**UNITED STATESSECURITIES  AND EXCHANGE COMMISSION****Washington,  D.C. 20549**

**FORM 10-Q**

 [X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended **January 31, 2011**

 [  ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934for the transition period from _____ to _____

Commission File Number:  **000-52827**

**OMNICITY CORP.**(Exact name of registrant as specified inits charter)

| **Nevada**                                                      | **98-0512569**                       |
|-----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of  incorporation or 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)                           |

**(765) 570-4221**(Registrant’s telephone number, including area code) 

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

Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor 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 [   ]

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

Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, or a smaller reporting company. See definitions of“large accelerated filer,” “accelerated filer,” and “smaller reporting company”in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct).Yes [  ]    No  [X]    

Indicate the number of sharesoutstanding of each of the issuer’s classes of common equity as of the latestpracticable date: As of May 10, 2011, there were 43,745,414 shares of commonstock, par value $0.001, outstanding.

----

PART I - FINANCIAL INFORMATION

**Item 1. Financial Statements.**

Omnicity Corp.Consolidated Balance SheetsAs at January 31, 2011 (Unaudited) and July31, 2010

|                                                                                                                                       |   | January 31, 2011  $  |   |   | July 31, 2010  $  |   |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|--------|--------|------------------------|--------|
| Assets                                                                                                                                     |   |                      |   |   |                   |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Current Assets:                                                                                                                            |   |                      |   |   |                   |   |
|        Cash                                                                                                       |   | 31,250                    |   |   | 39,405                 |   |
|       Accounts receivable, net                                                                                    |   | 314,000                   |   |   | 273,387                |   |
|       Prepaid expenses and deposits                                                                               |   | 28,613                    |   |   | 14,409                 |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Total Current Assets                                                                                                                       |   | 373,863                   |   |   | 327,201                |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Property and Equipment (Note 3)                                                                                                            |   | 2,485,038                 |   |   | 2,425,092              |   |
| Deposits and Other Assets  (Note 4)                                                                                                        |   | 119,546                   |   |   | 125,094                |   |
| Customers’ Relationships  (Note 5)                                                                                                    |   | 2,779,416                 |   |   | 2,973,713              |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Total Assets                                                                                                                               |   | 5,757,863                 |   |   | 5,851,100              |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Liabilities and Stockholders' Deficit                                                                                                      |   |                      |   |   |                   |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Current Liabilities:                                                                                                                       |   |                      |   |   |                   |   |
|       Accounts payable                                                                                            |   | 1,408,884                 |   |   | 1,267,413              |   |
|       Accrued liabilities (Note 6)                                                                                |   | 496,927                   |   |   | 398,410                |   |
|       Short-term notes payable (Note 7)                                                                           |   | 1,397,042                 |   |   | 942,050                |   |
|       Current portion of long-term debt (Note 8)                                                                  |   | 1,208,983                 |   |   | 1,455,137              |   |
|       Current portion of capital lease  obligations (Note 12)                                                     |   | 49,031                    |   |   | 74,569                 |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Total Current Liabilities                                                                                                                  |   | 4,560,867                 |   |   | 4,137,579              |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Capital Lease Obligations (Note 12)                                                                                                        |   | 21,989                    |   |   | 25,929                 |   |
| Long-term Debt (Note 8)                                                                                                                    |   | 3,267,596                 |   |   | 2,931,844              |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Total Liabilities                                                                                                                          |   | 7,850,452                 |   |   | 7,095,352              |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Nature of Operations and Continuance of Business (Note 1)                                                                                  |   |                      |   |   |                   |   |
| Legal Proceedings (Note 13)                                                                                                                |   |                      |   |   |                   |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
|  Stockholders' Deficit:                                                                                                               |   |                      |   |   |                   |   |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Common Stock, par value $.001, 1,540,000,000 shares  authorized, 43,745,414 and 43,445,418 issued and outstanding, respectively  (Note 10) |   | 43,745                    |   |   | 43,445                 |   |
| Common Stock Subscribed and/or Reserved (Note 11)                                                                                          |   | 232,500                   |   |   | 232,500                |   |
| Additional Paid-in Capital                                                                                                                 |   | 8,679,851                 |   |   | 8,650,151              |   |
| Deficit                                                                                                                                    |   | (11,048,685               | )      |   | (10,170,348            | )      |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Total Stockholders' Deficit                                                                                                                |   | (2,092,589                | )      |   | (1,244,252             | )      |
|                                                                                                                                       |   |                      |   |   |                   |   |
| Total Liabilities and Stockholders'  Deficit                                                                                               |   | 5,757,863                 |   |   | 5,851,100              |   |

(See accompanying notes to these  consolidated financial statements)

 - 2 - 

----

Consolidated Statements of Operations  For the Three Months and Six Months Ended January31, 2011 and 2010(Unaudited)

|                                                          |   | Three Months Ended January  31, 2011  $ |   |   | Three Months Ended January  31, 2010  $ |   |   |    Six Months Ended January 31,  2011  $ |   |   |    Six Months Ended January 31,  2010  $ |   |
|---------------------------------------------------------------|--------|-----------------------------------------|--------|--------|-----------------------------------------|--------|--------|-----------------------------------------------|--------|--------|-----------------------------------------------|--------|
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Sales, net                                                    |   | 1,205,804                               |   |   | 635,946                                 |   |   | 2,467,665                                     |   |   | 1,252,946                                     |   |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Expenses:                                                     |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
|       Service costs                  |   | 144,343                                 |   |   | 12,820                                  |   |   | 232,248                                       |   |   | 26,918                                        |   |
|       Plant and signal delivery      |   | 396,394                                 |   |   | 317,736                                 |   |   | 835,430                                       |   |   | 656,006                                       |   |
|       Marketing and sales            |   | 2,351                                   |   |   | 5,384                                   |   |   | 4,113                                         |   |   | 7,660                                         |   |
|       General and administration     |   | 150,269                                 |   |   | 229,711                                 |   |   | 321,690                                       |   |   | 523,405                                       |   |
|       Salaries and benefits          |   | 513,323                                 |   |   | 499,821                                 |   |   | 1,036,625                                     |   |   | 910,656                                       |   |
|       Depreciation and amortization  |   | 330,616                                 |   |   | 147,109                                 |   |   | 646,293                                       |   |   | 317,367                                       |   |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Total Expenses                                                |   | 1,537,296                               |   |   | 1,212,581                               |   |   | 3,076,399                                     |   |   | 2,442,012                                     |   |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Loss from Operations                                          |   | (331,492                                | )      |   | (576,635                                | )      |   | (608,734                                      | )      |   | (1,189,066                                    | )      |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Other Income (Expense):                                       |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
|       Other income                   |   | 31,355                                  |   |   | 2,570                                   |   |   | 31,958                                        |   |   | 49,298                                        |   |
|       Loss on asset written-off      |   | -                                       |   |   | (10,000                                 | )      |   | 5,500                                         |   |   | (10,000                                       | )      |
|       Financing expense              |   | (13,845                                 | )      |   | (9,038                                  | )      |   | (24,430                                       | )      |   | -                                             |   |
|       Interest                       |   | (104,308                                | )      |   | (40,487                                 | )      |   | (282,631                                      | )      |   | (127,958                                      | )      |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Total Other Income (Expense)                                  |   | (86,798                                 | )      |   | (56,955                                 | )      |   | (269,603                                      | )      |   | (88,660                                       | )      |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Net Loss                                                      |   | (418,290                                | )      |   | (633,590                                | )      |   | (878,337                                      | )      |   | (1,277,726                                    | )      |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Net Loss per Share – Basic and Diluted                   |   | (.01                                    | )      |   | (.01                                    | )      |   | (.02                                          | )      |   | (.03                                          | )      |
|                                                          |   |                                    |   |   |                                    |   |   |                                          |   |   |                                          |   |
| Weighted Average Shares Outstanding –  Basic and Diluted |   | 43,745,000                              |   |   | 42,570,000                              |   |   | 43,640,000                                    |   |   | 40,413,000                                    |   |

