptions: 5 year expected
      life, 0% expected dividends, 90% volatility and an average risk-free
      interest rate of 2.36%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Pursuant to $0.35 Unit and Unit for Debt Private
      Placement Subscription Agreements there are 1,303,695 common share
      purchase warrants outstanding exercisable at $0.50 per common share
      expiring as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | c)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | See Note 16 (e) and (f) for 2,291,697 common share
      purchase warrants issued on October 20, 2009. These warrants are
      exercisable at $0.50 per common share expiring October 20, 2011. In total,
      including warrants issued subsequent to July 31, 2009, the Company has
      common share purchase warrants issued and outstanding to purchase up to
      1,861,224 common shares at an average exercise price of $.51 per common
share having an average remaining life of 3 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

45

---

Omnicity Corp. (formerly Bear River Resources, Inc.)Notes
to Consolidated Financial Statements

|12. | Lease Obligations                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                  
|    | Pursuant to the Master Lease Agreement disclosed in Note
      4, the Company received $749,749 pursuant to four sale leaseback schedules
      completed. These sale leaseback arrangements are treated as operating
      leases and repaid over a 36 month period. During the year, rental expense
      under operating leases was $211,047 (2008 - $95,980).
|    |                                                                                                                                                                                                                                                                                                                                                                  
|    | Future minimum lease payments for equipment acquired
      under non-cancellable capital leases from a related party (See Note 9) and
      operating leases with initial terms of more than one year are as
      follows:                                                                                                                                      

| |                                             |  | Capital |  |  | Operating | 
| | ------------------------------------------- |  | ------- |  |  | --------- | 
| |                                             |  | Leases  |  |  | Leases    | 
| | Twelve months ending July 31,               |  | $       |  |  | $         | 
| | 2010                                        |  | 57,497  |  |  | 434,173   | 
| | 2011                                        |  | 32,666  |  |  | 386,953   | 
| | 2012                                        |  | 13,768  |  |  | 262,585   | 
| | 2013                                        |  | 6,620   |  |  | 19,200    | 
| | 2014                                        |  |        |  |  | 19,200    | 
| | Total minimum lease payments                |  | 110,552 |  |  |           | 
| |                                             |  |         |  |  |           | 
| | Less: amounts
      representing interest   |  | 13,537  |  |  |           | 
| | Present value of net minimum lease payments |  | 97,015  |  |  |           | 
| | Less: current
      portion                 |  | 50,147  |  |  |           | 
| | Long-term capital lease obligations         |  | 46,868  |  |  |           | 

Long-term capital lease obligations are
to be repaid over the next five years as follows:

Year
    $2010
    28,4342011
    12,8732012
    5,5612013
    2014
    


|13. | 401(K) Plan                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    | The Company established a 401(K) plan (the Plan)
      effective October 1, 2008. All employees having attained the age of 21 and
      having completed three months of service are eligible to participate in
      the Plan. Plan participants may elect to have 1% to 15% of their annual
      compensation contributed to the Plan. The Company plans to provide a
      discretionary match of up to 4% of the participants basic
      compensation.

46

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|14. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company accounts for income taxes pursuant to SFAS
      No. 109, "Accounting for Income Taxes" (SFAS 109). Deferred income tax
      assets and liabilities are determined based upon differences between
      financial reporting and tax bases of assets and liabilities and are
      measured using the enacted tax rates and laws that will be in effect when
      the differences are expected to reverse. Income tax expense differs from
      the amount that would result from applying the Federal and State income
      tax rates to earnings before income taxes. Federal and State income tax
      losses of approximately $6,700,000 are no longer immediately available to
      the Company pursuant to the change of control rules of Section 382 of the
      Internal Revenue Code. However, an annual deduction equal to approximately
      $238,000 is available to reduce taxable income of future years for the
      next 28 years. This annual deduction is available until a total of
      $6,700,000 has been deducted in total.

The Company has consolidated net
operating losses (NOL) of approximately $2,040,000 to carry forward. These
NOLs are available to offset taxable income in future years and begin expiring
in fiscal 2027. Pursuant to SFAS 109, the potential benefit of these NOLs
carried forward have not been recognized in the consolidated financial
statements since the Company cannot be assured that it is more likely than not
that such benefit will be realized in future years. The following is a summary
of the components of the provision for income tax benefit and related valuation
allowance for the years ended July 31:

2009
    
    
    2008$
    
    
    $Deferred income tax benefit:Federal
      (34%)
    
    (660,000
    )
    
    (352,000
    )State (8.5%)
    
    (45,000
    )
    
    (58,000
    )(705,000
    )
    
    (410,000
    )Valuation allowance
    
    705,000
    
    
    410,000Total income tax benefit
    
    
    
    
    


A reconciliation of the provision for
income taxes to the statutory federal and state rates is as follows:

2009
    
    
    2008$
    
    
    $Statutory tax rate Federal
      and State:
    
    42.5%
    
    
    42.5%Change in valuation allowance
    
    (42.5%
    )
    
