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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended October 31, 2010

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

For the transition period from _____________to _____________

Commission file number 000-27397

INOVA TECHNOLOGY INC.(Exact name of small business issuer in its charter)

|Nevada                                           | 98-0204280                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

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

|89146         | (800) 757-9808             
|------------- | ---------------------------
|(Postal Code) | (Issuer's telephone number)

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

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

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filler, accelerated
filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer [ 
 ]    Accelerated Filer [ 
 ]    Non-accelerated Filer [  
]    Smaller reporting Company [X]

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

State the number of shares of outstanding of each of the
issuers classes of common equity, as of December 20, 2010: 59,115,260

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Inova Technology Inc.

Form 10-Q

Table of Contents

|           | PART I                                                                                   | **Page**
|---------- | ---------------------------------------------------------------------------------------- | --------
|Item 1.    | Financial Statements                                                                     | 2       
|Item 2.    | Management
      Discussion and Analysis of Financial Condition and Result of Operations | 14      
|Item 4.    | Submission of Matters to a
      Vote of Security Holders                                | 15      
|           |                                                                                          |         
|           | PART II                                                                                  |         
|Item 1.    | Legal
      Proceedings                                                                  | 16      
|Item 2     | Unregistered Sales of Equity
      Securities and Use of Proceeds                        | 16      
|Item 3.    | Defaults
      Upon Senior Securities                                                    | 16      
|Item 4.    | Other Information                                                                        | 16      
|Item 5.    | Exhibits                                                                                 | 16      
|           |                                                                                          |         
|Signatures |                                                                                          | 17      

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Item 1. Financial Statements

INOVA TECHNOLOGY, INC. CONSOLIDATED BALANCE
SHEETS(Unaudited)

|                                                                                                                             |   | October 31, 2010 |   |   | April 30, 2010 |  
|---------------------------------------------------------------------------------------------------------------------------- | - | ---------------- | - | - | -------------- | -
|                                                                                                                             |   |                  |   |   |                |  
|ASSETS                                                                                                                       |  
|                                                                                                                             |   |                  |   |   |                |  
|Current assets                                                                                                               |   |                  |   |   |                |  
|Cash                                                                                                                         | $ | 599,200          |   | $ | 336,746        |  
|Accounts
      receivable                                                                                                    |   | 247,036          |   |   | 109,500        |  
|Contract receivables, net
      of allowance of $21,822 and $21,832                                                          |   | 586,433          |   |   | 2,011,853      |  
|Other
      receivable                                                                                                       |   | 1,216,692        |   |   | 952,562        |  
|Inventory                                                                                                                    |   | 100,015          |   |   | 93,335         |  
|Cost in
      excess of billing                                                                                              |   | 127,009          |   |   | 290,329        |  
|Prepaid and other current
      assets                                                                                       |   | 17,642           |   |   | 46,423         |  
|Total current assets                                                                                                         |   | 2,894,027        |   |   | 3,840,748      |  
|Fixed assets, net                                                                                                            |   | 216,101          |   |   | 185,017        |  
|Revenue
      earning equipment, net                                                                                         |   | 1,029,530        |   |   | 1,250,929      |  
|Intangible assets, net                                                                                                       |   | 209,634          |   |   | 463,976        |  
|Goodwill                                                                                                                     |   | 6,669,454        |   |   | 6,669,454      |  
|Other Assets                                                                                                                 |   | 14,196           |   |   | 50,432         |  
|Total assets                                                                                                                 | $ | 11,032,942       |   | $ | 12,460,556     |  
|                                                                                                                             |   |                  |   |   |                |  
|LIABILITIES AND STOCKHOLDERS'
      DEFICIT                                                                                  |  
|                                                                                                                             |   |                  |   |   |                |  
|Current liabilities                                                                                                          |   |                  |   |   |                |  
|Accounts payable                                                                                                             | $ | 801,840          |   | $ | 2,152,657      |  
|Accrued
      liabilities                                                                                                    |   | 1,742,090        |   |   | 1,465,859      |  
|Deferred income                                                                                                              |   | 411,157          |   |   | 424,872        |  
|Derivative liabilities                                                                                                       |   | 1,757,083        |   |   | 5,607,940      |  
|Notes payable - related
      parties                                                                                        |   | 1,650,000        |   |   | 1,650,000      |  
|Notes payable, net of unamortized discount
      of $112,027 and $134,816                                                    |   | 9,566,472        |   |   | 7,917,610      |  
|Total current liabilities                                                                                                    |   | 15,928,642       |   |   | 19,218,938     |  
|Notes
      payable - net of current maturities                                                                              |   | 137,898          |   |   | 137,898        |  
|Notes payable - related
      parties, net of current maturities                                                             |   | 142,532          |   |   | 142,532        |  
|Total liabilities                                                                                                            |   | 16,209,072       |   |   | 19,499,368     |  
|                                                                                                                             |   |                  |   |   |                |  
|Stockholders' deficit                                                                                                        |   |                  |   |   |                |  
|Common stock, $0.001 par value; 150,000,000 shares
      authorized; 59,115,260 and 56,338,300 shares issued and outstanding |   | 59,115           |   |   | 56,338         |  
|Additional paid-in capital                                                                                                   |   | 4,830,925        |   |   | 4,768,432      |  
|Non-controlling interest                                                                                                     |   | 1,307,506        |   |   | 1,307,506      |  
|Accumulated deficit                                                                                                          |   | (11,373,676      | ) |   | (13,171,088    | )
|Total stockholders' deficit                                                                                                  |   | (5,176,130       | ) |   | (7,038,812     | )
|Total liabilities and stockholders'
      deficit                                                                            | $ | 11,032,942       |   | $ | 12,460,556     |  