(See accompanying notes to these  consolidated financial statements)

 - 3 - 

----

Consolidated Statements of Cash Flows  For the Six Months Ended January 31, 2011and 2010(Unaudited)

|                                                                                                                |   | Six Months Ended January 31,  2011  $ |   |   | Six Months Ended January 31,  2010  $ |   |
|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|--------|--------|---------------------------------------|--------|
|                                                                                                                |   |                                  |   |   |                                  |   |
| Cash flows from (to) operating  activities:                                                                         |   |                                  |   |   |                                  |   |
|        Net loss                                                                            |   | (878,337                              | )      |   | (1,277,726                            | )      |
|       Adjustments to reconcile net  loss to net cash used in operating activities:         |   |                                  |   |   |                                  |   |
|             Depreciation and amortization                         |   | 646,293                               |   |   | 317,367                               |   |
|             Asset written-off                                     |   |                                  |   |   | 10,000                                |   |
|              Interest expense accreted                            |   | 54,151                                |   |   | -                                     |   |
|              Expenses settled with  equity                        |   | 30,000                                |   |   | -                                     |   |
|              Interest and expenses  capitalized to long-term debt |   | 84,700                                |   |   | -                                     |   |
|       (Increase) decrease in:                                                              |   |                                  |   |   |                                  |   |
|             Accounts receivable                                   |   | (40,612                               | )      |   | (7,167                                | )      |
|             Prepaid expenses                                      |   | (14,204                               | )      |   | 69,144                                |   |
|       Increase (decrease) in:                                                              |   |                                  |   |   |                                  |   |
|             Accounts payable and accrued  liabilities             |   | 240,680                               |   |   | (131,132                              | )      |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Net cash from (used in) operating  activities                                                                       |   | 122,671                               |   |   | (1,019,514                            | )      |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Cash flows from (to) investing  activities:                                                                         |   |                                  |   |   |                                  |   |
|       Increase (decrease) in  deposits                                                     |   | 5,548                                 |   |   | (4,008                                | )      |
|       Increase in cost of  customers’ relationships                                   |   | (50,826                               | )      |   | -                                     |   |
|       Acquisition of property and  equipment                                               |   | (461,116                              | )      |   | (858,716                              | )      |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Net cash used in investing activities                                                                               |   | (506,394                              | )      |   | (862,724                              | )      |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Cash flows from (to) financing  activities:                                                                         |   |                                  |   |   |                                  |   |
|       Proceeds from short-term  notes                                                      |   | 519,000                               |   |   | 282,000                               |   |
|       Repayment of short-term notes                                                        |   | (19,700                               | )      |   | (180,017                              | )      |
|       Proceeds from long-term debt                                                         |   | 62,670                                |   |   | 1,543,141                             |   |
|       Repayment of long-term debt  and capital lease obligations                           |   | (186,402                              | )      |   | (358,048                              | )      |
|       Proceeds from issuance of common  stock                                              |   | -                                     |   |   | 1,020,000                             |   |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Net cash provided by financing  activities                                                                          |   | 375,568                               |   |   | 2,307,076                             |   |
|                                                                                                                |   |                                  |   |   |                                  |   |
| (Decrease) increase in cash                                                                                         |   | (8,155                                | )      |   | 424,838                               |   |
| Cash, beginning of  period                                                                                     |   | 39,405                                |   |   | 159,119                               |   |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Cash, end of period                                                                                                 |   | 31,250                                |   |   | 583,957                               |   |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Supplemental cash flow information:                                                                                 |   |                                  |   |   |                                  |   |
| Cash paid for interest                                                                                              |   | 175,279                               |   |   | 119,338                               |   |
| Cash paid for income taxes                                                                                          |   | -                                     |   |   | -                                     |   |
|                                                                                                                |   |                                  |   |   |                                  |   |
| Supplemental  disclosure of non-cash investing and financing activities:                                            |   |                                  |   |   |                                  |   |
|       Current liabilities  transferred to long-term debt                                   |   | 45,000                                |   |   | 792,890                               |   |
|       Warrants issued pursuant to a  financing arrangement                                 |   | -                                     |   |   | 61,132                                |   |

(See accompanying notes to theseconsolidated financial statements)

 - 4 - 

----

Omnicity Corp.  Notes to the Consolidated  Financial Statements

| 1.    | Nature of Operations and Continuanceof Business |
|----------------------|-------------------------------------------------|

|   | On February 17, 2009, the Company acquired all of theissued and outstanding shares of Omnicity, Incorporated. Omnicity, Incorporated(incorporated on August 13, 2003) provides broadband access, including advancedservices of voice, video and data, in un-served and underserved small and ruralmarkets and is planning to be a consolidator of rural market broadbandnationwide. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Thesefinancial statements have been prepared on a going concern basis, which impliesthe Company will continue to realize its assets and discharge its liabilitiesin the normal course of business. The Company has generated substantialrevenues but has sustained losses since inception and has never paid anydividends and is unlikely to pay dividends in the immediate or foreseeablefuture. The continuation of the Company as a going concern is dependent uponthe ability of the Company to obtain necessary debt and/or equity financing tofund its growth strategy, pay debt when due, to continue operations, and to attain profitability. As at January 31, 2011, theCompany had a working capital deficit of $4,187,006 and a stockholders’ deficitof $2,092,589. All of these factors combined raises substantial doubt regardingthe Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverabilityand classification of recorded asset amounts and classification of liabilitiesthat might be necessary should the Company be unable to continue as a goingconcern. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Although the Company is operationally cashflow positive as at January 31, 2011, the Company must continue to address itsliquidity and working capital issues. The Company continues to raise additionalcapital through the issuance of short-term and long-term debt and equity toprivate investors to maintain its aggressive acquisition strategy, increase itsorganic growth and to repay principal and interest when due. Managementbelieves this additional capital and the expanded customer base throughacquisitions and organic growth will provide the Company the opportunity toincrease its operational cash flow and ultimately to be profitable over thenext twelve months. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.    | Significant Accounting Policies |
|----------------------|---------------------------------|

|   | *Interim Unaudited FinancialStatements* |
|--------|-----------------------------------------|

|   | These interimunaudited consolidated financial statements have been prepared in accordance withaccounting principles generally accepted in the United States for interimfinancial information and with the instructions for SEC Form 10-Q. They donot include all of the information and footnotes required by generally acceptedaccounting principles for complete financial statements. Therefore, thesefinancial statements should be read in conjunction with the Company’s auditedfinancial statements and notes thereto for the years ended July 31, 2010 and2009 included in the Company’s Form 10K filed on November 17, 2010 with theSEC. The consolidated financial statements included herein are unaudited;however, they contain all normal recurring accruals and adjustments that, inthe opinion of management, are necessary to present fairly the Company’s financialposition at January 31, 2011, and the results of its operations for the sixmonths ended January 31, 2011 and 2010 and the results of its cash flows forthe six months ended January 31, 2011 and 2010. The results of operations forthe six months ended January 31, 2011 are not necessarily indicative of theresults to be expected for future quarters or the full year. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.    | Property and Equipment |
|----------------------|------------------------|