    (42.5%
    )Effective Tax Rate
    
    0%
    
    
    0%


47

---

Omnicity Corp. (formerly Bear River Resources, Inc.)
  Notes to Consolidated Financial Statements

|15. | Restatement of Prior Periods due to Corrections of
      Errors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company has restated prior period financial
      statements pursuant to error corrections. Pursuant to SFAS No. 154,
      Accounting Changes and Error Corrections, previously issued financial
      statements and comparative financial statements issued currently are to be
      restated for correction of errors. Cumulative effects of errors are
      reflected in beginning balances of assets and liabilities with the
      offsetting adjustment reflected in the beginning deficit
balance.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company corrected errors in the recording of
      liabilities for equipment and services not actually received and royalties
      not actually owing during the years 2006, 2007 and 2008. The result of
      recording these liabilities in error resulted in a reduction of $170,474
      in current liabilities. A total of $96,425 resulted in an increase to
      revenue due to royalties not incurred that originally were offset to
      arrive at net sales (2008 - $36,866; 2007 - $51,335; 2006 - $8,224). A
      total of $48,212 was due to marketing fees owing to an REMC which resulted
      in a decrease to operating expenses (2008 - $18,433; 2007 - $25,667; 2006
      - $4,112). A total of $25,837 was for tower rental services not received
      and invoices recorded in error (2008 - $11,245; 2007 - $11,022; 2006 -
      $3,570),with a corresponding net increase to net income of prior years and
      a decrease to deficit of $127,477. The Company also corrected an error for
      services received but no liability was recorded totaling $17,161 (2008 -
      $11,773; 2007 - $5,388).

On December 1, 2006, pursuant to a
Master Lease Agreement and related Warrant Agreement, the Company received
$233,333 pursuant to a sale leaseback arrangement and was obligated to issue
warrants. This liability was not recorded on December 1, 2006, in error, and the
Company has restated its comparative periods presented to increase liabilities
and deficit as at July 31, 2007 and 2008 by $70,000 being the value of warrants
to be issued.

The combined effect of these errors in
the financial statements for the year ended July 31, 2008 is as follows:

| |                                          |  |            |   |  | Error       |   |  | Error      |  |  |           |  
| | ---------------------------------------- |  | ---------- | - |  | ----------- | - |  | ---------- |  |  | --------- | -
| |                                          |  |            |   |  | Corrections |   |  | Correction |  |  |           |  
| |                                          |  | Previously |   |  | (Accounts   |   |  | (Other     |  |  |           |  
| |                                          |  | Reported   |   |  | Payable)    |   |  | Liability) |  |  | Restated  |  
| |                                          |  | $          |   |  | $           |   |  | $          |  |  | $         |  
| | Balance Sheet:                           |  |            |   |  |             |   |  |            |  |  |           |  
| | Accounts payable                         |  | 539,450    |   |  | (153,313    | ) |  |           |  |  | 386,137   |  
| | Other liability                          |  |           |   |  |            |   |  | 70,000     |  |  | 70,000    |  
| | Deficit                                  |  | 5,129,849  |   |  | (153,313    | ) |  | 70,000     |  |  | 5,046,536 |  
| | Statement of Operations:                 |  |            |   |  |             |   |  |            |  |  |           |  
| | Revenue                                  |  | 997,444    |   |  | 36,866      |   |  |           |  |  | 1,034,310 |  
| | Plant and signal
      delivery          |  | 584,246    |   |  | (17,906     | ) |  |           |  |  | 566,340   |  
| | Net loss                                 |  | 1,034,633  |   |  | (54,772     | ) |  |           |  |  | 979,861   |  
| | Loss per share  basic
      and diluted |  | (.03       | ) |  |            |   |  |           |  |  | (.03      | )
| | Stockholders Deficit:                   |  |            |   |  |             |   |  |            |  |  |           |  
| | Deficit  beginning of
      year        |  | 4,095,216  |   |  | (98,541     | ) |  | 70,000     |  |  | 4,066,675 |  

48

---

Omnicity Corp. (formerly Bear River Resources, Inc.) 
  Notes to Consolidated Financial Statements

|16. | Subsequent Events
|--- | -----------------

Subsequent to July 31, 2009 the Company
has:

| | a) | received $10,000 pursuant to the Companys 8%, 18 month
      senior subordinated debenture $20,000 pursuant to the Companys $0.50 unit
      private placement. See Note 10 (h).                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | b) | issued 229,855 restricted common shares of the Company on
      August , at a fair value of $0.71 per common share, totalling $164,000,
      pursuant to the acquisition of wireless equipment, tower infrastructures
      and customers relationships. A total of $164,000 was recorded as common
      stock subscribed for as at July 31, 2009;                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | c) | issued 139,490 common share purchase warrants to acquire
      139,490 common shares at an exercise price of $0.56 per common share
      expiring July 14, 2019;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | d) | issued 268,818 restricted common shares to the
      shareholders of RIS at a fair value of $0.465 per common shares (See Note
      9 (a)).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | e) | received $100,000 from a major shareholder on September
      9, 2009 pursuant to a short-term loan. On October 20, 2009 this loan plus
      accrued interest of $4,767 plus two long-term debt notes totalling $99,420
      were converted into equity. Pursuant to a $0.35 unit for debt private
      placement subscription agreement the Company has agreed to issue 583,394
      Units at $0.35 per unit. Each unit will contain one common share and one
      half of one common share purchase warrant. Each whole warrant is
      exercisable into one common share at an exercise price of $0.50 per common
      share expiring October 20, 2011;
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | f) | received $1,000,000 from a major shareholder on October
      20, 2009. These funds plus $400,000 received on July 3, 2009 were combined
      and a subscription agreement for 4,000,000 units at $0.35 per unit was
      executed on October 20, 2009. Each unit will contain one common share and
      one half of one common share purchase warrant. Each whole warrant is
      exercisable into one common share at an exercise price of $0.50 per common
      share expiring October 20, 2011.                                                                                                                                                         

49

---

|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
      ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------------

We have had no disagreements with our principal independent
accountants.