See accompanying notes to consolidated financial statements

2

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INOVA TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended October 31, 2010 and 2009 (Unaudited)

|                                            |   |            |   |   | Restated   |  
|------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                            |   | 2010       |   |   | 2009       |  
|                                            |   |            |   |   |            |  
|Revenues                                    | $ | 4,805,677  |   | $ | 4,129,896  |  
|Cost of revenues                            |   | (2,700,907 | ) |   | (2,206,278 | )
|Gross profit                                |   | 2,104,770  |   |   | 1,923,618  |  
|                                            |   |            |   |   |            |  
|Selling, general and administrative         |   | (2,102,165 | ) |   | (1,698,376 | )
|Depreciation & amortization expense         |   | (21,938    | ) |   | (163,018   | )
|Operating
      income (loss)               |   | (19,333    | ) |   | 62,224     |  
|                                            |   |            |   |   |            |  
|Other income (expense):                     |   |            |   |   |            |  
|Other income                                |   | -          |   |   | (3,679     | )
|Gain
      (loss) on derivative liabilities |   | 51,562     |   |   | (1,019,415 | )
|Interest expense                            |   | (412,197   | ) |   | (870,355   | )
|Net income (loss)                           | $ | (379,968   | ) | $ | (1,831,225 | )
|                                            |   |            |   |   |            |  
|Net income (loss) per share                 |   |            |   |   |            |  
|Basic                                       | $ | (0.01      | ) | $ | (0.04      | )
|Weighted average common shares              |   |            |   |   |            |  
|Basic                                       |   | 57,820,711 |   |   | 50,134,580 |  

See accompanying notes to consolidated financial statements

3

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INOVA TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF OPERATIONS
For the six months ended October 31, 2010 and 2009 (Unaudited)

|                                            |   |            |   |   | Restated   |  
|------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                            |   | 2010       |   |   | 2009       |  
|                                            |   |            |   |   |            |  
|Revenues                                    | $ | 12,673,905 |   | $ | 9,064,570  |  
|Cost of revenues                            |   | (8,428,756 | ) |   | (5,517,914 | )
|Gross profit                                |   | 4,245,149  |   |   | 3,546,656  |  
|                                            |   |            |   |   |            |  
|Selling, general and administrative         |   | (3,468,697 | ) |   | (3,103,455 | )
|Depreciation & amortization expense         |   | (256,096   | ) |   | (356,062   | )
|Operating income                            |   | 520,356    |   |   | 87,139     |  
|                                            |   |            |   |   |            |  
|Other income (expense):                     |   |            |   |   |            |  
|Other income                                |   | -          |   |   | (2,989     | )
|Gain (loss) on
      derivative liabilities |   | 2,386,956  |   |   | (2,666,978 | )
|Interest expense                            |   | (1,109,900 | ) |   | (1,609,874 | )
|Net income (loss)                           | $ | 1,797,412  |   | $ | (4,192,702 | )
|                                            |   |            |   |   |            |  
|Net income (loss) per share                 |   |            |   |   |            |  
|Basic                                       | $ | 0.03       |   | $ | (0.08      | )
|Diluted                                     | $ | 0.02       |   | $ | (0.08      | )
|Weighted average common shares              |   |            |   |   |            |  
|Basic                                       |   | 57,075,455 |   |   | 49,671,777 |  
|Diluted                                     |   | 77,240,940 |   |   | 49,671,777 |  

