                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

                     For the Fiscal Year Ended July 31, 2010

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

         For the transition period from _____________ to _____________.

                        Commissions file number 000-52827


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

            Nevada                                               98-0512569
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation of organization)                              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)

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001
Par Value (Title of class)

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

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

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

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

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

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

Large accelerated filer [ ]                        Accelerated filer [ ]

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

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

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, as of November 16, 2010 was approximately $1,838,000.

The registrant had 43,745,414  shares of common stock outstanding as of November
17, 2010.

                           FORWARD LOOKING STATEMENTS

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

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

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

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

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

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

                              AVAILABLE INFORMATION

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

                                   REFERENCES

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

                                       2

                                TABLE OF CONTENTS

ITEM 1.       BUSINESS.......................................................  4
ITEM 1A.      RISK FACTORS................................................... 11
ITEM 1B.      UNRESOLVED STAFF COMMENTS...................................... 13
ITEM 2.       PROPERTIES..................................................... 13
ITEM 3.       LEGAL PROCEEDINGS.............................................. 14
ITEM 4.       SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............ 14
ITEM 5.       MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
              MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.............. 14
ITEM 6.       SELECTED FINANCIAL DATA........................................ 15
ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS...................................... 16
ITEM 7A.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..... 23
ITEM 8.       FINANCIAL STATEMENTS........................................... 24
ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
              AND FINANCIAL DISCLOSURE....................................... 43
ITEM 9A(T).   CONTROLS AND PROCEDURES........................................ 43
ITEM 9B.      OTHER INFORMATION.............................................. 44
ITEM 10.      DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE......... 44
ITEM 11.      EXECUTIVE COMPENSATION......................................... 48
ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              AND RELATED STOCKHOLDER MATTERS................................ 49
ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
              INDEPENDENCE................................................... 50
ITEM 14.      PRINCIPAL ACCOUNTING FEES AND SERVICES......................... 51
ITEM 15.      EXHIBITS....................................................... 52

                                       3

                                     PART I

ITEM 1. BUSINESS

NAME, INCORPORATION AND PRINCIPAL OFFICES

We were  incorporated  under the laws of the State of Nevada on October 12, 2006
under the name "Bear River  Resources  Inc.". On October 21, 2008, we effected a
forward  split of our  shares of common  stock on the basis of 7.7 new shares of
our common stock for each one share of common stock outstanding on that date and
increased our authorized share capital from  200,000,000  shares of common stock
to  1,540,000,000  shares  of  common  stock.  Also  on  October  21,  2008,  in
contemplation of the acquisition of Omnicity,  Incorporated,  we merged with our
wholly-owned  subsidiary incorporated under the laws of the State of Nevada, and
changed our name to Omnicity Corp. or ("the Company"). On February 17, 2009, the
Company  acquired  all  of  the  issued  and  outstanding  shares  of  Omnicity,
Incorporated.  Omnicity, Incorporated (incorporated on August 13, 2003) provides
broadband  access,  including  advanced  services of voice,  video and data,  in
un-served  and  underserved  small and rural  markets  and is  planning  to be a
consolidator of rural market broadband nationwide.  The total purchase price was
23,000,000 common shares of the Company.

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

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

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

OUR PRIOR BUSINESS

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

OUR CURRENT BUSINESS

OVERVIEW

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

     *    The forecasted increase of demand for broadband and  broadband-enabled
          services, including: web use and social networking; video (TV, movies,
          and  personal   video);   software-as-a-service   (SaaS);   and  cloud
          computing;
     *    The  availability  of  high-speed  4G Worldwide  Interoperability  for
          Microwave Access (WIMAX) equipment;

                                       4

     *    Weakness of existing service  providers in Omnicity's  target markets,
          primarily  small  telephone  companies and Wireless  Internet  Service
          Providers ("WISPs");
     *    A push by the federal government,  Congress,  and state governments to
          increase  the   availability  of  broadband   services  in  rural  and
          underserved markets.

THE COMPANY'S OPERATING PLAN IS TO GROW BY:

     *    Consolidating  WISPs in rural  and  urban  cluster  markets  initially
          within the Midwestern United States;
     *    Developing and expanding,  through organic growth, the subscriber base
          through disciplined sales and marketing programs;
     *    Partnering  with Rural  Electric  Membership  Cooperatives  ("REMCs"),
          local and state governments,  rural telephone companies ("Telcos") and
          Original  Equipment  Manufacturers  ("OEMs") to  efficiently  and cost
          effectively expand its network across rural America;
     *    Developing  and  expanding  its  service  offerings  to become a total
          broadband  solution  provider,  including  VOIP,  IPTV  and  Satellite
          Internet,  to increase value and average  revenue per subscriber  unit
          (ARPU);
     *    Completing  further debt and equity  offerings,  in stages, of $10m by
          February 28, 2011.

DESCRIPTION OF BUSINESS AND BUSINESS STRATEGY

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

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

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

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

Currently,   Omnicity   uses   standards-based   wireless   equipment   in   the
license-exempt  700Mhz,  900MHz,  2.4GHz and 5.8GHz  spectrum  bands,  providing
multiple  paths to cover  subscribers  in its markets.  The Company  deploys its
wireless  networks  by  installing  antennas on  cellular  and other  commercial
towers,  and  municipally or privately  owned  structures such as tall silos and
rooftops.  Customers  receive the wireless signal via customer premise equipment
(CPE) that currently costs $250 per unit. The Company is evolving its technology
and spectrum strategy as it becomes more opportune and cost effective to utilize
licensed spectrum and related equipment.

The Company plans to target multiple customer segments,  including: business and
healthcare  providers  (both local and  regional/national  entities that require
bandwidth  at multiple  locations);  local and state  government  entities;  and
residential  customers.  To reach  these  customers,  Omnicity  expects  to sell
through  a  variety  of  channels  including:   direct  sales  to  business  and
local/state government customers; direct mail and web-based sales to residential
customers  with  affiliate  sales  through  local school  systems;  agency sales
through  local  retailers;  and through  marketing  partnerships  with REMCs and
telcos.  The  Company  also  plans  to  undertake  marketing  programs,  such as

                                       5

providing  web pages for the  communities  it serves that feature  local content
such as news,  sports - video broadcasts of high-school  football and businesses
information.  The Company has been providing "hands-on",  experiential marketing
at community events through its Experiential Marketing Unit ("EMU").

Marketing  partnerships with REMCs form a part of Omnicity's  business strategy.
REMCs are  cooperatives  that provide  electricity to about 40 million homes and
operate in 80% of counties in the U.S. The Company has  partnered  with REMCs to
provide  broadband  services  to  REMC  customers,  and  to  provide  the  REMCs
value-added  services,  such as remote  meter  reading  and fiber  construction.
Omnicity  also  expects  to work  with  municipalities  and  other  governmental
entities to provide broadband services in their often under-served  communities,
and to provide  these  entities with mobile  broadband  for emergency  vehicles,
high-speed  networks  for  government  offices,  and remote  meter  reading  for
municipal-owned   utilities.   On  March  24,  2009,   Omnicity   announced  the
installation  of  a  "First  Responder"  emergency  mobile  and  fixed  wireless
broadband network in Parker City, Indiana. This network will provide mobile data
connections  for police  vehicles and broadband  connectivity to water and sewer
systems,  and to  town-owned  buildings.  Using this  model,  Omnicity  plans to
provide communications infrastructure to small towns and municipalities that can
become anchor tenants on its networks.