|                                              |   | January 31, 2011        $  |   |   | July 31, 2010        $  |   |
|---------------------------------------------------|--------|---------------------------------|--------|--------|------------------------------|--------|
|                                              |   |                            |   |   |                         |   |
| Computer and wireless equipment                   |   | 1,268,942                       |   |   | 1,094,215                    |   |
| Tower equipment, infrastructures and  house drops |   | 1,652,561                       |   |   | 1,441,707                    |   |
| Fiber build-out and test equipment                |   | 170,709                         |   |   | 121,601                      |   |
| Furniture and fixtures                            |   | 75,507                          |   |   | 74,562                       |   |
| Vehicles                                          |   | 168,629                         |   |   | 168,629                      |   |
| Software                                          |   | 83,341                          |   |   | 78,841                       |   |
|                                              |   |                            |   |   |                         |   |
|                                              |   | 3,419,689                       |   |   | 2,979,555                    |   |
| Less: accumulated depreciation                    |   | (1,362,765                      | )      |   | (961,595                     | )      |
|                                              |   |                            |   |   |                         |   |
|                                              |   | 2,056,924                       |   |   | 2,017,960                    |   |
| Land                                              |   | 15,553                          |   |   | 15,000                       |   |
| Network replacement parts not put in use          |   | 412,561                         |   |   | 392,132                      |   |
|                                              |   |                            |   |   |                         |   |
| Property and equipment, net                       |   | 2,485,038                       |   |   | 2,425,092                    |   |

 - 5 - 

----

| 4.  | Deposits and Other Assets |
|----------|---------------------------|

|                     |   | January 31, 2011      $ |   |   | July 31, 2010      $ |   |
|--------------------------|--------|-------------------------|--------|--------|----------------------|--------|
|                     |   |                    |   |   |                 |   |
| Operating lease deposits |   | 80,859                  |   |   | 86,682               |   |
| Other long-term deposits |   | 38,687                  |   |   | 38,412               |   |
|                     |   |                    |   |   |                 |   |
|                     |   | 119,546                 |   |   | 125,094              |   |

| 5.    | Customers’ Relationships        |
|----------------------|--------------------------------------------------------------------|

|                               |   |   January 31, 2011      $  |   |   | July 31, 2010      $  |   |
|------------------------------------|--------|--------------------------------------|--------|--------|----------------------------|--------|
|                               |   |                                 |   |   |                       |   |
| Capitalized value                  |   | 3,456,993                            |   |   | 3,406,167                  |   |
| Less: accumulated amortization     |   | (677,577                             | )      |   | (432,454                   | )      |
|                               |   |                                 |   |   |                       |   |
| Customers’ relationships, net |   | 2,779,416                            |   |   | 2,973,713                  |   |

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

|                                              |   |   January 31, 2011      $  |   |   | July 31, 2010                $  |   |
|---------------------------------------------------|--------|--------------------------------------|--------|--------|--------------------------------------|--------|
|                                              |   |                                 |   |   |                                 |   |
| Accrued interest                                  |   | 260,039                              |   |   | 184,838                              |   |
| Payroll and severance liabilities                 |   | 203,514                              |   |   | 177,090                              |   |
| Real property and sales taxes and other  accruals |   | 33,374                               |   |   | 36,482                               |   |
|                                              |   |                                 |   |   |                                 |   |
|                                              |   | 496,927                              |   |   | 398,410                              |   |

| 7.    | Short-term Notes Payable |
|----------------------|--------------------------|

|                                                                                                                                                                                                                                               |   |    January 31, 2011      $  |   |   | July 31, 2010      $  |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|----------------------------|--------|
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Notes payable, due on demand, unsecured  and bearing interest at rates between 8% and 9.5% per annum; a $20,000 note  does not bear interest.                                                                                                      |   | 330,000                                    |   |   | 340,000                    |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Notes payable to the Chairman of the  Board of the Company and a company beneficially owned bearing interest at 8%  per annum.                                                                                                                     |   | 29,992                                     |   |   | 35,000                     |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Notes payable due to a director and a company  controlled by a director. A $150,000 note was due January 1, 2011, unsecured  and bearing interest at 9% per annum with interest payable quarterly. A note  for $100,000 has no terms of repayment. |   | 250,000                                    |   |   | 150,000                    |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Notes payable due to a director, unsecured and  bearing interest at 8% repayable August, 2011.                                                                                                                                                     |   | 400,000                                    |   |   | 30,000                     |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Vendor Note, unsecured and bearing interest at 5%  per annum. See Note 13 for legal proceedings.                                                                                                                                                   |   | 326,000                                    |   |   | 326,000                    |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Vendor Note,  unsecured, bearing interest at 5% and repayable in 4 quarterly instalments of  $2,762 plus interest.                                                                                                                                 |   | 11,050                                     |   |   | 11,050                     |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
| Vendor Note,  unsecured, non-interest bearing and due on August 20, 2010. See Note 13 for  legal proceedings.                                                                                                                                      |   | 50,000                                     |   |   | 50,000                     |   |
|                                                                                                                                                                                                                                               |   |                                       |   |   |                       |   |
|                                                                                                                                                                                                                                               |   | 1,397,042                                  |   |   | 942,050                    |   |

 - 6 - 

----

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

|                                                                                                                                                                                                                                                                                                                                              |   |    January 31, 2011      $  |   |   | July 31, 2010      $  |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------|--------|--------|----------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| 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. Principal is currently repayable at $500 per month.                                                                         |   | 290,071                                    |   |   | 291,411                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Notes payable to Wabash Rural Electric  Membership Cooperative (“Wabash”). Six separate notes were renewed pursuant  to a Memorandum of Understanding effective September 24, 2009. Interest rates  are between 5.7% and 7.45% annually and are collateralized by certain  equipment in Wabash County, Indiana.                         |   | 607,101                                    |   |   | 590,247                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Note payable to Muncie Industrial  Revolving Loan Fund Board. Repayable in monthly instalments of principal and  interest of $4,570, matures on 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. |   | 249,225                                    |   |   | 249,225                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Note payable to Star Financial Bank. Interest is  paid monthly at 8.6% per annum. This note was due February 1, 2010. This loan  is collateralized by certain equipment and is guaranteed by the State of Indiana as to 80% of the loan.                                                                                                          |   | 171,476                                    |   |   | 187,846                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Unsecured notes payable to the Chairman of the  Company, the son of the Chairman of the Company and to companies controlled  by the Chairman.                                                                                                                                                                                                     |   | 186,004                                    |   |   | 210,755                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Convertible 8% debenture having a face value of  $1,500,000 issued to a director including warrants to acquire up to 1,500,000  common shares at $0.50 per share expiring December 24, 2014. The debenture is  convertible into common shares at a price of $0.35 per common share up to  December 24, 2014.                                      |   | 954,840                                    |   |   | 900,689                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Unsecured notes payable to a director of  the Company, interest only at 8% and maturing April 2012.                                                                                                                                                                                                                                               |   | 500,000                                    |   |   | 470,000                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Unsecured notes payable to a director of  the Company. Repayable in monthly instalments of principal and interest  totalling $4,613. Interest is 10% per annum.                                                                                                                                                                                   |   | 35,834                                     |   |   | 59,644                     |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Debentures, 8% interest paid quarterly  of which $20,000 is due to a director of the Company. Various maturities  between January, 2011 and June, 2012.                                                                                                                                                                                           |   | 200,000                                    |   |   | 190,000                    |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Unsecured vendor and investor notes  payable with monthly or quarterly payments of principal and interest ranging  from 5% to 10%. (See Note 13 for two long-term vendor notes that are subject  to legal proceedings).                                                                                                                           |   | 1,282,028                                  |   |   | 1,237,164                  |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Total                                                                                                                                                                                                                                                                                                                                             |   | 4,476,579                                  |   |   | 4,386,981                  |   |
| Less: current portion                                                                                                                                                                                                                                                                                                                             |   | 1,208,983                                  |   |   | 1,455,137                  |   |
|                                                                                                                                                                                                                                                                                                                                              |   |                                       |   |   |                       |   |
| Long-term portion                                                                                                                                                                                                                                                                                                                                 |   | 3,267,596                                  |   |   | 2,931,844                  |   |