See accompanying notes to consolidated financial statements

4

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INOVA TECHNOLOGY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended October 31, 2010 and 2009 (Unaudited)

|                                                                                                         |   |            |   |   | Restated   |  
|-------------------------------------------------------------------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                                                                         |   | 2010       |   |   | 2009       |  
|CASH FLOWS OPERATING ACTIVITIES                                                                          |   |            |   |   |            |  
|Net income (loss)                                                                                        | $ | 1,797,412  |   | $ | (4,192,702 | )
|Adjustments to reconcile net income (loss)
      to net cash provided by (used in) operating activities: |   |            |   |   |            |  
|Depreciation expense                                                                                     |   | 220,525    |   |   | 376,863    |  
|Amortization expense - loan discounts, deferred financing costs and
      intangibles)                   |   | 92,643     |   |   | 989,285    |  
|Amortization expense - intangible                                                                        |   | 254,342    |   |   | 359,813    |  
|Paid-in kind interest                                                                                    |   | 129,608    |   |   | -          |  
|Loss on
      sale of assets                                                                             |   | -          |   |   | 7,459      |  
|Stock issued for services                                                                                |   | 60,770     |   |   | 115,649    |  
|Warrants
      issued for services                                                                       |   | 56,500     |   |   | -          |  
|Derivative (gain) loss                                                                                   |   | (2,386,957 | ) |   | 2,666,978  |  
|Changes in operating assets and
      liabilities:                                                       |   |            |   |   |            |  
|Accounts receivable                                                                                      |   | 1,287,883  |   |   | 220,999    |  
|Other receivable                                                                                         |   | (264,130   | ) |   |            |  
|Inventory                                                                                                |   | (6,680     | ) |   | (32,673    | )
|Cost in excess of billing                                                                                |   | 163,320    |   |   | (110,999   | )
|Prepaid expenses and other current
      assets                                                          |   | 28,782     |   |   | 1,455      |  
|Other assets                                                                                             |   | 36,236     |   |   |            |  
|Accounts payable                                                                                         |   | (1,350,817 | ) |   | (36,482    | )
|Accrued expenses                                                                                         |   | 276,231    |   |   | (91,874    | )
|Deferred income                                                                                          |   | (13,715    | ) |   | (24,426    | )
|Net cash provided by (used in) operating activities
      of operations                                  |   | 381,953    |   |   | 249,345    |  
|                                                                                                         |   |            |   |   |            |  
|CASH FLOW INVESTING ACTIVITIES                                                                           |   |            |   |   |            |  
|Purchase of fixed assets                                                                                 |   | (30,210    | ) |   | -          |  
|Net cash used in investing activities                                                                    |   | (30,210    | ) |   | -          |  
|                                                                                                         |   |            |   |   |            |  
|CASH FLOW FINANCING ACTIVITIES                                                                           |   |            |   |   |            |  
|Proceeds from notes payable                                                                              |   | -          |   |   | 1,259,216  |  
|Repayments made on notes
    payable                                                                     |   | (89,289    | ) |   | (2,237,632 | )
|Proceeds from notes payable
    - related parties                                                        |   | -          |   |   | 10,736     |  
|Repayments made on notes
    payable - related parties                                                   |   | -          |   |   | (101,721   | )
|Net cash used in financing
      activities                                                              |   | (89,289    | ) |   | (1,069,401 | )
|                                                                                                         |   |            |   |   |            |  
|NET CHANGE IN CASH                                                                                       |   | 262,454    |   |   | (820,056   | )
|CASH AT BEGINNING OF PERIOD                                                                              |   | 336,746    |   |   | 1,087,894  |  
|CASH AT END OF PERIOD                                                                                    | $ | 599,200    |   | $ | 267,838    |  
|                                                                                                         |   |            |   |   |            |  
|SUPPLEMENTAL INFORMATION:                                                                                |   |            |   |   |            |  
|Interest paid                                                                                            | $ | 303,498    |   | $ | 528,475    |  
|Income taxes
      paid                                                                                  | $ | 30,000     |   | $ | -          |  
|                                                                                                         |   |            |   |   |            |  
|NON-CASH INVESTING AND FINANCING
      ACTIVITIES:                                                       |   |            |   |   |            |  
|Reclassification of derivative
      liability to notes payable                                          | $ | 1,515,900  |   | $ | -          |  
|Reclassification
      of warrants issued to derivative liability                                        |   | 52,000     |   |   | -          |  
|Cumulative effect of
      change in accounting principle-reclassification of derivative
      liability |   | -          |   |   | 420,162    |  
|Reclassification
      of derivative liabilities to APIC                                                 |   | -          |   |   | 680,779    |  
|Discount on notes payable from
      derivative liabilities                                              |   | -          |   |   | 325,358    |  

See accompanying notes to consolidated financial statements

5

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INOVA TECHNOLOGY, INC. NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS (Unaudited)

NOTE 1 BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial
statements of Inova have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission and should be read in conjunction with the
audited financial statements and notes thereto contained in Inovas latest
Annual Report filed with the SEC on Form 10-K. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the consolidated financial statements that would
substantially duplicate the disclosure contained in the audited financial
statements for the most recent fiscal year as reported in Form 10-K have been
omitted.