TARGET MARKET: RURAL AREAS AND URBAN CLUSTERS

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

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

ACQUISITIONS COMPLETED DURING THE YEAR ENDED JULY 31, 2010

AAA WIRELESS, INC. (INDIANA)

On January 7, 2010 the Company acquired the telecommunication network and system
assets of AAA Wireless,  Inc. The total purchase  price was $493,545,  which was
paid in cash.  The  purchase  price was  allocated  as follows:  land - $15,000;
towers,  infrastructures  and house and school drops - $315,232;  automobiles  -
$16,500;  and computer and wireless equipment  including spare parts - $146,813.
No value was placed on customers' relationships as these relationships had to be
renewed  through the efforts of the Company.  The purchase price  allocation was
based on relative fair market values of all of the assets acquired.

CLINTON COUNTY WIRELESS, LLC (INDIANA)

On January  14, 2010 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of Clinton  County  Wireless,  LLC,
located in Clinton County,  Indiana.  The total purchase price was $60,000 to be
paid in common shares.  The number of common shares was determined  based on the
15 trading day average  closing  price of the  Company's  common shares prior to
March 15, 2010,  being $0.36. The total number of common shares on July 26, 2010
was 176,667.  The purchase price was allocated $10,000 to property and equipment
and $50,000 to customers' relationships based on the relative fair values of the
assets acquired.

                                       6

USPPP, INC. (INDIANA)

On  March  23,  2010 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of USppp, Inc., located in Decatur,
Indiana. The total purchase price was $225,000.  Consideration was $55,000 cash,
$20,000  payable upon receiving  certain  deliverables,  a long-term 5% note for
$67,500 and $82,500 to be paid in common shares. The number of common shares was
determined  based on the 15 trading day average  closing  price of the Company's
common shares prior to May 22, 2010,  being $0.3167.  The total number of common
shares to be issued is  260,526;  these  shares  have not yet been  issued.  The
purchase price was allocated  $140,000 to  telecommunication  network assets and
$85,000 to  customers'  relationships  based on the relative  fair values of the
assets acquired.

BRIGHT CHOICE, INC. (OHIO)

On  March  31,  2010 the  Company  acquired  the  customers'  relationships  and
telecommunication network and system assets of Bright Choice, Inc., a subsidiary
of Consolidated  Electric  Cooperative,  a rural electric cooperative located in
North Central Ohio.  The total purchase  price was $231,050.  Consideration  was
$220,000  cash and a 5% note for  $11,050.  The  purchase  price  was  allocated
$126,400 to telecommunication network and system assets, $48,600 to vehicles and
$56,050 to  customers'  relationships  based on the relative  fair values of the
assets acquired.

DIGITAL SOLUTIONS NETWORK, INC. DBA LIGHTSPEED WIRELESS (OHIO)

On  April  22,  2010 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of Lightspeed  Wireless  located in
Berlin,  Ohio.  The total  purchase  price  was  $1,400,000.  Consideration  was
$700,000  cash,  a note  payable of $50,000 and a long-term  6% note payable for
$500,000 and $150,000 to be paid in common  shares.  The number of common shares
will be  determined  based on the 15 trading  day average  closing  price of the
Company's common shares prior to June 21, 2010 being $0.2967 per common share. A
total of  505,561  common  shares  are to be  issued;  these  shares are not yet
issued. The purchase price was allocated $237,000 to  telecommunication  network
and  system   assets,   $13,000  to  vehicles  and   $1,150,000   to  customers'
relationships based on the relative fair values of the assets acquired.

COMPETITION

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

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

                                       7

                 RURAL AND SMALL URBAN CLUSTER BROADBAND OPTIONS

Broadband Service            Speed                   Comments
-----------------            -----                   --------

DSL (Telcos)              Up to 6 Mbps     Speed depends on quality of copper
                                           plant; limited speeds if customer
                                           located >1 mile from telco central
                                           office (CO); very limited/no
                                           service if customer located >2
                                           miles from CO

Cable (Cable companies)   Up to 10 Mbps    Depends on age of CATV plant - may
                                           require overbuild; capital expense
                                           may not justified in small markets;
                                           speed depends on number of users

Satellite (Satellite &
Satellite TV companies)   Up to 1.5 Mbps   Suffers `latency' in data transfer;
                                           poor quality for video applications;
                                           relatively expensive

Wireless (WISPs)          Up to 3 Mbps     Can be deployed quickly; covers large
                          residential;     geographic areas; high-speed
                          up to 100 Mbps

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

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

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

               COMPANIES PURSUING WIRELESS/4G SERVICES BUSINESSES

Company                   Status                       Market Focus                       Direct Competitor
-------                   ------                       ------------                       -----------------

ERF Wireless          Public (OTC BB:    Similar to Omnicity, but focused in Texas,        Not at this time
                      ERFW)              Louisiana, New Mexico

DigitalBridge         Private            Focused in on metro-edge and small metro          Not at this time
Communications Corp.                     markets with up to 150,000 people.
                                         Serving 4 cities in Indiana

Open Range            Private            Similar to Omnicity, focused on 17 states         Possible competitor
Communications                           including 4 in Midwest                            in some markets

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

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

                                       8

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

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

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

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

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

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

NETWORKS AND TECHNOLOGY

Service is  delivered  by antennas  deployed on  cellular  and other  commercial
towers,  municipally or privately owned  structures  such as water towers,  tall
silos and rooftops.  Customers  receive the wireless signal via customer premise
equipment (CPE) that currently costs $240 per unit and that is typically mounted
on rooftops.  Most  customers with line of sight to the antenna that and who are
within 5 miles of the tower can  receive the signal.  Access  points  mounted on
each tower can  support  100-150  customers  depending  on the mix of  bandwidth
subscriptions and antenna  equipment.  Antennas are connected to Internet access
points via  point-to-point  radio and fiber connections  through agreements with
fiber carriers and telcos where traffic is backhauled to the Internet  backbone.
Networks  generally are designed in a ring topology to mitigate service failures
in the  event  that a  tower  or  network  connection  is  lost.  The  Company's
operations are managed through a Network  Operations  Center (NOC) in Rushville,
Indiana,  which also handles  customer  support.  Omnicity can  currently  offer
services to homes in about 1/3 of the geography of Indiana.

Currently,   Omnicity   uses   standards-based   wireless   equipment   in   the
license-exempt  900MHz,  2.4GHz and 5.8GHz  spectrum bands,  providing  multiple
paths  to  cover  subscribers  in its  markets.  The  Company  is  evolving  its
technology and spectrum strategy as it becomes more opportune and cost effective

                                       9

to utilize licensed spectrum and related equipment and is evaluating options for
using the 700Mhz,  2.5GHz and 3.65Ghz bands for WIMAX-based  services.  Backhaul
from wireless  distribution  points is provided via  point-to-point  radio,  and
fiber connections through agreements with backhaul carriers.