|   | Long-term debt principal repaymentsdue over the next five years are as follows: |
|--------|---------------------------------------------------------------------------------|

| Year   | $         | Year       | $         |
|--------|-----------|------------|-----------|
|   |      |       |      |
| 2012   | 1,208,983 | 2015       | 1,411,276 |
| 2013   | 1,018,516 | 2016       | 115,254   |
| 2014   | 306,038   | Thereafter | 416,512   |

| 9.  | Related Party Transactionsand Balances |
|----------|----------------------------------------|

|   | a) | The majority of the Company’scapital lease obligations relate to assets leased from the Chairman of theCompany or a company beneficially owned by the Chairman of the Company,totalling $51,318 (July 31, 2010 - $58,186 (See Note 12).  |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | Unsecured short-termand long-term notes payable to the Chairman of the Company and the son of theChairman of the Company and to companies controlled by the Chairman, total$215,996 (July 31, 2010 - $245,755) and bear interest at an average rate of 8%per annum. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | c) | The Companyreceived $500,000 from two directors and issued short-term unsecured debtbearing interest at 8%. Balances owing pursuant to unsecured short-term andlong-term debt notes owing to these two directors total $2,160,674 as at January31, 2011 and bear interest at an average interest rate of 8% per annum. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 - 7 - 

----

| 10.  | Common Stock |
|-----------|--------------|

|   | a) | The Company issued 299,996 common shares at$0.15 per share to settle an amount owing of $30,000 pursuant to a ServicesAgreement dated June 29, 2010; |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | b) | The Company is committed toissue 766,087 common shares pursuant to two completed asset purchase agreementsto settle $232,500 of common share commitments. |
|--------|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| 11.  | Warrants and OtherPotentially Dilutive Securities      |
|-----------|---------------------------------------------------------------------------------|

|   | As at January 31, 2011 the Company hascommon share purchase warrants issued and outstanding to purchase up to5,614,929 common shares at an average exercise price of $.50 per common sharehaving an average remaining life of 2 years. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Pursuant to an 8% convertibledebenture having a face value of $1,500,000, interest payable quarterly, theCompany has reserved up to 4,285,714 common shares to be issued upon conversionat $0.35 per share. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company is committed toissue 766,087 common shares pursuant to two completed asset purchase agreementsto settle $232,500 of common share commitments. These shares will be issuedupon receipt of required documents from the vendors. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.  | Lease Obligations |
|-----------|-------------------|

|   | Future minimum lease payments for equipment acquired undernon-cancellable capital leases and operating leases with initial terms of morethan one year are as follows: |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         |   | Capital        Leases |   |   | Operating        Leases |   |
|----------------------------------------------|--------|-----------------------|--------|--------|-------------------------|--------|
| Year ending July 31,                         |   | $                     |   |   | $                       |   |
|                                         |   |                  |   |   |                    |   |
| 2012                                         |   | 54,031                |   |   | 360,045                 |   |
| 2013                                         |   | 20,597                |   |   | 170,888                 |   |
| 2014                                         |   | 3,092                 |   |   | -                       |   |
|                                         |   |                  |   |   |                    |   |
| Total minimum lease payments                 |   | 77,720                |   |   |                    |   |
|                                         |   |                  |   |   |                    |   |
| Less: amounts representing interest          |   | 6,700                 |   |   |                    |   |
|                                         |   |                  |   |   |                    |   |
| Present value of net minimum lease  payments |   | 71,020                |   |   |                    |   |
| Less: current portion                        |   | 49,031                |   |   |                    |   |
|                                         |   |                  |   |   |                    |   |
| Long-term capital lease obligations          |   | 21,989                |   |   |                    |   |

|   | The principal portion of capital lease obligations is to be repaidas follows: |
|--------|-------------------------------------------------------------------------------|

|   | $      |
|--------|--------|
| 2012   | 49,031 |
| 2013   | 19,097 |
| 2014   | 2,892  |

| 13.  | Legal Proceedings |
|-----------|-------------------|

|   | The Company has been served with a Complaint filedwith the Rush Circuit Court in the State of Indiana dated August 25, 2010. Theplaintiff has made claims against the Company for failure to make requiredinstalment payments that were due pursuant to promissory notes. The Company hasrecorded all debt relating to this claim as a current liability. On September14, 2010 the Company filed an Appearance and Notice of Extension of Time toanswer the Complaint. The Company filed and Answer and Counterclaim to thiscomplaint.  This Answer denied certain allegations due to breach by thevendor of the Asset Purchase Agreement entered into. On February 23, 2011 theCompany filed a revised Counterclaim with the Rush County Court. ThisCounterclaim includes counterclaims of breach, fraud, and conversion forvarious damages, including punitive damages, suffered by the Company. TheCompany expects to receive a favourable outcome.  |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has been served with a Complaint filed      with the Rush Circuit Court in the State of Indiana dated September 1, 2010.      The plaintiff has made claims against the Company for failure to make required      instalment payments that were due pursuant to promissory notes. The Company has      recorded all debt relating to this claim as a current liability. On September      14, 2010 the Company filed an Appearance and Notice of Extension of Time to      answer the Complaints. The Company has filed an answer to this complaint and      expects to receive a favourable outcome. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company has been served with a Complaint filed      with the Holmes County Court in the State of Ohio dated September 16,      2010.  The plaintiff has made claims against the Company for failure to      make required instalment payments that were due pursuant to promissory notes.      The Company has recorded all debt relating to this claim as a current      liability. On November 8, 2010 the Company filed an Answer and Counterclaim      with the Holmes County Court. This Answer and Counterclaim includes      counterclaims for various damages, including punitive damages, suffered by the      Company and also seeks an injunction. The Company expects to receive a      favourable outcome.  |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 - 8 - 

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**Item 2.Management’s Discussion and Analysis of Financial Condition and Results ofOperations.**

**FORWARD LOOKING STATEMENTS**

This report contains forward-looking statements thatinvolve risks and uncertainties.  Any statements contained herein that are notstatements of historical fact may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology suchas “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”,“believe”, “estimate”, “predict”, “potential” or “continue”, the negative ofsuch terms or other comparable terminology.  In evaluating these statements,you should consider various factors, including the assumptions, risks anduncertainties outlined in this report under “Risk Factors”.  These factors orany of them may cause our actual results to differ materially from anyforward-looking statement made in this report.  Forward-looking statements inthis report include, among others, statements regarding:

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

While these forward-looking statements, and anyassumptions upon which they are based, are made in good faith and reflect ourcurrent judgment regarding future events, our actual results will likely vary,sometimes materially, from any estimates, predictions, projections, assumptionsor other future performance suggested herein.  Some of the risks andassumptions 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 remarksexpressly qualify in their entirety all forward-looking statements attributableto us or persons acting on our behalf.  Important factors that you should alsoconsider, include, but are not limited to, the factors discussed under “RiskFactors” in this report.

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

**REFERENCES**

As used in this quarterly 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” refersto the United States  *Securities Act of 1933*, as amended; (iv) “ExchangeAct” refers to the United States *Securities Exchange Act of 1934*, asamended; and (v) all dollar amounts refer to United States dollars unlessotherwise indicated.