ITEM
9A(T).       CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Greg Jarman our principal executive officer and Don Prest, our
principal financial officer, have concluded that our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act)
were not effective as of the end of the period covered by this report, based on
their evaluation of these controls and procedures required by paragraph (b) of
Rules 13a-15 and 15d-15, due to the deficiencies in our internal control over
financial reporting as described below.

Managements Annual Report on Internal Control over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in Rules
13a-15(f) under the Exchange Act.

The management of the Company assessed the effectiveness of the
Companys internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO) and SEC guidance on conducting such
assessments. Based on this assessment, management determined that, during the
year ended July 31, 2009, our internal controls and procedures were not
effective to detect the inappropriate application of US GAAP rules, as more
fully described below. This was due to deficiencies in the design or operation
of the Companys internal control that adversely affected the Companys internal
controls and that may be considered to be material weaknesses.

Management identified the following material weaknesses in
internal control over financial reporting:

| | 1. | The Company has limited segregation of duties which is
      not consistent with good internal control procedures.                                                                                                                                                                                                                            
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                               
| | 2. | The Company does not have a written internal control
      procedurals manual which outlines the duties and reporting requirements of
      the Directors and any staff to be hired in the future. This lack of a
      written internal control procedurals manual does not meet the requirements
      of the SEC or good internal controls.

Management believes that the material weaknesses set forth in
items 1 and 2 above did not have an affect on the Companys financial
results.

The Company and its management will endeavor to correct the
above noted weaknesses in internal control once it has adequate funds to do
so.

Management will continue to monitor and evaluate the
effectiveness of the Companys internal controls and procedures and its internal
controls over financial reporting on an ongoing basis and are committed to
taking further action and implementing additional enhancements or improvements,
as necessary and as funds allow.

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

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial
reporting that occurred during the last quarter of our fiscal year ended July
31, 2009 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

ITEM
9B.            
OTHER INFORMATION

Not applicable.

50

---

ITEM
10.            
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and directors and their respective ages
as of the date of October 23, 2009 are as follows:

|Name                                           | Age | Position Held                               
|---------------------------------------------- | --- | --------------------------------------------
|                                               |     |                                             
|Name and Municipality of Residence             | Age | Current Office                              
|                                               |     |                                             
|Richard Beltzhoover Carmel, Indiana,
      USA | 70  | Chairman, Director                          
|                                               |     |                                             
|Greg Jarman Rushville, Indiana, USA            | 46  | President, Chief Executive Officer, Director
|                                               |     |                                             
|Don Prest Vancouver, Canada                    | 49  | Chief Financial Officer, Director           
|                                               |     |                                             
|David Bradford Angola, Indiana, USA            | 61  | Chief Operating Officer, Director           
|                                               |     |                                             
|Paul Brock Vancouver, Canada                   | 45  | Director                                    
|                                               |     |                                             
|Robert Pearson Wabash, Indiana, USA            | 52  | Director                                    
|                                               |     |                                             
|William Herdrich Rushville, Indiana,
      USA | 63  | Director                                    

The following describes the business experience of each of our
directors and executive officers, including other directorships held in
reporting companies:

Greg Jarman

Mr. Jarman was appointed President and Chief Executive Officer
on June 23, 2009. Mr. Jarman has been the chief architect of Omnicitys rural
broadband focus and its long-term development strategy. Mr. Jarman has been with
the Company since 2003, Chief Operating Officer since 2006 and President since
2008. Mr. Jarman most recently served as President of RushDSL, a rural broadband
services provider. Mr. Jarman has also served as Chief Technology Officer of
Q-media, a network services and managed services provider and was Chief
Technology Officer and board member of Netisun LLC where he directed Netisuns
technical services group and managed network infrastructure. Mr. Jarman was a
founder and executive of Indiana Communications & Systems, Inc., which was a
rural business ISP and managed service providers acquired by Netisun LLC. He has
25 years of technical experience working with many corporate and governmental
agencies, and has consulted with Northrop, The Associated Group, United Student
Aid Funds, Cinergy, Sperry, Unisys, and EDS. Mr. Jarman received his AS in
Computer Information Services from Indiana Central University and has spent 10
years of his career in information systems consulting.