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

     *    Completed ten WISP asset purchases.  Including acquisitions,  Omnicity
          currently has a portfolio of  transmission  rights  covering 452 tower
          sites located principally in Indiana and Ohio. These markets represent
          approximately  434,000 households,  approximately 369,000 of which are
          believed  to  be  serviceable  by  line-of-sight   transmissions  from
          Omnicity antenna locations;
     *    The Company's revenues for 2010 increased by $1,750,000 to $3,433,000,
          an increase of 104%. This significant increase reflects an increase in
          recurring service revenue from our four acquisitions from 2009 and six
          acquisitions  from 2010.  Revenues from our first acquisition began in
          February,  2009.  The numbers of  subscribers  increased from 1,800 in
          February,  2009  to  11,500  at  July  31,  2010 by  virtue  of  these
          acquisitions and organic growth;
     *    Completed its first local  government  project,  providing mobile data
          connections for the police vehicles and broadband  connectivity to the
          water, sewer and town hall buildings in Parker City, Indiana;
     *    Entered into a $1 million master lease facility with Agility Ventures,
          LLC for  operating  leases of radio and other  equipment to expand its
          business.

COST FACTORS

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

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

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

EMPLOYEES

As of July 31,  2010,  we had a total  of 49 full  time  employees.  None of our
employees is subject to a collective bargaining  agreement.  We have experienced
no work stoppages and believe that we have good relations with our employees. We
also occasionally  utilize the services of independent  contractors to build and
install our wireless systems and market our services.

SUBSIDIARIES

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

PATENTS AND TRADEMARKS

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

                                       10

ITEM 1A. RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES A NUMBER OF VERY  SIGNIFICANT  RISKS.
YOU SHOULD CAREFULLY  CONSIDER THE FOLLOWING RISKS AND UNCERTAINTIES IN ADDITION
TO OTHER  INFORMATION  IN THIS ANNUAL REPORT IN  EVALUATING  OUR COMPANY AND ITS
BUSINESS BEFORE PURCHASING  SHARES OF OUR COMMON STOCK. OUR BUSINESS,  OPERATING
RESULTS AND  FINANCIAL  CONDITION  COULD BE  SERIOUSLY  HARMED DUE TO ANY OF THE
FOLLOWING  RISKS.  THE RISKS  DESCRIBED BELOW MAY NOT BE ALL OF THE RISKS FACING
OUR COMPANY.  ADDITIONAL  RISKS NOT  PRESENTLY  KNOWN TO US OR THAT WE CURRENTLY
CONSIDER IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS.  YOU COULD LOSE ALL
OR PART OF YOUR INVESTMENT DUE TO ANY OF THESE RISKS.

RISKS RELATING TO OUR BUSINESS

WE LACK PROFITABLE OPERATIONS.

Omnicity's business commenced in 2003 and substantially all of its revenues have
been  generated  by the 10 Indiana  and Ohio WISP  network  infrastructures  and
customers'  relationships.  Omnicity has recorded net losses in each of the last
four fiscal years ended July 31, 2010,  2009,  2008 and 2007,  due  primarily to
Omnicity's  rapid growth through  acquisitions,  building an  acquisition  team,
related administrative costs, public company costs including investor relations,
legal and audit, interest and financing expense and charges for depreciation and
amortization  of capital  expenditures to develop its wireless  systems.  We may
continue  to  experience  net losses  while we develop  and expand our  wireless
systems  even if  mature  individual  systems  of our  company  are  profitable.
Prospective  investors  should  be  aware  of the  difficulties  encountered  by
enterprises  in the  early  stages  of  development,  particularly  in  light of
potential competition.  There can be no assurance that an increase in the number
of  subscribers  or the launch of  additional  wireless  systems  will result in
profitability for our company in future years.

OUR BUSINESS DEPENDS ON LEASES AND MATERIAL  AGREEMENTS WITH UNAFFILIATED  THIRD
PARTIES FOR A  SIGNIFICANT  PORTION OF OUR CUSTOMER  PREMISES  EQUIPMENT AND OUR
WIRELESS TOWER TRANSMISSION RIGHTS.

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

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

WE WILL NEED ADDITIONAL FINANCING IN ORDER FOR OUR COMPANY TO GROW.

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

OUR  COMPANY IS  DEPENDENT  ON THE  KNOWLEDGE  AND  EXPERIENCE  OF OUR  EXISTING
MANAGEMENT AND KEY EMPLOYEES.

We are dependent, in large part, on the experience and knowledge of our existing
management  team.  The loss of the  services  of any one or more of our  current
executive  officers could have a material  adverse effect upon our Company.  Our

                                       11

success is also  dependent  upon our  ability to  attract  and retain  qualified
employees to develop and operate our wireless systems.

RISKS RELATING TO OUR INDUSTRY

THE WIRELESS BROADBAND SERVICE PROVIDER INDUSTRY IS HIGHLY COMPETITIVE.

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

THERE ARE PHYSICAL LIMITATIONS OF WIRELESS TRANSMISSION.

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

WE ARE SUBJECT TO GOVERNMENT REGULATION.

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

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

RISKS RELATING TO OUR COMMON STOCK

OUR  STOCKHOLDERS  MAY  EXPERIENCE  DILUTION  AS A  RESULT  OF OUR  ISSUANCE  OF
ADDITIONAL COMMON STOCK OR THE EXERCISE OF OUTSTANDING  WARRANTS AND CONVERTIBLE
SECURITIES.

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

WE HAVE NEVER DECLARED OR PAID CASH DIVIDENDS ON OUR COMMON STOCK.

                                       12

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

THERE IS A LIMITED TRADING MARKET FOR OUR COMMON STOCK, AND OUR INVESTORS MAY BE
UNABLE TO SELL THEIR SHARES.

We  have  a  limited   trading   market   for  our   common   stock  on  FINRA's
Over-the-Counter  Bulletin Board  ("OTCBB").  As a result,  investors may not be
able to sell the shares of our common  stock  that they have  purchased  and may
lose all of their investment.

OUR COMMON STOCK IS SUBJECT TO THE "PENNY  STOCK"  RULES OF THE SEC,  WHICH WILL
MAKE  TRANSACTIONS IN OUR COMMON STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN
INVESTMENT IN OUR COMMON STOCK.

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

OUR INDEPENDENT  AUDITORS HAVE EXPRESSED  SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO
CONTINUE  AS A GOING  CONCERN,  WHICH MAY  HINDER OUR  ABILITY TO OBTAIN  FUTURE
FINANCING.

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

A DECLINE IN THE PRICE OF OUR COMMON  STOCK  COULD  AFFECT OUR  ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR OPERATIONS.