Fair Value Measurements

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

As of October 31, 2010, Inova measured its derivative
liabilities using Level 3 inputs as defined by ASC 820 with a total fair value
of $1,757,083.

Reclassifications

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

Restatements

The consolidated statements of operations and cash flows for
the three and six months ended October 31, 2009 have been restated due to errors
discovered in April 2010. See Note 7 for details.

NOTE 2  GOING CONCERN

As shown in the accompanying consolidated financial statements,
we have an accumulated deficit and negative working capital and are in default
on the majority of our notes payable as of October 31, 2010. These conditions
raise substantial doubt as to our ability to continue as a going concern. The
consolidated financial statements contained herein do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should we be unable to continue in existence. Our ability to continue as a going
concern is dependent upon our ability to generate sufficient cash flows to meet
our obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain profitable operations. However, there is no
assurance that profitable operations or sufficient cash flows will occur in the
future. Management is trying to raise additional capital through sales of stock
and refinancing debt.

6

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NOTE 3  RELATED PARTY TRANSACTIONS

Loans payable from related parties consists of advances from
existing shareholders. These notes are unsecured, bear interest at 7%, and are
due in May 21, 2017. The amount due to Southbase, a Company owned by Inovas
controlling shareholder, is $142,532.

Seller notes with a balance of $1,500,000 relate to the Desert
Communications, Inc. purchase. They have interest rates of 18%, are secured and
are due in December of 2010.

In addition, the Desert sellers are owed $150,000 under a
working capital facility established during fiscal 2010 with an interest rate of
18%, due December, 2010.

NOTE 4 - DERIVATIVE LIABILITIES & ADDITIONAL CONVERTIBLE
NOTE

ASC 815-40 Put Warrant Liabilities

Under ASC 815-40 Put Warrants, warrants for put shares should
be classified as liabilities and measured at fair value at the end of each
reporting period with the change in fair value recorded to earnings. As a
result, the fair value of the warrants granted to Inovas debt holders in prior
years were recorded as derivative liabilities at inception. These liabilities
are subsequently measured at fair value at the end of each reporting period with
the changes recorded to earnings. As of October 31, 2010, Inova had $1,399,613
of derivative liabilities as a result of these provisions.

Boone Convertible Put Exercise Notes

Inova determined that the instruments embedded in a convertible
put note exercised by Boone during fiscal 2010 should be classified as
liabilities and recorded at fair value due to their being no explicit limit to
the number of shares to be delivered upon settlement of the above conversion
options. During the quarter ended July 31, 2010, Boone exercised warrants to
purchase 23,307,749 shares of Inova common stock and 125.80 shares of Desert
common stock. Contemporaneously, Boone exercised the related put options,
requiring Inova to repurchase the warrants shares from Boone for $1,515,900.
Under the put option agreement, if Inova fails to repurchase the warrant shares
from Boone, the put option liability will become a convertible note. Inova did
not repurchase the warrant shares and accordingly, the put option became a
convertible note during the quarter ended July 31, 2010.

The note is convertible into shares of Desert common stock at
an amount equal to (A) 350% of Deserts EBITDA for the 12 full-months preceding
such date, minus (i) the aggregate amount of Deserts indebtedness to the
initial Holder at such date and (ii) the aggregate amount of the Companys
indebtedness to the Desert Sellers at such date, divided by (B) the total number
of issued and outstanding shares of common stock at such date. The note is also
convertible into shares of Inova common stock at the lower of (i) $30 per
share of Inova common stock and (ii) the lowest per share price of Inova common
stock conversion price in effect at April 22, 2010 in any warrant, option,
convertible note or other instrument that has been issued by Inova or that is
otherwise convertible or exchangeable into Inova, after taking into effect any
applicable reset or other conversion or exchange price adjustments. The
conversion options are subject to reset provisions that can reduce the
conversion prices based on subsequent equity or rights offerings by Desert or
Inova below the prices above. As a result of the exercise, the put option
liability was transferred from derivative liabilities to notes payable during
the quarter.

Because the number of shares to be issued upon settlement
cannot be determined under these instruments, Inova cannot determine whether it
will have sufficient authorized shares at a given date to settle any other of
its share-settleable instruments. As a result of this, under ASC 815-15
Accounting for Derivative Financial Instruments Indexed to and Potentially
Settled in, a Company's Own Stock (formerly EITF 00-19), the conversion options
noted above and all other share-settleable instruments are classified as
liabilities. Inova has two conversion options embedded in notes payable
agreements and 1,528,140 warrants to purchase Inova common stock that are
classified as liabilities as a result of the provisions of the convertible put
notes. As of October 31, 2010, Inova had $348,983 of derivative liabilities as a
result of these provisions.