 - 9 - 

----

**Plan of Operations**

Our business plan is to be a rural wireless internetservice provider in the United States through a consolidation strategy andorganic growth of all acquired business units and to partner with REMCs, Telcosand local governments for nationwide marketing. We also plan to partner withregional and national telecommunication companies for the delivery of voiceservices and complete negotiations and logistics of satellite television resellagreements. We further plan to partner with local governments to provideessential services, including mobile internet for emergency mobilecommunications, fire and police and to establish new utility applications suchas automated meter reading. We plan to bring WISP based services to rural America through three distinct market channels: (1) Telco and Electric partnerships, (2)strategic acquisitions and (3) local government and private enterprisepartnerships.

Developing relationships with REMCs and "valueadded" institutional services and facilities we provide for municipalitiesand local governments, we plan to organize and consolidate within the ruralbroadband market initially in Indiana and Ohio, and then in the MidwesternUnited States and ultimately nationwide. Collaborations with both the REMCs andmunicipalities may act as effective barriers for competition and provideadditional sources of revenue and customer service for the REMCs andmunicipalities as well as income and cash flow for our company. The bundling ofbroadband services, including internet, voice, and video, in partnership withrural electric and/or municipal services provides an opportunity to imbed,cross promote, and extend services in collaboration with these institutionalproviders.

**Our plan of operations for the next twelve months isto:**

- develop and expand, through organic growth, the     subscriber base through our sales and marketing programs, to increase our     number of  sales teams in the field, and to launch new marketing     initiatives tailored to specific markets;
- acquire, and transition into our operations     assets of competing WISP operators and expand our network in Indiana , Ohio, and other states, and continue expansion into all of Midwest USA by identifying strategic regional acquisitions;
- launch the next generation of WiMax equipment in     all new builds and in all rebuild opportunities to standardize Omnicity     networks with carrier grade deployments; 
- increase operational cash flow to over $250,000     per month and build a liquidity floor under operations of $200,000 minimum     by  July 31, 2011; 
- partner with   local and State governments, Rural     Telcos,  Original Equipment Manufacturers "OEMs", and REMCs to     efficiently and cost effectively expand our network across rural America;     and
- develop and expand our service offerings to     become a total broadband solution including VOIP and video.

**Future Financing Requirements**

At January 31, 2011, we had cash of $31,000 and aworking capital deficit of $4,187,000.  A total of $500,000 was loaned to the Companyby two directors during the six months ended January 31, 2011. We estimate thatapproximately $6 million will be required during the remainder of the year endedJuly 31, 2011 to finance our short-term working capital deficit and to financethe expansion of, and the addition of subscribers through acquisition to, ourexisting and to be acquired network infrastructures. A total of $1 million willbe required for working capital purposes, $1.5 million for organic growth and$3.5 million for acquisitions. Upon closing our second large acquisition in Ohio at the end of March, 2010, and with a reduction of employees, we became operationallycash flow positive and will require no additional funds to finance operationaldeficits. We will continue to seek a combination of equity and long-term debtfinancing as well as other traditional cash flow and asset backed financing tomeet our financing needs and to reduce our overall cost of capital.Additionally, in order to accelerate our growth rate and to finance generalcorporate activities, we may supplement our existing sources of funds withfinancing arrangements at the operating system level or through additionalborrowings, joint ventures or other off balance sheet arrangements. As afurther capital resource, we may sell or lease certain wireless rights orassets from our portfolio as appropriate opportunities become available.However, there can be no assurance that we will be able to obtain anyadditional financing, on acceptable terms or at all.

**Current Financing Arrangements**

We are currently in  negotiations with various individuals to raise approximately $2 million in  capital through the sale of our common stock. We anticipated these agreements  will be consummated during the upcoming quarter with funding to occur in incremental  traunches post closing. Proceeds from the potential aforementioned sale will  primarily be utilized to fund future acquisitions. 

 - 10 - 

----

We have also entered into  discussions to raise additional capital through a private bond issuance.  Proceeds from the bond fund will be designated to accelerate network build-outs  and new subscriber deployments in several counties and other jurisdictions in  the State of Ohio. We anticipate this process to extend throughout a minimum of  twelve months. 

**Results of Operations**

**Three months ended January 31, 2011****and 2010**

The following table sets forth certain financial informationrelating to the Company for the three months ended January 31, 2011 (“2011”)and January 31, 2010 (“2010”). The financial information presented has beenrounded to the nearest thousand $ and is derived from the unaudited interimconsolidated financial statements included under Item 1 in this Form 10-Q. 

|                                                          |   | Three Months Ended January 31, 2011  $ |   |    Three Months Ended January 31, 2010  $  |   |
|---------------------------------------------------------------|--------|----------------------------------------|--------|------------------------------------------------------|--------|
|                                                          |   |                                   |   |                                                 |   |
| Sales, net                                                    |   | 1,206,000                              |   | 636,000                                              |   |
|                                                          |   |                                   |   |                                                 |   |
| Expenses:                                                     |   |                                   |   |                                                 |   |
|        Service costs                 |   | 144,000                                |   | 13,000                                               |   |
|       Plant and signal  delivery     |   | 397,000                                |   | 318,000                                              |   |
|       Marketing and  sales           |   | 2,000                                  |   | 5,000                                                |   |
|       General and  administration    |   | 150,000                                |   | 230,000                                              |   |
|       Salaries and  benefits         |   | 513,000                                |   | 500,000                                              |   |
|       Depreciation and  amortization |   | 331,000                                |   | 147,000                                              |   |
|                                                          |   |                                   |   |                                                 |   |
| Total Expenses                                                |   | 1,537,000                              |   | 1,213,000                                            |   |
|                                                          |   |                                   |   |                                                 |   |
| Loss from Operations                                          |   | (331,000                               | )      | (577,000                                             | )      |
|                                                          |   |                                   |   |                                                 |   |
| Other Income (Expense):                                       |   |                                   |   |                                                 |   |
|       Other income                   |   | 31,000                                 |   | 3,000                                                |   |
|       Loss on assets  written-off    |   | -                                      |   | (10,000                                              | )      |
|       Financing expense              |   | (14,000                                | )      | (9,000                                               | )      |
|       Interest expense               |   | (104,000                               | )      | (40,000                                              | )      |
|                                                          |   |                                   |   |                                                 |   |
| Total Other Income (Expense)                                  |   | (87,000                                | )      | (57,000                                              | )      |
|                                                          |   |                                   |   |                                                 |   |
| Net Loss                                                      |   | (418,000                               | )      | (634,000                                             | )      |
|                                                          |   |                                   |   |                                                 |   |
| Net Loss per Share – Basic  and Diluted                  |   | (.01                                   | )      | (.01                                                 | )      |

The followingdiscussion should be read in conjunction with the unaudited interimconsolidated financial statements (including the notes thereto) included underItem 1 in this Form 10-Q.

***Revenues***

The Company's revenues for the 2nd quarter of2011 increased by $570,000 to $1,206,000 (2nd quarter 2010 - $636,000)an increase of 90%. These increases were achieved mainly through our Lightspeedand BrightChoice Ohio acquisitions and through organic growth. The number of activesubscribers was 10,600 as at January 31, 2011. This subscriber count does notdifferentiate a subscriber, for example, one school, hospital or businesssubscriber is counted as one subscriber. On an equivalent subscriber unit basiswe ended at 11,700 as at January 31, 2011. This is important to note becausegoing forward the Company will be adding schools, hospitals and businessaccounts at an accelerated rate. The Company receives revenue mainly frommonthly service and modem rental fees collected from its subscribers. TheCompany’s installation revenue, while representing 4% of revenues currently, isexpected to increase rapidly as we complete current financing arrangements and,as a result, we expand our marketing efforts. The Company also receives webhosting fees, fiber construction project fees and late fees which togetherrepresent less than 1% of total revenue. The Company expects revenues toincrease rapidly as a result of organic growth, planned acquisitions andincrease in average revenue per unit (“ARPU”). 