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

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We lease, on a month to month basis, our executive and operations offices. These
offices are located together at 807 South State Rd 3, Rushville, Indiana, U.S.A.
We also lease, on a month to month basis, small warehouse  facilities that house
certain smaller segments of our operations including spare parts to our system.

                                       13

We also own 100% of the issued and outstanding shares of Omnicity, Incorporated,
an Indiana corporation, which is our sole operating subsidiary.

ITEM 3. LEGAL PROCEEDINGS

The Company has been served with a Complaints  filed with the Rush Circuit Court
in the State of Indiana  dated August 25, 2010.  The  plaintiff  has made claims
against the Company for failure to make required  installment 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 Complaint.  On November
8, 2010 the  Company  filed an  Answer to this  Complaint.  This  Answer  denied
certain  allegations due to breach by the vendor of the Asset Purchase Agreement
entered into. The Company expects to receive a favorable 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  installment 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
is in the  process of filing an Answer to this  Complaint  which will  include a
denial of certain  allegations due to breach by the vendor of the Asset Purchase
Agreement and expects to receive a favorable 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  installment 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 favorable outcome.

ITEM 4. (REMOVED AND RESERVED)

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S  COMMON EQUITY,  RELATED STOCKHOLDER MATTERS AND
        ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

The market for our common stock is limited, volatile and sporadic. The following
table sets forth the high and low bid prices  relating  to our common  stock for
the periods  indicated,  as provided by the OTC Bulletin Board. These quotations
reflect inter-dealer prices without retail mark-up,  mark-down,  or commissions,
and may not reflect actual transactions.

QUARTER ENDED                   HIGH BID               LOW BID
-------------                   --------               -------
July 31, 2010                    $0.36                  $0.11

April 30, 2010                   $0.40                  $0.25

January 31, 2010                 $0.41                  $0.22

October 31, 2009                 $0.62                  $0.35

HOLDERS

As of November 17, 2010, we had approximately 700 shareholders of record.

DIVIDEND POLICY

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

RECENT SALES OF UNREGISTERED SECURITIES

Effective on August 18, 2009,  we issued a total of 229,855  common  shares from
treasury to four  individuals  to complete the common share  portion to complete
two Asset Purchase  Agreements at an agreed price of $0.71 per common share.  We
relied on exemptions from registration under the Securities Act provided by Rule
506 for U.S.  accredited  investors  based  on  representations  and  warranties
provided by the individuals.

                                       14

Effective on October 13, 2009,  we issued a total of 268,818  common shares from
treasury to eleven  individuals to complete the common share portion to complete
two Asset Purchase  Agreements at an agreed price of $0.465 per common share. We
relied on exemptions from registration under the Securities Act provided by Rule
506 based on representations and warranties provided by the individuals.

Effective on November 10, 2009, we completed a  non-brokered  private  placement
pursuant to which we issued from treasury to one subscriber a total of 4,000,000
Units at a subscription price of $0.35 per unit for proceeds of $1,400,000. Each
unit  consisted of one share of common stock and one-half of one share  purchase
warrant.  Each whole warrant  entitles the holder to acquire an additional share
of common stock at an exercise  price of $0.50 per share until October 20, 2011.
We relied on exemptions from  registration  under the Securities Act provided by
Rule 506 for U.S.  accredited  investors based on representations and warranties
provided by the subscriber in his  subscription  agreement  entered into between
the subscriber and the Company.

Effective on November 13, 2009, we completed a  non-brokered  private  placement
pursuant to which we issued from treasury to five subscribers a total of 278,840
Units at a  subscription  price of $0.35 per unit for proceeds of $97,594.  Each
unit  consisted of one share of common stock and one-half of one share  purchase
warrant.  Each whole warrant  entitles the holder to acquire an additional share
of common stock at an exercise price of $0.50 per share until November 13, 2011.
We relied on exemptions from  registration  under the Securities Act provided by
Rule 506 for U.S.  accredited  investors based on representations and warranties
provided by the subscriber in his  subscription  agreement  entered into between
the subscriber and the Company.

Effective on March 31, 2010 we issued 5,000 common  shares to one  individual to
complete the purchase of a vehicle pursuant to a Bill of Sale dated November 19,
2009.  We relied on an exemption  from  registration  under the  Securities  Act
provided by Section 4(2) thereof.

Effective  on March 31, 2010 we issued  5,714  common  shares to one  individual
complete a Letter  Agreement  to settle a claim.  We relied on  exemptions  from
registration  under the Securities Act provided by Rule 506 for U.S.  accredited
investors.

On April 9, 2010 we issued 8,571 common  shares to one  individual to complete a
Letter  Agreement to settle a claim. We relied on exemptions  from  registration
under the Securities Act provided by Rule 506 for U.S. accredited investors.

On April  26,  2010 we issued  an  aggregate  of  235,000  common  shares to two
entities  pursuant to  Agreements  for services to be rendered.  With respect to
165,000 of these shares,  we relied on exemptions  from  registration  under the
Securities Act provided by Rule 506 for U.S. accredited investors;  with respect
to the remaining 70,000 shares, we relied on exemptions from registration  under
the Securities Act provided by Regulation S.

On April 29, 2010, we completed a  non-brokered  private  placement  pursuant to
which we issued from  treasury to two  subscribers a total of 228,571 Units at a
subscription  price of $0.35  per unit to  settle  debt of  $80,000.  Each  unit
consisted  of one  share of  common  stock and  one-half  of one share  purchase
warrant.  Each whole warrant  entitles the holder to acquire an additional share
of common stock at an exercise price of $0.50 per share until April 29, 2012. We
relied on exemptions from registration under the Securities Act provided by Rule
506 for U.S.  accredited  investors  based  on  representations  and  warranties
provided by the subscribers in the subscription  agreements entered into between
each subscriber and the Company.

Effective  on July 26,  2010,  we issued a total of 166,667  common  shares from
treasury to two  individuals to complete the common share portion to complete an
Asset Purchase Agreement at an agreed price of $0.36 per common share. We relied
on exemptions  from  registration  under the Securities Act provided by Rule 506
based on representations and warranties provided by the individuals.

NO REPURCHASES

Neither  we nor any of our  affiliates  have made any  purchases  of our  equity
securities during the fourth quarter of our fiscal year ended July 31, 2010.

ITEM 6. SELECTED FINANCIAL DATA

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

                                       15

ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The  following  discussion  of our  financial  condition,  changes in  financial
condition,  plan of  operations  and  results  of  operations  should be read in
conjunction with (i) our audited  consolidated  financial  statements as at July
31, 2010 and 2009 and (ii) the section entitled  "Business",  included in Item 1
in this Form 10-K Annual Report.

The  discussion   contains   forward-looking   statements  that  involve  risks,
uncertainties  and  assumptions.  Our actual results may differ  materially from
those  anticipated  in these  forward-looking  statements  as a  result  of many
factors, including, but not limited to, those set forth under "Risk Factors" and
elsewhere in this Annual Report.