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

7

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

Derivative LiabilitiesBalance at April 30, 2010
    $
    5,607,940Reclassification of derivative liabilities to notes payable
    
    (1,515,900
    )ASC 815-15 (EITF 00-19) Additions
    
    52,000Change in fair value
    
    (2,386,957
    )Balance at October 31, 2010
    $
    1,757,083


Valuation Models

Inova values its warrant derivatives and simple conversion
option derivatives using the Black-Scholes option-pricing model. Assumptions
used include (1) 3% risk-free interest rate, (2) warrant life is the remaining
contractual life of the warrants, (3) expected volatility 261% to 390%, (4) zero
expected dividends (5) exercise prices as set forth in the agreements, (6)
common stock price of the underlying share on the valuation date, and (7) number
of shares to be issued if the instrument is converted.

Inova valued the conversion options and reset provisions under
its convertible put exercise note with Boone using a Monte Carlo simulation
model utilizing present value and various probabilities of events. Assumptions
used include (1) 0.34% risk free rate, (2) conversion prices as set forth in the
agreement, (3) expected Inova stock price volatility of 261%, (4) expected
Desert stock price volatility of 25%, and (6) common stock price of the
underlying share on the valuation date. Inova valued the note as a combination
of the underlying debt payment and series of two options. Since the options are
mutually exclusive, the Monte Carlo simulation was used to estimate when either
of the options is exercisable. When both are exercisable Inova assumed that the
more valuable of the two would be exercised.

NOTE 5 SEGMENT INFORMATION

Inova has three reportable segments, one providing IT solutions
and services (Edgetech Services, Inc.), one providing network solutions (Desert
Communications, Inc.) and one which manufactures standards compliant and durable
RFID (Radio Frequency Identification) equipment (Trakkers, LLC & RightTag,
Inc). Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly in
deciding how to allocate resources and in assessing performance.

The following table presents three month segment information:

**Trakkers,**
    
    
    Edgetech
    
    
    Desert**LLC &**
    
    
    Services,
    
    
    Communications,RightTag, Inc.
    
    
    Inc.
    
    
    Inc.
    
    
    Corporate
    
    
    TotalRevenues
    $
    1,220,435
    
    
    -
    
    
    11,453,470
    
    
    -
    
    
    12,673,905Net income (loss)
    
    (278,261
    )
    
    (31,324
    )
    
    700,386
    
    
    1,406,611
    
    
    1,797,412Total assets
    
    1,533,854
    
    
    38
    
    
    2,572,604
    
    
    6,926,474
    
    
    11,032,942


8

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NOTE 6  WARRANTS

Inova issued
1,000,000 warrants to a public relations firm with a fair value of $56,500 that
were fully vested and non-forfeitable on the date of grant. The fair value of
these warrants was reclassified to derivative liabilities at $52,000 due to
provisions in certain convertible note agreements (described in Note 3) that
cause all share-settable instruments issued by Inova to be classified as
liabilities.

The following tables summarize common stock warrants
outstanding by entity:

Weightedaverage**Weighted**
    
    
    
    
    
    remainingaverage
    
    
    Aggregate
    
    
    contractual lifeWarrants to
      purchase Inova common stock
    
    Warrants
    
    
    exercise price
    
    
    intrinsic value
    
    
    (years)Outstanding at April 30, 2010
    
    48,161,435
    
    $
    0.05
    
    $
    2,720,778
    
    
    4.11Granted
    
    1,000,000
    
    
    0.18Exercised
    
    (30,751,989
    )
    
    0.00Forfeited
    
    -
    
    
    -Expired
    
    -
    
    
    -Outstanding at October 31, 2010
    
    18,409,446
    
    $
    0.02
    
    $
    301,421
    
    
    2.87


Weightedaverage**Weighted**
    
    
    
    
    
    remainingaverage
    
    
    Aggregate
    
    
    contractual lifeWarrants to
      purchase Desert common stock
    
    Warrants
    
    
    exercise price
    
    
    intrinsic value
    
    
    (years)Outstanding at April 30, 2010
    
    130.90
    
    $
    -
    
    $
    1,072,842
    
    
    5.10Granted
    
    -
    
    
    -Exercised
    
    (130.90
    )
    
    0.00Forfeited
    
    -
    
    
    -Expired
    
    -
    
    
    -Outstanding at October 31, 2010
    
    -
    
    $
    0.00
    
    $
    -
    
    
    0.00


Weightedaverage**Weighted**
    
    
    
    
    
    remainingaverage
    
    
    Aggregate
    
    
    contractual lifeWarrants to
      purchase Trakkers common stock
    
    Warrants
    
    
    exercise price
    
    
    intrinsic value
    
    
    (years)Outstanding at April 30, 2010
    
    32.94%
    
    $
    -
    
    $
    1,082,932
    
    
    3.69Granted
    
    0.00%
    
    
    0.00Exercised
    
    -19%
    
    
    0.00Forfeited
    
    -
    
    
    -Expired
    
    -
    
    
    -Outstanding at October 31, 2010
    
    13.50%
    
    $
    -
    
    $
    443,848
    
    
    3.67


All warrants above were exercisable as of October 31, 2010.