 - 11 - 

----

***Operational Expenses***

Operational expenses include service costs, plant andsignal delivery, marketing and sales, general and administration and salariesand benefits, stock based compensation and depreciation and amortization.

**Service costs** include the cost of billing and collection, the costof buying DSL service and the cost of providing Lifeline and satellite servicesin Ohio. During the 2nd quarter of 2011, service costs increased by$131,000 to $144,000 (2nd quarter 2010 - $13,000). This increase wasdue mainly to the acquisition of Bright Choice, Inc. in Ohio. Approximatelytwo-thirds of Bright Choice revenue comes from satellite and Lifeline serviceswhich started in April, 2010. The increase also comes from an increase in thenumber of customers accounts offset by a decrease in the cost of collection. 

**Plant and signal delivery** expenses include the rental of towers, the cost ofinternet transmission (“backhaul”) the cost of installing equipment on thetowers and at customers’ premises (“housedrops”) and the operating lease costsof housedrop or tower equipment. We currently have a portfolio of transmissionrights covering 452 tower sites located principally in Indiana and Ohio. These markets represent approximately 434,000 households, approximately 369,000 ofwhich are believed to be serviceable by line-of-sight transmissions fromOmnicity antenna locations. During the 2nd quarter of 2011, plantand signal delivery expenses increased by $78,000 to $396,000 (2ndquarter 2010 - $318,000), an increase of 25%. The increase in revenues was 90%during this period. As subscribers are added to the network the incrementalcost of providing our signal to that subscriber is lower. This increase was duemainly to the increase in the number of towers under rental arrangements, theamount of backhaul needed to service the increase in subscribers, the increasein tower and customer premises equipment being leased pursuant to operatinglease arrangements and the increase in customer installations. Plant and signaldelivery costs per customer will significantly decrease as the Companypopulates its towers with customers. The Company, on average, has a penetrationof approximately 4% of homes passed whereas the minimum target penetration isat least 20% (>74,000 subscribers) which is the penetration rate in theWabash REMC coverage area.

**Marketing and sales** expenses include REMC fees, advertising andpreparation of marketing materials. During 2nd quarter 2011,marketing and sales expenses decreased by $3,000 to $2,000 (2ndquarter 2010 - $5,000). Marketing and sales expenses are expected tosignificantly increase during the balance of 2011 as the Company increases itsmarketing plan to significantly increase organic growth.   

**General and administration** expenses include professional fees (legal, audit,accounting and outside professional consulting), investor relations consultingfees, office expenses (including rent, property tax, utilities, telephone andinsurance), travel and automobile, software fees and fees associated with latepayments and bank charges. During the 2nd quarter of 2011, generaland administration expenses decreased by $80,000 to $150,000 (2ndquarter 2010 - $230,000), a decrease of 35%. General and administration expensesare not expected to increase significantly during the remainder of 2011 inrelation to revenue. As the Company grows, general and administration expensesbecome significantly lower on a percentage of revenue basis. 

**Salaries and benefits** for the 2nd quarter of 2011 increased by $13,000to $513,000 (2nd quarter 2010 - $500,000) an increase of 3% whilerevenue increased by 90%. This increase is mainly due to a small net gain ofessential support personnel for acquired properties over the last 12 months. Staffinglevels have remained constant at around 49 full-time employees as at January31, 2011. The Company does not expect to increase its number of employeessignificantly during 2011, except for certain key people to be brought on as aresult of acquisitions and increasing the number of marketing teams we have incurrent and new regions brought on through acquisitions. The Company continuesto upgrade its employees as better trained personnel become available throughacquisitions. 

**Depreciation and amortization** for the 2nd quarter of 2011 increasedby $184,000 to $331,000 (2nd quarter 2010 - $147,000). This increasewas attributed to an increase in amortization of customers’ relationships of $53,000to $123,000 (2nd quarter 2010 - $70,000) and an increase indepreciation of our network system, automobiles, software and office equipmentof $131,000 to $208,000 (2nd quarter 2010 - $77,000). 

 - 12 - 

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***Other Income and Expense***

**Interest expense** for the 2nd quarter of 2011 increased by $64,000to $104,000 (2nd quarter 2010 - $40,000). The increase was a resultof increased short-term and long-term debt levels. The Company may selectively issueshort-term and long-term notes as part consideration of planned acquisitions. 

**Financing expenses** are costs associated with consultants hired to secureadditional debt and/or equity financing for the Company. Once equity financingis secured the related cost will reduce the proceeds of the equity instrumentissued. Financing expense for 2nd quarter 2011 increased by $5,000 to $14,000 (2ndquarter 2010 - $9,000). The increase was a result of the Company relying moreupon financial consultants to assist the Company in raising capital.

***Net Loss***

The net loss for the 2nd quarter of 2011 decreasedby $216,000 to $418,000 (2nd quarter 2010 - $634,000). This decreasein loss was due to the 90% increase in revenues while expenses increased at alower rate and will continue to increase at an incrementally lower rate, as apercentage of revenue, as we expand through acquisitions and organic growth. Tohighlight this trend our first quarter earnings before interest, income taxes,depreciation and amortization (“EBITDA”) was positive $40,000 and our 2ndquarter was $30,000 while our 4th quarter of 2010 was negative$17,000. 

**Six months endedJanuary 31, 2011 and 2010**

The following table sets forth certain financialinformation relating to the Company for the six months ended January 31, 2011 (“2011”)and January 31, 2010 (“2010”). The financial information presented has beenrounded to the nearest thousand $ and is derived from the unaudited interimconsolidated financial statements included under Item 1 in this Form 10-Q. 

|                                                          |   | Six Months Ended January 31, 2011  $ |   |    Six Months Ended January 31, 2010  $  |   |
|---------------------------------------------------------------|--------|--------------------------------------|--------|----------------------------------------------------|--------|
|                                                          |   |                                 |   |                                               |   |
| Sales, net                                                    |   | 2,468,000                            |   | 1,253,000                                          |   |
|                                                          |   |                                 |   |                                               |   |
| Expenses:                                                     |   |                                 |   |                                               |   |
|       Service costs                  |   | 233,000                              |   | 27,000                                             |   |
|       Plant and signal  delivery     |   | 835,000                              |   | 656,000                                            |   |
|       Marketing and  sales           |   | 4,000                                |   | 8,000                                              |   |
|       General and  administration    |   | 322,000                              |   | 523,000                                            |   |
|       Salaries and  benefits         |   | 1,037,000                            |   | 911,000                                            |   |
|       Depreciation and  amortization |   | 646,000                              |   | 317,000                                            |   |
|                                                          |   |                                 |   |                                               |   |
| Total Expenses                                                |   | 3,077,000                            |   | 2,442,000                                          |   |
|                                                          |   |                                 |   |                                               |   |
| Loss from Operations                                          |   | (609,000                             | )      | (1,189,000                                         | )      |
|                                                          |   |                                 |   |                                               |   |
| Other Income (Expense):                                       |   |                                 |   |                                               |   |
|       Other income                   |   | 32,000                               |   | 49,000                                             |   |
|       Loss on assets  written-off    |   | 6,000                                |   | (10,000                                            | )      |
|       Financing expense              |   | (24,000                              | )      | -                                                  |   |
|       Interest expense               |   | (283,000                             | )      | (128,000                                           |   |
|                                                          |   |                                 |   |                                               |   |
| Total Other Income (Expense)                                  |   | (269,000                             | )      | (89,000                                            | )      |
|                                                          |   |                                 |   |                                               |   |
| Net Loss                                                      |   | (878,000                             | )      | (1,278,000                                         | )      |
|                                                          |   |                                 |   |                                               |   |
| Net Loss per Share – Basic  and Diluted                  |   | (.02                                 | )      | (.03                                               | )      |

The followingdiscussion should be read in conjunction with the unaudited interimconsolidated financial statements (including the notes thereto) included underItem 1 in this Form 10-Q.