PLAN OF OPERATIONS

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

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

OUR PLAN OF OPERATIONS FOR THE NEXT TWELVE MONTHS IS TO:

     *    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,
          connecting  these  network  clusters  by July 31,  2011  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;
     *    continue  to  partner  with  Rural  Electric  Membership  Cooperatives
          "REMCs",  local and  State  governments,  Rural  Telcos  and  Original
          Equipment  Manufacturers  "OEMs" to efficiently  and cost  effectively
          expand our network across rural America; and
     *    develop and expand our service  offerings to become a total  broadband
          solution including VOIP and video.

FUTURE FINANCING REQUIREMENTS

At July 31,  2010,  we had cash of  $39,000  and a working  capital  deficit  of
$3,810,000.  Approximately  $4 million was injected into the Company  during the
year ended July 31,  2010.  We estimate  that  approximately  $6 million will be
required  during the twelve months ended July 31, 2011 to finance our short-term
working  capital  deficit and to finance the  expansion  of, and the addition of
subscribers  through  acquisition  to, our existing  and to be acquired  network
infrastructures.  A total of $1 million  will be 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  operationally  cash flow positive and
will  require no  additional  funds to  finance  operational  deficits.  We will
continue to seek a combination of equity and long-term debt financing as well as
other  traditional  cash flow and asset backed  financing to meet our  financing
needs and to reduce  our  overall  cost of  capital.  Additionally,  in order to

                                       16

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

CURRENT FINANCING ARRANGEMENTS

We are  currently  in  negotiations  to raise $1 million  to $3 million  under a
capital  lease  program with  private  investors  to fund our  acquisitions  and
organic  growth.  We expect to close this financing by December 31, 2010. We are
also in negotiations to raise $2.5 million in equity with private investors.  In
addition to the proposed equity injection of $2.5 million,  expected to complete
by December  31,  2010,  a  commitment  for three  additional  tranches of $2. 5
million,  $7.5 million in total, will be made. These additional  financings will
be in the form of convertible debentures to be funded when the Company needs the
funds.

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

YEAR ENDED JULY 31, 2010 AND 2009

The following  table sets forth certain  financial  information  relating to the
Company for the Year ended July 31, 2010  ("2010")  and July 31, 2009  ("2009").
The financial  information  presented has been rounded to the nearest thousand $
and is derived from the audited consolidated financial statements included under
Item 8 in this Form 10-K.

                                               2010             2009
                                            ----------       ----------
                                                $                $
Sales, net                                   3,475,828        1,684,350
                                            ----------       ----------
Expenses:
  Service costs                                225,876           30,712
  Plant and signal delivery                  1,511,067          967,406
  Marketing and sales                           17,806           45,375
  General and administration                   940,398          744,616
  Salaries and benefits                      2,128,760        1,276,016
  Stock based compensation                          --          289,629
  Depreciation and amortization                845,083          536,113
                                            ----------       ----------
      Total Expenses                         5,668,990        3,889,867
                                            ----------       ----------

Loss from Operations                        (2,193,162)      (2,205,517)
                                            ----------       ----------
Other Income (Expense):
  Other income                                 216,667               --
  Gain on sale of assets, net                   30,719               --
  Financing expense                           (161,547)        (190,039)
  Interest                                    (374,968)        (241,096)
                                            ----------       ----------
      Total Other Income (Expense)            (327,867)        (431,135)
                                            ----------       ----------

Net Loss                                    (2,521,029)      (2,636,652)
                                            ==========       ==========

Net Loss per Share - Basic and Diluted            (.06)            (.08)
                                            ==========       ==========

Weighted Average Shares Outstanding -
 Basic and Diluted                          41,737,000       34,160,000
                                            ==========       ==========


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

                                       17

REVENUES

The Company's  revenues for 2010  increased by $1,792,000 to $3,476,000  (2009 -
$1,684,000) an increase of 106%. This significant  increase reflects an increase
in installation  revenues for 2010 which increased by $129,000 to $203,000 (2009
-  $74,000)  and an  increase  in  recurring  service  revenues  for 2010  which
increased by $1,663,000 to $3,273,000  (2009 - $1,610,000)  an increase of 103%.
These  significant  increases were achieved  mainly through our five  additional
acquisitions  folded in from  August 1, 2009  through  July 31, 2010 and through
organic  growth,  which is increasing at a rapid rate. The number of subscribers
increased  from  5,200 to 11,500  during  the year  ended  July 31,  2010.  This
subscriber count does not differentiate a subscriber,  for example,  one school,
hospital or business  subscriber is counted as one subscriber.  On an equivalent
subscriber unit basis we increased our equivalent subscribers from 5,586 at July
31, 2009 to 12,350 as at July 31, 2010.  This is important to note because going
forward the Company will be adding schools,  hospitals and business  accounts at
an accelerated rate. During the first 9 months of the fiscal year ended July 31,
2009 the Company had 1,800 subscribers, during the final 3 months of fiscal 2009
the Company added 3,400 subscribers  mainly through five acquisitions  completed
during that period. The Company receives revenue mainly from monthly service and
modem rental fees collected  from its  subscribers.  The Company's  installation
revenue,  while representing 6% of revenues  currently,  is expected to increase
rapidly as we complete  current  financing  arrangements  and,  as a result,  we
expand our marketing efforts.  The Company also receives web hosting fees, fiber
construction project fees and late fees which together represent less than 1% of
total revenue.  The Company expects  revenues to increase rapidly as a result of
organic growth,  planned  acquisitions  and increase in average revenue per unit
("ARPU").

OPERATIONAL EXPENSES

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

SERVICE COSTS include the cost of billing and collection, the cost of buying DSL
service  and the cost of  providing  Lifeline  and  satellite  services in Ohio.
During 2010,  service costs  increased by $195,000 to $226,000 (2009 - $31,000).
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
Lifeline services which started in April,  2010. The increase also comes from an
increase in the number of customers accounts offset by a decrease in the cost of
collection.

PLANT AND SIGNAL  DELIVERY  expenses  include the rental of towers,  the cost of
internet  transmission  ("backhaul")  the cost of  installing  equipment  on the
towers and at customers'  premises  ("housedrops") and the operating lease costs
of housedrop or tower  equipment.  We currently have a portfolio of transmission
rights covering 452 tower sites located  principally in Indiana and Ohio.  These
markets represent  approximately  434,000 households,  approximately  369,000 of
which  are  believed  to be  serviceable  by  line-of-sight  transmissions  from
Omnicity  antenna  locations.  During 2010,  plant and signal delivery  expenses
increased by $543,000 to $1,511,000  (2009 - $967,000),  an increase of 56%. The
increase in revenues was 106% during this period.  As  subscribers  are added to
the network the  incremental  cost of providing our signal to that subscriber is
lower.  This  increase  was due mainly to the  increase  in the number of towers
under rental arrangements, the amount of backhaul needed to service the increase
in  subscribers,  the increase in tower and customer  premises  equipment  being
leased  pursuant to operating  lease  arrangements  and the increase in customer
installations.  Plant and signal delivery costs per customer will  significantly
decrease as the Company  populates its towers with  customers.  The Company,  on
average,  has a  penetration  of  approximately  4% of homes passed  whereas the
minimum target  penetration is 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 and preparation of
marketing  materials.  During 2010,  marketing and sales  expenses  decreased by
$28,000  to  $18,000  (2009-  $45,000).   In  2009  the  Company  paid  contract
commissions for sales of $25,000  whereas none were paid in 2010.  Marketing and
sales expenses are expected to significantly increase during 2011 as the Company
increases its marketing  plan to  significantly  increase  organic  growth.  The
Company  now has four  full-time  sales  people,  which  costs are  included  in
salaries and  benefits.  In December,  2009, we upgraded our marketing and sales
models which increased new  installations  from 50 during December,  2009 to 155
during January,  2010 and 220 during  February,  2010. Our current growth,  on a
month over month  basis,  is 35% which is expected to increase  once  sufficient
growth financing is secured.