9

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NOTE 7  RESTATEMENT

On April 30, 2010, Inovas Board of Directors identified a
classification error in the Companys financial statements as of and for the
three months ended October 31, 2009. The Company determined that the accounting
for put warrants granted with various notes payable was incorrect. The original
accounting for these transactions classified the relative fair values of the put
warrants as equity. After consideration of ASC 480-10-25-8 through 25-13 and
815-40-55-16 through 55-18 Put Warrants, the Company determined that these
warrants should have originally been recorded as liabilities at their fair value
with subsequent changes in fair value recorded through earnings. In addition,
the Company identified certain unrecorded expenses and liabilities during fiscal
2010, and has adjusted for these unrecorded transactions as well.

The following table summarizes the impact of the restatements
for the three and six months ended October 31, 2009:

11

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CONSOLIDATED STATEMENT OF OPERATIONSThree Months
Ended October 31, 2009(Unaudited)

|                                      |   | Previously |   |   |             |   |    |   |   |            |  
|------------------------------------- | - | ---------- | - | - | ----------- | - | -- | - | - | ---------- | -
|                                      |   | Reported   |   |   | Adjustments |   |    |   |   | Restated   |  
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Revenues                              | $ | 4,129,896  |   | $ | -           |   |    |   | $ | 4,129,896  |  
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Cost of revenues                      |   | (2,014,542 | ) |   | (191,736    | ) | (1 | ) |   | (2,206,278 | )
|Selling, general and administrative   |   | (1,695,060 | ) |   | 76,351      |   | (4 | ) |   | (1,702,055 | )
|Depreciation and amortization expense |   | (354,754   | ) |   | 191,736     |   | (1 | ) |   | (163,018   | )
|Operating loss                        |   | 65,540     |   |   | 76,351      |   |    |   |   | 58,545     |  
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Other income (expense):               |   |            |   |   |             |   |    |   |   |            |  
|Loss on derivatives                   |   | -          |   |   | (1,019,415  | ) | (2 | ) |   | (1,019,415 | )
|Other income                          |   | -          |   |   | -           |   |    |   |   |            |  
|Interest expense                      |   | (870,355   | ) |   | -           |   |    |   |   | (870,355   | )
|Net loss                              | $ | (804,815   | ) | $ | (943,064    | ) |    |   | $ | (1,831,225 | )
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Basic and diluted loss per share:     |   |            |   |   |             |   |    |   |   |            |  
|Loss per share                        | $ | (0.02      | ) | $ | (0.02       | ) | (3 | ) | $ | (0.04      | )
|Weighted average common shares        |   | 49,580,520 |   |   | 554,060     |   | (4 | ) |   | 50,134,580 |  

|(1) | To reclassify depreciation on revenue producing equipment
      to cost of revenues                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | To record change in fair value of derivative liabilities
      resulting from reclassification of put w arrants                                                               
|(3) | Impact of (1), (2) & (4)                                                                                                                                                      
|(4) | To record adjustment for shares recorded as issued during
      the year ended April 30, 2009 that w ere previously recorded during the
      three months ended July 31, 2009

CONSOLIDATED STATEMENT OF OPERATIONSSix Months
Ended October 31, 2009(Unaudited)

|                                      |   | Previously |   |   |             |   |    |   |   |            |  
|------------------------------------- | - | ---------- | - | - | ----------- | - | -- | - | - | ---------- | -
|                                      |   | Reported   |   |   | Adjustments |   |    |   |   | Restated   |  
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Revenues                              | $ | 9,064,570  |   | $ | -           |   |    |   | $ | 9,064,570  |  
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Cost of revenues                      |   | (5,137,300 | ) |   | (380,614    | ) | (1 | ) |   | (5,517,914 | )
|Selling, general and administrative   |   | (3,175,800 | ) |   | 69,356      |   | (4 | ) |   | (3,106,444 | )
|Depreciation and amortization expense |   | (736,676   | ) |   | 380,614     |   | (1 | ) |   | (356,062   | )
|Operating loss                        |   | 14,794     |   |   | 69,356      |   |    |   |   | 84,150     |  
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Other income (expense):               |   |            |   |   |             |   |    |   |   |            |  
|Loss on derivatives                   |   | (2,344,240 | ) |   | (322,738    | ) | (2 | ) |   | (2,666,978 | )
|Other income                          |   | -          |   |   | -           |   |    |   |   | -          |  
|Interest expense                      |   | (1,609,874 | ) |   | -           |   |    |   |   | (1,609,874 | )
|Net loss                              | $ | (3,939,320 | ) | $ | (253,382    | ) |    |   | $ | (4,192,702 | )
|                                      |   |            |   |   |             |   |    |   |   |            |  
|Basic and diluted loss per share:     |   |            |   |   |             |   |    |   |   |            |  
|Loss per share                        | $ | (0.08      | ) | $ | (0.00       | ) | (3 | ) | $ | (0.08      | )
|Weighted average common shares        |   | 49,157,480 |   |   | 514,297     |   | (4 | ) |   | 49,671,777 |  