 - 13 - 

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***Revenues***

The Company's revenues for 2011 increased by $1,215,000to $2,468,000 (2010 - $1,253,000) an increase of 97%. These increases wereachieved mainly through our Lightspeed and BrightChoice Ohio acquisitions andthrough organic growth. The number of active subscribers was 10,600 as at January31, 2011. This subscriber count does not differentiate a subscriber, forexample, one school, hospital or business subscriber is counted as one subscriber.On an equivalent subscriber unit basis we ended at 11,700 as at January 31,2011. This is important to note because going forward the Company will beadding schools, hospitals and business accounts at an accelerated rate. TheCompany receives revenue mainly from monthly service and modem rental feescollected from its subscribers. The Company’s installation revenue, whilerepresenting 4% of revenues currently, is expected to increase rapidly as wecomplete current financing arrangements and, as a result, we expand ourmarketing efforts. The Company also receives web hosting fees, fiberconstruction project fees and late fees which together represent less than 1%of total revenue. The Company expects revenues to increase rapidly as a resultof organic growth, planned acquisitions and increase in average revenue perunit (“ARPU”). 

***Operational Expenses***

Operational expenses include service costs, plant andsignal delivery, marketing and sales, general and administration and salariesand benefits, stock based compensation and depreciation and amortization.

**Service costs** include the cost of billing and collection, the costof buying DSL service and the cost of providing Lifeline and satellite servicesin Ohio. During 2011, service costs increased by $206,000 to $233,000 (2010 - $27,000).This increase was due mainly to the acquisition of Bright Choice, Inc. in Ohio. Approximately two-thirds of Bright Choice revenue comes from satellite and Lifelineservices which started in April, 2010. The increase also comes from an increasein the number of customers accounts offset by a decrease in the cost ofcollection. 

**Plant and signal delivery** expenses include the rental of towers, the cost ofinternet transmission (“backhaul”) the cost of installing equipment on thetowers and at customers’ premises (“housedrops”) and the operating lease costsof housedrop or tower equipment. We currently have a portfolio of transmissionrights covering 452 tower sites located principally in Indiana and Ohio. These markets represent approximately 434,000 households, approximately 369,000 ofwhich are believed to be serviceable by line-of-sight transmissions fromOmnicity antenna locations. During the 2011, plant and signal delivery expensesincreased by $179,000 to $835,000 (2010 - $656,000), an increase of 27%. Theincrease in revenues was 97% during this period. As subscribers are added tothe network the incremental cost of providing our signal to that subscriber islower. This increase was due mainly to the increase in the number of towersunder rental arrangements, the amount of backhaul needed to service theincrease in subscribers, the increase in tower and customer premises equipmentbeing leased pursuant to operating lease arrangements and the increase incustomer installations. Plant and signal delivery costs per customer willsignificantly decrease as the Company populates its towers with customers. TheCompany, on average, has a penetration of approximately 4% of homes passedwhereas the minimum target penetration is at least 20% (>74,000 subscribers)which is the penetration rate in the Wabash REMC coverage area.

**Marketing and sales** expenses include REMC fees, advertising andpreparation of marketing materials. During 2011  marketing and sales expenses decreasedby $4,000 to $4,000 ( 2010 - $8,000). Marketing and sales expenses are expectedto significantly increase during the balance of 2011 as the Company increasesits marketing plan to significantly increase organic growth.   

**General and administration** expenses include professional fees (legal, audit,accounting and outside professional consulting), investor relations consultingfees, office expenses (including rent, property tax, utilities, telephone andinsurance), travel and automobile, software fees and fees associated with latepayments and bank charges. During 2011, general and administration expenses decreasedby $201,000 to $322,000 (2010 - $523,000), a decrease of 38%. General andadministration expenses are not expected to increase significantly during theremainder of 2011 in relation to revenue. As the Company grows, general andadministration expenses become significantly lower on a percentage of revenuebasis. 

**Salaries and benefits** for 2011 increased by $126,000 to $1,037,000 (2010 -$911,000) an increase of 14% while revenue increased by 97%. This increase ismainly due to a small net gain of essential support personnel for acquiredproperties over the last 12 months. Staffing levels have remained constant at around49 full-time employees as at January 31, 2011. The Company does not expect toincrease its number of employees significantly during 2011, except for certainkey people to be brought on as a result of acquisitions and increasing thenumber of marketing teams we have in current and new regions brought on throughacquisitions. The Company continues to upgrade its employees as better trainedpersonnel become available through acquisitions. 

 - 14 - 

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**Depreciation and amortization** for 2011 increased by $329,000 to $646,000(2010 - $317,000). This increase was attributed to an increase in amortizationof customers’ relationships of $106,000 to $246,000 (2010 - $140,000) and anincrease in depreciation of our network system, automobiles, software andoffice equipment of $223,000 to $400,000 (2010 - $177,000). 

***Other Income and Expense***

**Interest expense** for 2011 increased by $155,000 to $283,000 (2010 - $128,000).The increase was a result of increased short-term and long-term debt levels.The Company may selectively issue short-term and long-term notes as partconsideration of planned acquisitions. 

**Financing expenses** are costs associated with consultants hired to secureadditional debt and/or equity financing for the Company. Once equity financingis secured the related cost will reduce the proceeds of the equity instrumentissued. Financing expense for 2011 increased by $24,000 to $24,000 (2010 - $nil).The increase was a result of the Company relying more upon financialconsultants to assist the Company in raising capital.

***Net Loss***

The net loss for 2011 decreased by $500,000 to $878,000(2010 - $1,278,000). This decrease in loss was due to the 90% increase inrevenues while expenses increased at a lower rate and will continue to increaseat an incrementally lower rate, as a percentage of revenue, as we expandthrough acquisitions and organic growth. To highlight this trend our firstquarter earnings before interest, income taxes, depreciation and amortization(“EBITDA”) was positive $40,000 and our 2nd quarter was $30,000while our 4th quarter of 2010 was negative $17,000. 