Don Prest has been our Chief Financial Officer and a
member of our board of directors since July 18, 2007. Mr. Prest will lead the
SEC public financial reporting process for the Company and the overall financing
plan. Mr. Prest has been a US and Canadian public company assurance partner for
17 years at a large regional PCAOB registered accounting firm located in Canada,
where his career began 26 years ago. Prior to December 31, 2009 Mr. Prest was an
assurance partner for over 150 public US companies. Mr. Prest has retired from
this position as at December 31, 2008 to focus on the business of the Company.
Mr. Prest is a 1/3 owner of FBP Capital Corp. ("FBP"), a merchant bank, for 6
years where he has leveraged his international tax and assurance practice and
contacts to assist FBP's clients in going and being public. Mr. Prest also
served as the Chief Financial Officer for Power Air Corporation for three years.
Power Air is a public fuel cell company. Mr. Prest is currently serving as
President and Chief Financial Officer for Omnicity Corp., the OTCBB listed
company that will be the parent company for Omnicity Incorporated. Mr. Prest
will stay on as the Chief Financial Officer of the Company and continue to be a
director. Mr. Prest started his career in 1983 upon graduating from BCIT in
Financial Management. Mr. Prest received his Canadian CA designation in 1991 and
his US CPA designation in 1997.

David Bradford Mr. Bradford became our Chief Operating
Officer on July 30, 2009 and is in charge of managing the profitability of the
Companys day-to-day operations in support of established policies, goals and
objectives while providing leadership, strategic direction and vision to the
Company. He also assists senior officers of the Company in the design and
development of the Companys long-term strategic planning, organization of
resources to execute its plan, and the timely and accurate reporting and
analysis of operating results. His responsibilities include management of acquisitions, operations, and financial
matters, and ensuring their most effective synthesis to the maximization of the
Companys strategic and operating plans. Mr. Bradford has devoted the majority
of his senior management career to the telecommunications industry. From 1977
through 1987 he served in executive positions at the Chicago Tribunes broadcast
and cable television divisions. Positions included Vice President and General
Manager for Tribune Cable Communications, Vice President of Operations for WGN
Electronic Systems Company, and Director of Strategic Planning for Tribune Cable
and subsidiaries. After leaving the Tribune companies Mr. Bradford served as
President of Empire Communications and Bradford Communications, Inc., both rural
cable television multi-system operators. Mr. Bradford subsequently served as
President of National Telsat, Inc., a rural wireless television and data
provider. Mr. Bradford brings thirty years of successful subscriber based
telecommunications operating experience to the Company as well as participation
and oversight of numerous debt and equity financings, acquisitions, and
restructurings.

51

---

Richard Beltzhoover Mr. Beltzhoover was formerly the
Chief Executive Officer from inception until June 23, 2009. He now devotes his
time to the Board of Directors and assisting the CEO in capital raising efforts.
He was the first investor of Omnicity Incorporated and brings more than 35
years business and corporate venturing experience to the Company. Mr.
Beltzhoover was the Chief Operations Officer and Board member of National
Vulcanized Fibre and, since 1975, has served as founder and President of Insul
Reps, which represents manufacturers in the electronic and electro-mechanical
markets. Mr. Beltzhoover grew sales to $40 million and directed Insul Reps
expansion. Mr. Beltzhoover was also instrumental in funding and guiding Indy
Connection into becoming an $8 million revenue ground transportation company,
ultimately selling to Carey Limousine for $12 million. Other companies he
founded include Midwest Rail, Prestige Magazine, Hunt Graphics, and Digital
Arts, all of which sold to private companies. Mr. Beltzhoover holds a Bachelor
of Science in Mechanical Engineering from Penn State University.

Paul Brock Paul Brock is a business management
consultant with experience running public and private companies involved
primarily in the telecom and financial services sector, developing software and
applied electronic technologies in the UK, the Middle East, Asia, Latin America,
as well as throughout the US and Canada. In 1988 Mr. Brock co-founded VendTek
Systems Inc. (TSX:VSI), which grew to over $100 million in revenues by 2008 when
he resigned as Chairman. During his tenure at VendTek he created and also served
as President of VendTek Industries Inc. (Canada), a Director of VendTek
International Inc. (USA), President (until June 2002) of Now Prepay Inc.
(Canada), and President of VendTek China Systems Technologies (Beijing) Co., Ltd
(China). Mr. Brock was a co-founder in 2003 and President of Fortune Partners
Inc., which listed on the OTCBB, and later acquired Power Air Corp. where he
continues as a Director. He was co-founder and President of Rochdale Mining
Corp. listed on the OTCBB and later acquired Zoro Mining Corp. where he
continues as a Director. Mr. Brock is the founder in 1999 and President of Bent
International Inc., which is a privately owned business consulting company. Mr.
Brock now serves as a director of the following public companies; Power Air
Corp, i-Level Media Corp, Zoro Mining Corp, Silica Resources Corp, and VendTek
Systems Inc. Mr. Brock is a graduate of the British Columbia Institute of
Technologys Robotics and Automation Technology Program, a graduate of Simon
Fraser University's Executive Management Development Program. He is a member in
good standing of the professional association of the Applied Science
Technologists of BC, and an accredited professional director with the Institute
of Charters Secretaries and Administrators (ICSA) in Canada.

Robert Pearson has been a member of our board of
directors since February 17, 2009. Mr. Pearson has been employed by the Wabash
County, Indiana REMC since 1990 and is currently the Chief Executive Officer
since 1995.