GENERAL AND  ADMINISTRATION  expenses include  professional fees (legal,  audit,
accounting and outside professional  consulting),  investor relations consulting
fees, office expenses (including rent,  property tax,  utilities,  telephone and
insurance),  travel and automobile,  software fees and fees associated with late
payments and bank  charges.  During 2010,  general and  administration  expenses
increased by $195,000 to $940,000 (2009 - $745,000),  an increase of 26%. Travel

                                       18

and automobile  costs held constant at $98,000 whereas fees associated with late
payments  and bank  charges  decreased  by $32,000 to $43,000.  Telephone  costs
increased by $30,000;  insurance,  mainly D&O  insurance,  increased by $33,000,
rent increased by $42,000,  investor  relations  expenses  increased by $14,000,
annual  property taxes increased by $27,000 and  professional  fees increased by
$81,000.  These  increases are mainly due to expanding our  subscriber  base and
being a public company during 2010 versus a private  company during the majority
of 2009.  There are significant  additional costs associated with being a public
company including legal costs, auditing, investor relations and regulatory fees.
As the Company  expanded  into Ohio it picked up a small  portion of general and
administrative  expenses,  however,  the additional  expenses are  significantly
lower on an  incremental  basis.  General and  administration  expenses  are not
expected to increase  significantly in 2011 in relation to increased revenue. As
the Company grows,  general and  administration  expenses  become  significantly
lower on a percentage of revenue basis.

SALARIES AND BENEFITS for 2010 have increased by $853,000 to $2,129,000  (2009 -
$1,276,000)  and increase of 67% while revenue  increased by 104%. This increase
is mainly  due to the  additional  costs  associated  with  hiring of senior and
middle management to oversee the acquisition, marketing, financial reporting and
operations  teams. The Company went from 25 employees during the year ended July
31, 2009 to as high as 68 employees at its peak at April 309,  2010.  This staff
has been  rationalized and the staffing levels have been lowered to 49 full-time
employees  as at July 31,  2010.  The Company  does not expect to  increase  its
number of employees  significantly during 2011, except for certain key people to
be brought on as a result of acquisitions and increasing the number of marketing
teams we have in  current  and new  regions  brought  on  through  acquisitions.
Installations are now contracted out to an independent  contractor.  The Company
continues to upgrade its employees as better trained  personnel become available
through acquisitions.

STOCK BASED  COMPENSATION  of $290,000 was charged to  operations  on January 2,
2009 with no corresponding charge during 2010.

DEPRECIATION AND AMORTIZATION for 2010 increased by $309,000 to $845,000 (2009 -
$536,000).  This  increase  was  attributed  to an increase in  amortization  of
customers'  relationships  of  $229,000 to  $334,000  (2009 -  $105,000)  and an
increase in depreciation of our network system, automobiles, software and office
equipment of $80,000 to $511,000.

OTHER INCOME AND EXPENSE

INTEREST  EXPENSE for 2010  increased by $134,000 to $375,000 (2009 - $241,000).
The increase  was a result of increased  short-term  and  long-term  debt levels
offset by an  overall  reduction  in the cost of debt to 6.8%  achieved  through
negotiations  with all  creditors.  During  the  year  ended  July 31,  2010 the
Company's  cost of short-term  and long-term  debt  decreased by 2% to 6.8% from
8.8%.  Interest  expense will increase in 2010 as the Company plans to finance a
portion of its growth through the issuance of debt instruments. The Company will
also issue  short-term  and  long-term  notes as part  consideration  of planned
acquisitions.

FINANCING  EXPENSES  are  costs  associated  with  consultants  hired to  secure
additional debt and/or equity  financing for the Company.  Once equity financing
is secured the related  cost will reduce the  proceeds of the equity  instrument
issued.  Financing  expense for 2010  decreased  by $28,000 to $162,000  (2009 -
$190,000).  The  decrease  was a result of the Company  not issuing  warrants to
secure customer premises equipment leasing  arrangements during 2010 whereas the
Company recorded  $190,000 in 2009 for warrants  committed to be issued pursuant
to an equipment leasing arrangement.  The financing expense relates to financial
consultants hired to assist the Company in raising capital..

GAIN ON SALE OF  ASSETS,  NET  included  a gain of  $41,000  offset  by an asset
write-off of $10,000.  During 2010 the Company received $225,000 from a director
of the Company  pursuant to a sale of towers to the  director.  The towers had a
net book value of $184,000 and the Company  recorded a gain on sale of assets of
$41,000  (2009 - $nil).  During  2010 the  Company  had  written-off  a  $10,000
non-refundable deposit on a 2008 planned acquisition that did not complete.

OTHER INCOME  included  accounts  payable  written-off of $178,000 and a gain on
reversal of accounts receivable credits not used of $39,000 (2009 - $nil).

                                       19

NET LOSS

The net loss for 2010  decreased by $100,000 to $2,487,000  (2009 - $2,637,000).
This  decrease in loss was due to the 104% while  expenses  increased at a lower
rate  and will  continue  to  increase  at an  incrementally  lower  rate,  as a
percentage of revenue, as we expand through  acquisitions and organic growth. To
highlight  this trend our net loss for quarter  four of fiscal 2010 was $517,000
and our fourth quarter earnings before interest,  income taxes, depreciation and
amortization ("EBITDA") was negative $17,000 ($1,186,000 for all of 2010).

LIQUIDITY AND CAPITAL RESOURCES

The Company completed its acquisition of Omnicity,  Incorporated on February 17,
2009.  Prior to this the Company was a dormant early  exploration  stage company
with no operations.  Since then, the Company's  acquisition and transition teams
have acquired and folded in ten WISP's increasing its subscriber base from 1,800
to 11,500 as at July 31, 2010. See  discussion  under  "Revenues"  above for our
increase in cash flow from our customers.