|(1) | To reclassify depreciation on revenue producing equipment
      to cost of revenues                                                                                           
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | To record change in fair value of derivative liabilities
      resulting from reclassification of put w arrants                                                               
|(3) | Impact of (1), (2) & (4)                                                                                                                                                      
|(4) | To record adjustment for shares recorded as issued during
      the year ended April 30, 2009 that w ere previously recorded during the
      three months ended July 31, 2009

12

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NOTE 8  COMMON STOCK

During the quarter ended October 31, 2010 1,600,000 shares of
common stock with a fair value of $48,000 were issued to Advisors, LLC for
services rendered. Advisors, LLC is controlled by a director of the Company. The
fair value of the stock was recorded to expense during the quarter ended October
31, 2010.

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

During the quarter ended October 31, 2010 50,000 shares of
common stock with a fair value of $1,500 were issued to a public relations firm
for services rendered. The fair value of the stock was recorded to expense
during the quarter ended October 31, 2010.

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

NOTE 9  DEBT

The following table summarizes outstanding debt as of April
30, 2010 and October 31, 2010:

|                                    |   | April
      30, 2010 |  |   | October
      31, 2010 |  
|----------------------------------- | - | -------------------- |  | - | ---------------------- | -
|                                    |   | Principal            |  |   | Unamortized            |  
|Lender                              |   | Amount               |  |   | Discount               |  
|Boone Lenders, LLC                  | $ | 4,378,671            |  | $ | (10,450                | )
|Ascendiant Opportunity Fund, LLC    |   | 1,153,930            |  |   | -                      |  
|Agile Opportunity Fund, LLC         |   | 409,500              |  |   | (108,122               | )
|IBM -  Lease Facility               |   | 332,921              |  |   | (16,244                | )
|Desert Communications, Inc. Sellers |   | 1,650,000            |  |   | -                      |  
|Trakkers, LLC Sellers               |   | 1,769,686            |  |   | -                      |  
|Southbase, LLC - Related Party      |   | 142,532              |  |   | -                      |  
|Other debt                          |   | 145,616              |  |   |                        |  
|Total                               | $ | 9,982,856            |  | $ | (134,816               | )

Of the total outstanding debt, $10,112,795 was in default as of
October 31, 2010. Principal owed to Boone Lenders, LLC (Boone) increased due
to the convertible put note described in Note 4 and paid-in kind interest
described below.

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

For the six months ended October 31, 2010, a total of $129,608
of interest was recognized and recorded to the principal balance of all loans
from Boone Lenders, LLC except the convertible put notes described in Note 4.

NOTE 10  SUBSEQUENT EVENTS

As mentioned in Note 4, since Inova did not repurchase certain
warrant shares exercised by Boone within 40 days, on November 6, 2010 a two year
$792,000 note was established by Boone initially at a 2% interest rate, then
increasing in steps to 12% as other debt is paid off. For more details, see Note
4.

13

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Item 2. Management Discussion and Analysis of Financial
Condition and Result of Operations.

The information contained in this Managements Discussion and
Analysis of Financial Condition and Results of Operation contains forward
looking statements.Actual results may materially differ from those
projected in the forward looking statements as a result of certain risks and
uncertainties set forth in this report. Although our management believes that
the assumptions made and expectations reflected in the forward looking
statements are reasonable, there is no assurance that the underlying assumptions
will, in fact, prove to be correct or that actual future results will not be
materially different from the expectations expressed in this Annual Report. The
following discussion should be read in conjunction with the unaudited
Consolidated Financial Statements and related Notes included in Item 1.

RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED
OCTOBER 31, 2010

Net revenues increased from $4,129,896 in the three-month
period ending October 31, 2009 to $4,805,677 for the three-month period ending
October 31, 2010. The increase in revenue is due to changes in the timing of
various projects, in addition to the reversal of the worldwide economic
slowdown.

Cost of sales increased from $1,825,664 in the three-month
period ending October 31, 2009 to $2,700,907 for the three-month period ending
October 31, 2010. The increase came from the revenue increase described above.