William Herdrich is a Rushville, Indiana native and has
been involved in finance in the oil and gas industry for forty years. He has a
deep understanding of Midwest rural markets having been a retailer and
wholesaler in the petroleum industry, and actively participating in numerous
leadership roles on regional and national boards. Mr. Herdrich has assisted in
the creation of several firms including finance, environmental and real estate
development.

Term of Office

Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our stockholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our board of
directors and hold office until removed by the board.

Significant Employees

We have no significant employees other than the officers and
directors described above.

Family Relationships

There are no family relationships among our directors or
officers.

52

---

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not
  been involved in any of the following events during the past five years:

| | 1. | any bankruptcy petition filed by or against any business
      of which such person was a general partner or executive officer either at
      the time of the bankruptcy or within two years prior to that
  time;                                                                                                           
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                               
| | 2. | any conviction in a criminal proceeding or being subject
      to a pending criminal proceeding (excluding traffic violations and other
      minor offences);                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                               
| | 3. | being subject to any order, judgment or decree, not
      subsequently reversed, suspended or vacated, of any court of competent
      jurisdiction, permanently or temporarily enjoining, barring, suspending or
      otherwise limiting his involvement in any type of business, securities or
      banking activities; or
| |    |                                                                                                                                                                                                                                                                                                                               
| | 4. | being found by a court of competent jurisdiction (in a
      civil action), the SEC or the Commodity Futures Trading Commission to have
      violated a federal or state securities or commodities law, and the
      judgment has not been reversed, suspended or
vacated.                                                  

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934
requires the executive officers and directors, and persons who beneficially own
more than ten percent of our equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. During the
fiscal year ended July 31, 2009, except as disclosed below, these filings were
made on a timely basis:

Reporting Person
      No. of Late/Unfiled Reports During the Fiscal Year Ended July 31, 2009
      No. of Late/Unfiled Reports During the Fiscal Year Ended July 31, 2008Don Prest
      1  late Form 4 regarding one transaction
      NilWilliam Herdrich
      1  failed to file Form 3
      N/A


Code of Ethics

On October 22, 2009 our Board of Directors adopted a Corporate
Governance Manual which includes a Code of Ethics applicable to its principal
executive officer, its principal financial officer, its principal accounting
officer or controller, or persons performing similar functions.

Committees

On June 17, 2009 our Board of Directors adopted our
nominating, audit and compensation committee charters. Pursuant to these
charters independent directors are the only members of the audit committee. Paul
Brock and William Herdrich are the two independent members of each of these
committees.

The Board can elect one additional non-independent member for
the nominating and compensation committees. On October 22, 2009 the Board
elected Greg Jarman to be the one non-independent member of the compensation
committee.

Both of our independent directors sitting on our audit
committee are considered financial experts.

53

---

ITEM
11.            
EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

The table below summarizes all compensation awarded to, earned
  by or paid to our executive officers by any person for all services rendered
  in all capacities to us during our fiscal years ended July 31, 2009 and 2008.

Summary Compensation Table

|                                                        |                     |                      |                |                    |                | Non-           |                |                |                      
|------------------------------------------------------- | ------------------- | -------------------- | -------------- | ------------------ | -------------- | -------------- | -------------- | -------------- | ---------------------
|                                                        |                     |                      |                |                    |                | Equity         | Nonqualified   |                |                      
|                                                        |                     |                      |                |                    |                | Incentive      | Deferred       | All            |                      
|                                                        |                     |                      |                |                    |                | Plan           | Compen-        | Other          |                      
|                                                        |                     |                      |                | Stock              | Option         | Compen-        | sation         | Compen-        |                      
|Name and Principal                                      |                     | Salary               | Bonus          | Awards             | Awards         | sation         | Earnings       | sation         | Total                
|Position                                                | Year                | ($)                  | ($)            | ($)                | ($)            | ($)            | ($)            | ($)            | ($)                  
|Richard Beltzhoover (Former) Chief Executive Officer    | 2008 
      2009(1) | 0 
      30,000      | nil 
      nil | nil 
      104,125 | nil 
      nil | nil 
      nil | nil 
      nil | nil 
      nil | 0 
      134,125     
|Don Prest Chief Financial Officer                       | 2008 
      2009    | 35,750 
      nil    | nil 
      nil | nil 
      nil     | nil 
      nil | nil 
      nil | nil 
      nil | nil 
      nil | 35,750 
      nil    
|Greg Jarman Chief Executive
      Officer and President | 2008 
      2009    | 68,445 
      73,455 | nil 
      nil | nil 
      93,187  | nil 
      nil | nil 
      nil | nil 
      nil | nil 
      nil | 68,445 
      166,642

|(1) | Mr. Beltzhoover resigned as our Chief Executive Officer
      on June 17, 2009 and Mr. Jarman was appointed our Chief Executive Officer
      in his place on the same day.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Outstanding Equity Awards

As at July 31, 2009, there were no unexercised options, stock
that had not vested or outstanding equity incentive plan awards with respect to
any of our officers or directors.