                                        July 31, 2010       July 31, 2009
                                        -------------       -------------
                                              $                   $

     Cash                                    39,000            159,000

     Working Capital (Deficiency)        (3,810,000)        (2,585,000)

     Total Assets                         5,851,000          3,350,000

     Total Liabilities                    7,095,000          4,424,000

     Stockholders' Deficit               (1,244,000)        (1,074,000)

Long-term  debt  principal  repayments of $4,387,000  are due over the next five
years are as follows:

     Year           $                    Year               $
     ----          ---                   ----              ---
     2011      1,455,000                 2014            175,000
     2012      1,135,000                 2015          1,032,000
     2013        189,000                 Thereafter      401,000

CASH TO OPERATING ACTIVITIES

During the year ended 2010,  operating  activities used cash of $968,000 (2009 -
$1,131,000).  Our  loss  for  2010 was  $2,487,000  (2009 -  $2,637,000),  which
included a non-cash  outlay for  interest  expense  accreted of $61,000  (2009 -
$nil),  a financing  charge of $5,000  (2009 - $190,000,  expenses  settled with
equity or debt $179,000 (2009 - $82,000) an asset written-off of $10,000 (2009 -
$nil), a gain on accounts payable  written-off of $144,000 (2009 - $nil), a gain
on  sale  of  tower  equipment  of  $41,000  (2009  -  $nil),  depreciation  and
amortization  of  $845,000  (2009  -  $536,000),  and  a  non-cash  stock  based
compensation  expense  of $nil  (2009 -  $290,000);  for a net cash  outflow  of
$1,622,000  (2009 - $1,539,000)  before changes in working  capital  items.  Our
accounts  receivable  have  increased  by $195,000  (2009 - $23,000)  due to our
increase  in  customer  base in Indiana  during 2009 and Indiana and Ohio during
2010.  Prepaid  expenses  decreased  by $9,000  (2009 - $34,000).  Our  accounts
payable and accrued liabilities have increased by $851,000 (2009 - $484,000) due
to our operations being partially financed by our creditors. We plan to decrease
our reliance on creditor support as we secure additional financing.

CASH TO INVESTING ACTIVITIES

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

                                       20

During 2010, investing activities used net cash of $2,159,000 (2009 - $146,000).
We acquired,  through asset purchase agreements and equipment  purchases,  tower
and customers'  premises  equipment totaling  $1,636,000,  net of sale leaseback
proceeds  of  $225,000  (2009 -  $165,000,  net of sale  leaseback  proceeds  of
$689,000).  We  acquired  customers'   relationships,   through  asset  purchase
agreements,  totaling  $1,466,000;  cash consideration was $518,000 and non-cash
consideration was $948,000.

CASH FROM FINANCING ACTIVITIES

During  2010,   financing   activities  provided  cash  of  $3,787,000  (2009  -
$1,662,000). Proceeds of $1,020,000 was received from common stock subscriptions
(2009 -  $1,105,309).  During 2010,  proceeds of $602,000 (2009 - $411,000) were
received from short-term  loans and $2,160,000  (2009 - $145,000) from long-term
debt.  A total of  $684,000 of  short-term  debt  became  long-term  debt due to
renegotiations  with note holders.  We repaid  $780,000  (2009 - $2,196,000)  of
short-term debt, long-term debt and capital lease obligations.

OFF-BALANCE SHEET ARRANGEMENTS

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

APPLICATION OF CRITICAL ACCOUNTING POLICIES

FAIR VALUE

The Company's  financial  instruments  consist  principally of notes payable and
convertible  debentures.  Notes payable and convertible debentures are financial
liabilities  with  carrying  values that  approximate  fair  value.  The Company
determines the fair value of notes payable and convertible  debentures  based on
the effective  yields of similar  obligations.  The Company  believes all of the
financial  instruments' recorded values approximate fair market value because of
their nature and respective durations.

The Company  complies with the provisions of ASC 820,  "FAIR VALUE  MEASUREMENTS
AND DISCLOSURES"  ("ASC 820"),  previously  referred to as SFAS No. 157. ASC 820
defines fair value, establishes a framework for measuring fair value and expands
disclosures  about fair  value  measurements  required  under  other  accounting
pronouncements.  ASC  820-10-35,  "FAIR VALUE  MEASUREMENTS  AND  DISCLOSURES  -
SUBSEQUENT MEASUREMENT" ("ASC 820-10-35"),  clarifies that fair value is an exit
price,  representing the amount that would be received from the sale of an asset
or paid to  transfer  a  liability  in an  orderly  transaction  between  market
participants.  ASC 820-10-35 also requires that a fair value measurement reflect
the assumptions  market  participants would use in pricing an asset or liability
based on the best information available.  Assumptions include the risks inherent
in a particular  valuation  technique (such as a pricing model) and/or the risks
inherent in the inputs to the model.  The Company  also follows ASC 825 "INTERIM
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL  INSTRUMENTS",  previously referred to
as FAS 107-1 to expand required disclosures.

ASC 820-10-35  establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques 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  measurements).  The three levels of the fair value hierarchy under ASC
820-10-35 are described below:

Level 1 -  Valuations  based on quoted  prices in active  markets for  identical
assets or liabilities that an entity has the ability to access.

Level 2 - Valuations  based on quoted prices for similar assets or  liabilities,
quoted  prices for  identical  assets or  liabilities  in  markets  that are not
active, or other inputs that are observable or can be corroborated by observable
data for substantially the full term of the assets or liabilities.

Level 3 - Valuations  based on inputs that are  supported by little or no market
activity  and  that  are  significant  to  the  fair  value  of  the  assets  or
liabilities.

USE OF ESTIMATES

The  preparation  of  financial  statements  in  accordance  with United  States
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that affect the reported  amounts of assets and liabilities at

                                       21

the date of the  financial  statements  and the reported  amounts of revenue and
expenses in the reporting period. The Company regularly  evaluates estimates and
assumptions  related to the useful life and recoverability of long-lived assets,
stock-based  compensation,  and deferred income tax asset valuation  allowances.
The Company bases its estimates and  assumptions  on current  facts,  historical
experience and various other factors that it believes to be reasonable under the
circumstances,  the results of which form the basis for making  judgments  about
the  carrying  values of assets  and  liabilities  and the  accrual of costs and
expenses that are not readily  apparent from other  sources.  The actual results
experienced  by the  Company  may  differ  materially  and  adversely  from  the
Company's  estimates.  To the extent there are material  differences between the
estimates and the actual results, future results of operations will be affected.

CASH AND CASH EQUIVALENTS

The Company  considers all highly liquid  instruments  with  maturities of three
months or less at the time of issuance to be cash  equivalents.  Amount due bank
represents  checks  written and released  but not yet  presented to the bank for
payment, effectively outstanding checks in excess of bank balances.

CONCENTRATION OF BUSINESS AND CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk consist  principally of accounts  receivable.  The Company reviews a
customer's  credit history  before  extending  credit.  There were no individual
customers with balances in excess of 10% of the accounts receivable or net sales
balances at July 31, 2010 and 2009.

PROPERTY AND EQUIPMENT

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

Computers and wireless  equipment also consists of spare  equipment and supplies
not put in use such as  radios,  antennas,  cable  and wire and is stated at the
lower of cost (first-in,  first-out basis) or market. The carrying value of such
equipment  was $392,132  (2009 - $234,867).  The spare  electronic  equipment is
maintained  to  provide  replacement  parts  when and if needed in a short  time
period to provide  minimal  service  disruption  to  customers in the event of a
parts  failure  and to install new  customers'  premises  equipment  timely when
ordered. Spare equipment and supplies are not depreciated until put into use.