Operating expenses decreased from $2,242,008 for the three
months ending October 31, 2009 to $2,124,103 for the same period in 2010. This
was mainly due to the decrease in bonus and management fee expense in Desert.

Net loss decreased from $1,831,225 for the three months ending
October 31, 2009 to $379,968 for the same period in 2010. This is due to a
change from a derivative loss of $1,019,415 during the three months ended
October 31, 2009 to a derivative gain of $51,562 for the three months ended
October 31, 2010.

RESULTS OF OPERATIONS FOR THE SIX MONTH PERIOD ENDED OCTOBER
31, 2010

Net revenues increased from $9,064,570 in the six-month period
ending October 31, 2009 to $12,673,905 for the six-month period ending October
31, 2010. The increase in revenue is due to changes in the timing of various
projects, increased projects won and the reversal of the worldwide economic
slowdown.

Cost of sales increased from $5,137,300 in the six-month period
ending October 31, 2009 to $8,428,756 for the six-month period ending October
31, 2010. The increase came from the revenue increase described above.

Operating expenses decreased from $3,840,131 for the six months
ending October 31, 2009 to $3,724,793 for the same period in 2010. This was
mainly due to the decrease in bonus and management fee expense in Desert.

Net loss decreased from $4,192,702 for the six months ending
October 31, 2009 to net income of $1,797,412 for the same period in 2010. This
is due to a change from a derivative loss of $2,666,978 during the six months
ended October 31, 2009 to a derivative gain of $2,386,956 for the six months
ended October 31, 2010.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations for the six month period ended
October 31, 2010 was $381,953 as compared to cash provided by operations of
$249,345 for the six months ended October 31, 2009. This change is primarily due
to higher revenues. Cash used in investing activities for the six month period
ended October 31, 2010 was $30,210, as compared to $0 for the six months ended
October 31, 2009. Cash used in financing activities for the period ended October
31, 2010 was $89,289, as compared to $1,069,401 provided in financing activities
for the six months ended October 31, 2009.

Our operating activities for the six months ended October 31,
2010, have generated adequate cash to meet our operating needs. As of October
31, 2010, we had cash and cash equivalents totaling $599,200, and total
receivables of $2,050,161.

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

14

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EBITDA

EBITDA for the 6 month period is $1,025,223. EBITDA is Earnings
before interest, tax, depreciation and amortization:

October 31,EBITDA
    
    2010Net income
    $
    1,797,412Interest
    
    1,109,900Derivative gain
    
    (2,386,956
    )Tax
    
    30,000Depreciation/Amortization
    
    474,867EBITDA
    
    1,025,223


Stock Dividend

On October 20, 2010 the Board of Directors to approved a
resolution to complete the issue of a stock dividend to all current
shareholders. The ratio will be 20 new shares for every one share held by all
shareholders as at the record date. The record date is Friday, November 1, 2010.
The authorized shares of the company will be adjusted by the same ratio.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Management has evaluated, with the participation of our Chief
Executive Officer and Chief Financial Officer, the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(f)
and 15d-15(f)) as of the end of the period covered by this report and concluded
that our disclosure controls and procedures were not effective to ensure that
all material information required to be disclosed in this Quarterly Report on
Form 10-Q has been made known to them in a timely fashion. We are in the process
of improving our internal control over financial reporting in an effort to
remediate these deficiencies through improved supervision and training of our
accounting staff. These deficiencies have been disclosed to our Board of
Directors. We believe that this effort is sufficient to fully remedy these
deficiencies and we are continuing our efforts to improve and strengthen our
control processes and procedures. Our Chief Executive Office, Chief Financial
Officer and directors will continue to work with our auditors and other outside
advisors to ensure that our controls and procedures are adequate and effective.

(b) Changes in internal controls

There have been no significant changes in our internal controls
over financial reporting that occurred during the fiscal quarter covered by this
report that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.

15

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PART II

Item 1. Legal Proceedings.

None

Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds.

None

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Other Information

None

Item 5. Exhibits

(A) Exhibits

|Exhibit |                                                                                                                                                                   
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                       
|31.1    | Certification
        of the Chief Executive Officer required by Rule 13a - 14(a) or Rule 15d
        - 14(a)                                                     
|31.2    | Certification
        of the Chief Financial Officer required by Rule 13a - 14(a) or Rule 15d
        - 14(a)                                                     
|32.1    | Certification
        of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002
|32.2    | Certification
        of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
        Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002

16

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SIGNATURES

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

|Dated: December 20, 2010 | By: | /s/ Adam Radly         
|------------------------ | --- | -----------------------
|                         |     | Adam Radly             
|                         |     | Chief Executive Officer
|                         |     |                        
|Dated: December 20, 2010 | By: | /s/ Bob Bates          
|                         |     | Bob Bates              
|                         |     | Chief Financial Officer

17

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