Compensation of Directors

Except as disclosed below, we did not pay our directors any
fees or other compensation for acting as directors during our fiscal year ended
July 31, 2009. Certain of our current or former directors serve or have served
as officers of the Company, and any compensation they received due to their
service as an officer is disclosed in the table above and is not included in the
table below:

Director Compensation

Non-Equity
    NonqualifiedIncentive
    DeferredFees earned
    
    
    Plan
    Compen-
    All Otheror paid in
    Stock
    Option
    Compen-
    sation
    Compen-Name and Principal
    cash
    Awards
    Awards
    sation
    Earnings
    sation
    TotalPosition
    ($)
    ($)
    ($)
    ($)
    ($)
    ($)
    ($)Richard Beltzhoover
    nil
    nil
    nil
    nil
    nil
    nil
    nilGreg Jarman
    nil
    nil
    nil
    nil
    nil
    nil
    nilDon Prest
    nil
    nil
    nil
    nil
    nil
    nil
    nilDavid Bradford
    nil
    nil
    nil
    nil
    nil
    nil
    nilPaul Brock
    nil
    nil
    nil
    nil
    nil
    nil
    nilRobert Pearson
    nil
    nil
    nil
    nil
    nil
    nil
    nilWilliam Herdrich
    nil
    nil
    nil
    nil
    nil
    nil
    nil


54

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|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------------

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of October 23,
2009 by: (i) each person (including any group) known to us to own more than 5%
of any class of our voting securities, (ii) each of our directors, (iii) each of
our officers and (iv) our officers and directors as a group. Each stockholder
listed possesses sole voting and investment power with respect to the shares
shown.

|                                                                      |                                                                        | Amount and nature   | Percentage of
|--------------------------------------------------------------------- | ---------------------------------------------------------------------- | ------------------- | -------------
|Title of class                                                        | Name and address of beneficial owner(2)                                | of beneficial owner | class(1)     
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Richard Beltzhoover(3)
      Carmel, Indiana, USA                      | 5,852,800           | 15.20        
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Greg Jarman(4)
      Rushville, Indiana, USA                           | 1,633,855           | 4.24         
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Don Prest 
      Vancouver, Canada                                     | nil                 | Nil%         
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | David Bradford 
      Angola, Indiana, USA                             | nil                 | Nil%         
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Paul Brock 
      Vancouver, Canada                                    | nil                 | Nil%         
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Robert Pearson 
      Wabash, Indiana, USA                             | nil                 | Nil%         
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | William Herdrich 
      Rushville, Indiana, USA                        | 342,743             | .89          
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | All executive officers and directors
      as a group (seven persons)  | 7,829,398           | 20.33        
|                                                                      |                                                                        |                     |              
|Shareholders of Greater than
      5% of Issued and Outstanding Stock
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Schwarz Partners LLC(5)                                                | 5,515,059           | 14.32        
|                                                                      |                                                                        |                     |              
|Common Stock                                                          | Harris Family Limited Partnership
      and individual member holdings | 1,949,153           | 5.06         

|(1) | Based on 38,517,055 shares of common stock issued and
      outstanding as of October 23, 2009. Under Rule 13d-3 of the Exchange Act a
      beneficial owner of a security includes any person who, directly or
      indirectly, through any contract, arrangement, understanding,
      relationship, or otherwise has or shares: (i) voting power, which includes
      the power to vote, or to direct the voting of shares; and (ii) investment
      power, which includes the power to dispose or direct the disposition of
      shares. Certain shares may be deemed to be beneficially owned by more than
      one person (if, for example, persons share the power to vote or the power
      to dispose of the shares). In addition, shares are deemed to be
      beneficially owned by a person if the person has the right to acquire the
      shares (for example, upon exercise of an option) within 60 days of the
      date as of which the information is provided. In computing the percentage
      ownership of any person, the amount of shares outstanding is deemed to
      include the amount of shares beneficially owned by such person (and only
      such person) by reason of these acquisition rights.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The address of the executive officers and directors is
      c/o Omnicity, Incorporated, 807 South SR 3, Rushville, Indiana, USA,
      46173.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | Richard Beltzhoover is the beneficial owner of 671,976
      shares owned by Insul Reps Profit Sharing Plan and 225,912 shares owned by
      Insul Reps, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(4) | Greg Jarman is a beneficial owner of 11,143 shares owned
      by Lea Ann Jarman.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(5) | John Schwarz is beneficial owner of Schwarz Partners
      LLC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

Securities Authorized For Issuance under Compensation
Plans

The table set forth below presents information relating to our
equity compensation plans as of the date of July 31, 2009:

55

---

|Plan Category                                                      | Number of Securities to be Issued Upon
      Exercise of Outstanding Options, Warrants and
      Rights (a) | Weighted-Average Exercise Price of
      Outstanding Options, Warrants and Rights
      (b) | Number of Securities Remaining Available for
      Future Issuance Under Equity Compensation
      Plans (excluding column (a))
|------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------
|                                                                   |                                                                                                             |                                                                                             |                                                                                                                                
|Equity Compensation Plans to be
      Approved by Security Holders | n/a                                                                                                         | n/a                                                                                         | n/a                                                                                                                            
|                                                                   |                                                                                                             |                                                                                             |                                                                                                                                
|Equity Compensation Plans Not Approved
      by Security Holders   | n/a                                                                                                         | n/a                                                                                         | n/a                                                                                                                            

Changes in Control

We are unaware of any contract, or other arrangement or
provision of our Articles, the operation of which may at any subsequent date
result in a change in control of the Company.