**Liquidity and Capital Resources**

The Company completed its acquisition of Omnicity,Incorporated on February 17, 2009. Prior to this the Company was a dormantearly exploration stage company with no operations. Since then, the Company'sacquisition and transition teams have acquired and folded in ten WISP'sincreasing its subscriber base from 1,800 to 11,700 as at January 31, 2011. Seediscussion under “Revenues” above for our increase in cash flow from ourcustomers.   

|                         |   | January 31, 2011 |   |   | July 31, 2010 |   |
|------------------------------|--------|------------------|--------|--------|---------------|--------|
|                         |   | $                |   |   | $             |   |
|                         |   |             |   |   |          |   |
| Cash                         |   | 31,000           |   |   | 39,000        |   |
| Working Capital (Deficiency) |   | (4,187,000       | )      |   | (3,810,000    | )      |
| Total Assets                 |   | 5,758,000        |   |   | 5,851,000     |   |
| Total Liabilities            |   | 7,850,000        |   |   | 7,095,000     |   |
| Stockholders’ Deficit   |   | (2,093,000       | )      |   | (1,244,000    | )      |

**Cash to Operating Activities**

During the six months ended January 31, 2011,operating activities generated cash of $123,000 (2010 – used cash of $1,020,000).Our loss for 2011 was $878,000 (2010 - $1,278,000), which included: a non-cashoutlay for interest expense accreted of $54,000 (2010 - $nil); expenses settledwith equity or debt $115,000 (2010 - $nil); depreciation and amortization of $646,000(2010 - $317,000); for a net cash outflow of $63,000 (2010 – net cash outflowof $950,000) before changes in working capital items. Our accounts receivablehave increased by $41,000 (20109 – $7,000) due to our increase in customer basein Indiana during 2010 and Indiana and Ohio during 2011. Prepaid expenses increasedby $14,000 (2010 – decreased by $69,000). Our accounts payable and accruedliabilities have increased by $241,000 (2010 – decreased by $131,000) due toour operations being partially financed by our creditors. We plan to decreaseour reliance on creditor support as we secure additional financing.  

**Cash toInvesting Activities**

Our business is a capital intensive business. Sinceinception, the Company has expended funds to lease or otherwise acquiretransmission site rights in various locations and markets, to construct theexisting network tower infrastructures and house drops to the customers’premises and to finance initial operating losses. The Company intends to expandthe existing systems and launch additional wireless systems and will requireadditional funds. The Company estimates that a launch by it of a wirelessinternet provider system in a typical new tower location will involve theexpenditures for wireless internet system transmission equipment andincremental installation costs per subscriber for customer premise equipment.As a result of these costs, operating losses are likely to be incurred by asystem during the roll-out period.

 - 15 - 

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During 2011, investing activities used net cash of $506,000(2010 - $863,000). We acquired tower and customers’ premises equipment totalling$461,000 (2010 - $859,000). We increased our cost of customers’ relationshipsby $51,000 (2010 - $nil).  

**Cash fromFinancing Activities**

During the sixmonths ended January 31, 2011, financing activities provided cash of $376,000(2010 - $2,307,000). Proceeds of $nil (2010 - $1,020,000) was received from theissuance of common stock. During 2011, net proceeds of $500,000 (2010 - $102,000)were received from short-term loans, net of repayments and $62,000 (2010 - $1,543,000)from long-term debt. We repaid $186,000 (2010 - $358,000) of long-term debt andcapital lease obligations. 

**Item3.  Quantitative and Qualitative Disclosures About Market Risk.**

Not requiredbecause we are a smaller reporting company.

**Item 4.Controls and Procedures.**

Greg Jarman our principal executive officerand Don Prest, our principal financial officer, have concluded that ourdisclosure 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 coveredby this report, based on their evaluation of these controls and proceduresrequired by paragraph (b) of Rules 13a-15 and 15d-15, due to the deficienciesin our internal control over financial reporting as described below.  

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

| Themanagement of the Company assessed the effectiveness of the Company’s internalcontrol over financial reporting based on the criteria for effective internalcontrol over financial reporting established in Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the TreadwayCommission (“COSO”) and SEC guidance on conducting such assessments.  Based onthis assessment, management determined that, during the quarter ended January31, 2011, our internal controls and procedures were not effective to detect theinappropriate application of US GAAP rules, as more fully described below. This was due to deficiencies in the design or operation of the Company’sinternal control that adversely affected the Company’s internal controls andthat may be considered to be material weaknesses.  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Managementidentified the following material weaknesses in internal control over financialreporting: |
|-----------------------------------------------------------------------------------------------------|

|   | 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 thematerial weaknesses set forth in items 1 and 2 above did not have an affect onthe 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. 

| Managementwill continue to monitor and evaluate the effectiveness of the Company’sinternal controls and procedures and its internal controls over financialreporting on an ongoing basis and are committed to taking further action andimplementing additional enhancements or improvements, as necessary and as fundsallow. |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Changes in Internal Controlover Financial Reporting**

There were no changes to our internalcontrol over financial reporting that occurred during the quarter ended January31, 2011 that have materially affected, or are reasonably likely to materiallyaffect, our internal control over financial reporting. 

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**PART II -OTHER INFORMATION**

**Item 1. Legal Proceedings.**

Current as of March 10, 2011:

The Company has been served with aComplaint filed with the Rush Circuit Court in the State of Indiana datedAugust 25, 2010. The plaintiff has made claims against the Company for failureto make required instalment payments that were due pursuant to promissorynotes. The Company has recorded all debt relating to this claim as a currentliability. On September 14, 2010 the Company filed an Appearance and Notice ofExtension of Time to answer the Complaint. The Company filed and Answer andCounterclaim to this complaint.  This Answer denied certain allegationsdue to breach by the vendor of the Asset Purchase Agreement entered into. OnFebruary 23, 2011 the Company filed a revised Counterclaim with the Rush CountyCourt. This Counterclaim includes counterclaims of breach, fraud, andconversion for various damages, including punitive damages, suffered by theCompany. The Company expects to receive a favourable outcome.  

The Company has been served with a Complaint filed with the RushCircuit Court in the State of Indiana dated September 1, 2010. The plaintiffhas made claims against the Company for failure to make required instalmentpayments that were due pursuant to promissory notes. The Company has recordedall debt relating to this claim as a current liability. On September 14, 2010the Company filed an Appearance and Notice of Extension of Time to answer theComplaints. The Company has filed an answer to this complaint and expects toreceive a favourable outcome.

The Company has been servedwith a Complaint filed with the Holmes County Court in the State of Ohio datedSeptember 16, 2010.  The plaintiff has made claims against the Company forfailure to make required instalment payments that were due pursuant topromissory notes. The Company has recorded all debt relating to this claim as acurrent liability. On November 8, 2010 the Company filed an Answer andCounterclaim with the Holmes County Court. This Answer and Counterclaimincludes counterclaims for various damages, including punitive damages,suffered by the Company and also seeks an injunction. The Company expects toreceive a favourable outcome. 

**Item 1A. Risk Factors.**

Not required because we are asmaller reporting company.

**Item 2.   UnregisteredSales of Equity Securities.**

None.

**Item3.  Defaults Upon Senior Securities**

Not required becausewe are a smaller reporting company.

**Item 4. (Removed and Reserved).**

**Item 5.  OtherInformation.**

None.

**Item 6.  Exhibits**

The following exhibits areincluded with this Quarterly Report on Form 10-Q: 

| **Exhibit  Number** |   | **Description of Exhibit**                                                                           |
|---------------------|--------|------------------------------------------------------------------------------------------------------|
| 31.1                |   | Rule 13a-14(a)/15(d)-14(a)  Certification of Principal Executive Officer                             |
| 31.2                |   | Rule 13a-14(a)/15(d)-14(a) Certification  of Principal Financial Officer                             |
| 32.1                |   | 18 U.S.C. Section 1350 Certification of  Principal Executive Officer and Principal Financial Officer |

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**SIGNATURES**

In accordance with the requirements of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned thereunto duly authorized.

**OMNICITY  CORP.**

| By:    | */s/ Greg  Jarman*    Greg Jarman  Chief Executive Officer and a Director   (Principal Executive Officer)   Date:  May 10, 2011                                    |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                         |
|   | */s/ Don  Prest*    Don Prest  Chief Financial Officer and a Director   (Principal Financial Officer and Principal Accounting Officer)   Date:  May 10, 2011  |

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