|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
      DIRECTOR INDEPENDENCE
|-------- | ------------------------------------------------------------------------------

Except as described below, none of the following parties has,
in the last two fiscal years, had any material interest, direct or indirect, in
any transaction with us or in any presently proposed transaction that has or
will materially affect us:

| | 1. | any of our directors or officers;                                                                                                                                              
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                
| | 2. | any person proposed as a nominee for election as a
      director;                                                                                                             
| |    |                                                                                                                                                                                
| | 3. | any person who beneficially owns, directly or indirectly,
      shares carrying more than 10% of the voting rights attached to our
      outstanding shares of common stock; or
| |    |                                                                                                                                                                                
| | 4. | any member of the immediate family (including spouse,
      parents, children, siblings and in-laws) of any of the above
    persons.                                          

Paul Brock, Robert Pearson and William Herdrich are independent
directors of the Company as provided in the listing standards of the American
Stock Exchange.

Transactions with William Herdrich:

Included in accrued liabilities is $56,294 (2008 - $17,493)
owing to Rushville Internet Services LLC (RIS) which represents amounts due to
RIS under certain lease agreements. The Company and RIS have shareholders in
common including a company controlled by Mr. Herdrich. The shareholders of RIS
agreed to wind-up RIS and sell RISs assets to Omnicity for $125,000. The
Company will receive their assets, being wireless equipment and tower
infrastructures, having a fair value of $68,706 and to settle the inter-company
debt of $56,294. All shareholders of RIS accepted to receive restricted common
shares of the Company. On October 13, 2009 the Company issued 268,818 restricted
common shares to the shareholders of RIS at a fair value of $0.465 per common
share.

On April 15, 2009 Mr. Herdrich and Capital Investors Limited, a
company controlled Mr. Herdrich, subscribed for an aggregate of 342,743 Units of
our Company at $0.35 per Unit and received 342,743 common shares and warrants to
acquire a further 171,372 common shares as $0.50 per share expiring May 8,
2011.

On July 2, 2009, Mr. Herdrich loaned the Company $20,000 pursuant
  to a senior subordinated debenture. 8% interest per annum is payable quarterly
  and matures January 2, 2011. Mr. Herdrich can settle in common shares or cash
  on the maturity date of January 2, 2011.

56

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Transactions with Robert Pearson:

Wabash REMCs Chief Executive Officer is Robert Pearson. Since
December 21, 2004 six loans have been provided by Wabash REMC. A total of
$30,000 was received during the year ended July 31, 2009 and $60,298 of interest
and penalties was charged to operations. Pursuant to a Memorandum of
Understanding dated September 24, 2009 accrued interest and penalties to this
date, totalling $115,111, were added to the Principal amounts outstanding of
$520,040 for a total of $635,151 of Principal and Interest outstanding. These
notes were then converted into long-term notes. Interest rates are between 5.7%
and 7.45% annually and are collateralized by certain equipment in Wabash County,
Indiana. Monthly payments of $448 begin on January 31, 2010 on one note with
final payment due December 31, 2015. Quarterly payments of $23,469 begin on
December 31, 2009 on three notes with final payments due between September 1,
2016 and August 1, 2017. Quarterly payments of $945 begin on December 31, 2009
on one note with final payment due July 31, 2014 and quarterly payments of $835
on one note begins on January 31, 2010 with final payment due July 31, 2017.

Transactions with Paul Brock:

None.

ITEM
14.            
PRINCIPAL ACCOUNTING FEES AND SERVICES

Weaver & Martin LLC served as our independent registered
public accounting firm and audited our consolidated financial statements for the
fiscal year ended July 31, 2009. BGBC Partners LLC served as our independent
registered public accounting firm and audited our consolidated financial
statements for the fiscal year ended July 31, 2008. Aggregate fees for
professional services rendered to us by our current and predecessor auditors are
set forth below:

Year Ended
    
    
    Year EndedJuly 31, 2009
    
    
    July 31, 2008Audit Fees
    $
    28,250
    
    $
    61,072Audit-Related Fees
    $
    6,800
    
    $
    2,700Tax Fees
    $
    nil
    
    $
    3,837All Other Fees
    $
    nil
    
    $
    nilTotal
    $
    26,800
    
    $
    67,609Audit Fees


Audit fees are the aggregate fees billed for professional
services rendered by our independent auditors for the audit of our annual
financial statements, the review of the financial statements included in each of
our quarterly reports and services provided in connection with statutory and
regulatory filings or engagements.

Audit Related Fees

Audit related fees are the aggregate fees billed by our
independent auditors for assurance and related services that are reasonably
related to the performance of the audit or review of our financial statements
and are not described in the preceding category.

Tax Fees

Tax fees are billed by our independent auditors for tax
compliance, tax advice and tax planning.

All Other Fees

All other fees include fees billed by our independent auditors
for products or services other than as described in the immediately preceding
three categories.

57

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Policy on Pre-Approval of Services Performed by Independent
Auditors

It is our Board of Directors policy to pre-approve all audit
and permissible non-audit services performed by the independent auditors. We
approved all services that our independent accountants provided to us in the
past two fiscal years.

ITEM
15.            
EXHIBITS

The following exhibits are filed with this Annual Report on
Form 10-K:

|Exhibit No. | Description                                                                                                                                                
|----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                            
|3.1         | Articles of
        Incorporation.(1)                                                                                                                      
|            |                                                                                                                                                            
|3.2         | Articles of
        Merger.(2)                                                                                                                             
|            |                                                                                                                                                            
|3.3         | Certificate
        of Change. (2)                                                                                                                         
|            |                                                                                                                                                            
|3.4         | Bylaws.(1)                                                                                                                                                 
|            |                                                                                                                                                            
|10.1        | Agreement and
        Plan of Merger among the Company, MergerSub and Omnicity Incorporated,
        dated for reference effective on December 29, 2008.(3)
|            |                                                                                                                                                            
|10.2        | Master
        Lease Agreement with Agility Venture Fund I, LLC.                                                                                           
|            |                                                                                                                                                            
|10.3        | Master
        Lease Agreement with Agility Venture Fund II, LLC.                                                                                          
|            |                                                                                                                                                            
|10.4        | Agreement
        Concerning Debt with Jay County Development Corporation.                                                                                 
|            |                                                                                                                                                            
|10.5        | Memorandum
        of Understanding between the Company and Wabash County REMC.                                                                            
|            |                                                                                                                                                            
|10.6        | Loan
        Modification Agreement between the Company and Muncie Industrial Revolving
        Loan Board.                                                
|            |                                                                                                                                                            
|10.7        | Promissory
        Note Payable to Star Financial Bank.                                                                                                    
|            |                                                                                                                                                            
|10.8        | Promissory
        Note Payable to Insul Reps, PSP.                                                                                                        
|            |                                                                                                                                                            
|10.9        | Convertible
        Redeemable Debenture Payable to William J. Herdrich.                                                                                   
|            |                                                                                                                                                            
|10.10       | Form
        of $0.35 Unit Private Placement Subscription Agreement entered into by
        William Herdrich.                                              
|            |                                                                                                                                                            
|10.11       | Form
        of $0.35 Unit for Debt Private Placement Subscription Agreement entered
        into by Capital Investors Limited.                            
|            |                                                                                                                                                            
|10.12       | Promissory
        Note Payable to George Beltzhoover                                                                                                      
|            |                                                                                                                                                            
|10.13       | Asset
        Purchase Agreement with ND Wave, LLC, as amended.                                                                                            
|            |                                                                                                                                                            
|10.14       | Asset
        Purchase Agreement with Fore Point Networks, LLC, as amended.                                                                                
|            |                                                                                                                                                            
|10.15       | Asset
        Purchase Agreement with Cue Connex, LLC.                                                                                                     
|            |                                                                                                                                                            
|10.16       | Asset
        Purchase Agreement with North Central Communications, Inc.                                                                                   
|            |                                                                                                                                                            
|10.17       | Form
        of Letter Agreement between Company and Shareholders of Rushville Internet
        Services LLC.                                              

58

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|10.18 | Form of
        Subscription Agreement between Company and Shareholders of Rushville Internet
        Services LLC.                            
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                
|31.1  | Certifications
        of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                            
|      |                                                                                                                                                
|31.2  | Certifications
        of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002                            
|      |                                                                                                                                                
|32.1  | Certifications
        of Chief Executive Officer and Chief Financial Officer Pursuant to Section
        906 of the Sarbanes-Oxley Act of 2002

|(1) | Incorporated by reference from our Company's registration
      statement on Form SB-2 as filed with the SEC on September 10,
  2007.
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(2) | Incorporated by reference from our Company's Current
      Report on Form 8-K filed with the SEC on October 23, 2008.                
|(3) | Incorporated by reference from our Company's Current
      Report on Form 8-K filed with the SEC on December 31,
  2008.             

59

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SIGNATURES

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

OMNICITY CORP.

| | **By:** | /s/Greg Jarman                                          
| | ------- | --------------------------------------------------------
| |         | Greg Jarman                                             
| |         | Chief Executive Officer, President, and a
      director
| |         | Date: September 28, 2010                                
| |         |                                                         
| |         | /s/Don Prest                                            
| |         | Don Prest                                               
| |         | Chief Financial Officer and a director                  
| | **By:** | Date: September 28, 2010                                

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

|Signature               |  | Title                                                 | Date              
|----------------------- |  | ----------------------------------------------------- | ------------------
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/ Richard Beltzhoover |  | Chairman of the Board and
      Director              | September 28, 2010
|Richard Beltzhoover     |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/Greg Jarman          |  | President, Chief Executive
      Officer and Director | September 28, 2010
|Greg Jarman             |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/ Don Prest           |  | Chief Financial Officer and
      Director            | September 28, 2010
|Don Prest               |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/David Bradford       |  | Chief Operating Officer and
      Director            | September 28, 2010
|David Bradford          |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/Paul Brock           |  | Director                                              | September 28, 2010
|Paul Brock              |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/Greg Dunn            |  | Director                                              | September 28, 2010
|Greg Dunn               |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/William Herdrich     |  | Director                                              | September 28, 2010
|William Herdrich        |  |                                                       |                   
|                        |  |                                                       |                   
|                        |  |                                                       |                   
|/s/Richard Reahard      |  | Director                                              | September 28, 2010
|Richard Reahard         |  |                                                       |                   



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