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

Description                                      Life
-----------                                      ----
Computer and wireless equipment                3 years
Towers and infrastructures                     5 years
Furniture and fixtures                         7 years
Vehicles                                       5 years
Software                                       3 years

The  Company  periodically  evaluates  the  useful  lives  of its  property  and
equipment.  The  Company's  property and  equipment  is reviewed for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability is measured by comparison of the
carrying  amount to the  future  net  undiscounted  cash  flows  expected  to be
generated by the related  assets.  If such assets are considered to be impaired,
the  impairment to be  recognized  is measured by the amount the carrying  value
exceeds the fair market value of the assets.  No impairment was recorded at July
31, 2010 or 2009.

CUSTOMERS' RELATIONSHIPS

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

LONG-LIVED ASSETS

The Company evaluates  property and equipment and amortizable  intangible assets
for impairment  whenever current events and circumstances  indicate the carrying
amounts  may  not be  recoverable.  The  evaluation  of  long-lived  assets  for

                                       22

impairment  requires  a  high  degree  of  judgment  and  involves  the  use  of
significant  estimates and  assumptions.  If the carrying amount is greater than
the  expected  future  undiscounted  cash  flows to be  generated,  the  Company
recognizes an impairment loss equal to the excess, if any, of the carrying value
over the fair value of the asset.  The  Company  generally  measures  fair value
based  upon the  present  value of  estimated  future net cash flows of an asset
group over its remaining useful life.

FINANCIAL INSTRUMENTS

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

REVENUE RECOGNITION

The  Company  charges  a  recurring  subscription  fee  for  providing  wireless
broadband  services to its  subscribers.  Revenue from service is  recognized as
monthly   services  are  rendered  in  accordance   with   individual   customer
arrangements.  Credit risk is managed by  disconnecting  services  to  customers
whose accounts are delinquent for a specified  number of days.  Consistent  with
SFAS No. 51, installation revenue obtained from the connection of subscribers to
the system is recognized in the period installation services are provided to the
extent of related  direct selling  costs.  Any remaining  amount is deferred and
recognized  over the  estimated  average  period that  customers are expected to
remain  connected  to the system.  From time to time,  the  Company  enters into
barter  arrangements   whereby  it  provides  certain  customers  with  wireless
broadband  services  in  exchange  for use of  towers  and  equipment  owned  by
customers.  Revenue and expenses recorded under barter  arrangements was $99,336
(2009 - $66,851).

STOCK-BASED COMPENSATION

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

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

Basic loss per share is computed by dividing  net loss by the  weighted  average
number of common  shares  outstanding  for the year.  Diluted  loss per share is
computed by dividing net loss by the weighted  average  number of common  shares
outstanding plus common stock equivalents (if dilutive) related to stock options
and warrants for each year. There were no common equivalent  shares  outstanding
at April 30, 2010 and 2009 that have been  included  in dilutive  loss per share
calculation as the effects would have been  anti-dilutive.  There were no common
equivalent shares  outstanding at July 31, 2010 and 2009 that have been included
in  dilutive  loss  per  share  calculation  as  the  effects  would  have  been
anti-dilutive.  There are no stock options issued and outstanding as at July 31,
2010 and 2009.  Total  potentially  dilutive  common  shares,  relating to stock
purchase  warrants issuable in the future, as at July 31, 2010 totals 10,666,730
including  5,614,929  common  shares  issuable  on  the  exercise  of  warrants,
4,285,714  common shares  issuable if the  $1,500,000  convertible  debenture is
converted  into common shares at $0.35 per share and 766,087 common shares to be
issued in connection with the completion of two asset purchase agreements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

                                       23

ITEM 8. FINANCIAL STATEMENTS

             Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders
Omnicity Corp.
Rushville, Indiana

We have audited the accompanying  consolidated  balance sheets of Omnicity Corp.
("the  Company")  as of July 31,  2010 and  2009  and the  related  consolidated
statements of operations,  changes in  stockholders'  deficit and cash flows for
the years then ended.  These financial  statements are the responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Omnicity Corp. as of July 31,
2010 and 2009,  and the  results  of its  operations  and its cash flows for the
years then ended in conformity with accounting  principles generally accepted in
the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial statements, the Company has suffered recurring losses and had negative
working  capital as at July 31,  2010 that  raise  substantial  doubt  about the
Company's ability to continue as a going concern.  Management's  plans in regard
to these matters are also  described in the Note 1. The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.


/s/ Weaver & Martin, LLC
-----------------------------------
Weaver & Martin, LLC
Kansas City, Missouri
November 17, 2010

                                       24

Omnicity Corp.
Consolidated Balance Sheets
As at July 31, 2010 and 2009


                                                                         2010                   2009
                                                                     ------------           ------------
                                                                          $                      $
                                                                                        (Restated - Note 17)
                                     Assets

Current Assets:
  Cash                                                                     39,405                159,119
  Accounts receivable, net                                                273,387                 78,007
  Other receivable                                                             --                  5,000
  Prepaid expenses and deposits                                            14,409                114,173
                                                                     ------------           ------------
      Total Current Assets                                                327,201                356,299

Property and Equipment (Note 3)                                         2,425,092              1,022,675
Deposits and Other Assets (Note 4)                                        125,094                129,886
Customers' Relationships (Note 5)                                       2,973,713              1,841,247
                                                                     ------------           ------------

      Total Assets                                                      5,851,100              3,350,107
                                                                     ============           ============
                      Liabilities and Stockholders' Deficit

Current Liabilities:
  Accounts payable                                                      1,267,413                838,336
  Accrued liabilities (Note 7)                                            398,410                276,563
  Short-term notes payable (Note 8)                                       942,050              1,222,716
  Current portion of long-term debt (Note 9)                            1,455,137                511,521
  Current portion of capital lease obligations (Note 13)                   74,569                 50,147
  Deferred revenue                                                             --                 42,000
                                                                     ------------           ------------
      Total Current Liabilities                                         4,137,579              2,941,283

Capital Lease Obligations (Note 13)                                        25,929                 46,868
Long-term Debt (Note 9)                                                 2,931,844              1,436,053
                                                                     ------------           ------------
      Total Liabilities                                                 7,095,352              4,424,204
                                                                     ------------           ------------
Nature of Operations and Continuance of Business (Note 1)
Commitments (Note 13)
Legal Proceedings (Note 15)

Stockholders' Deficit:
  Common Stock, par value $.001, 1,540,000,000 shares
   authorized, 43,445,418 and 38,018,382 issued and
   outstanding, respectively (Note 11)                                     43,445                 38,018
  Common Stock Subscribed and/or Reserved (Note 11 (m))                   232,500                641,594
  Additional Paid-in Capital                                            8,650,151              5,929,479
  Deficit                                                             (10,170,348)            (7,683,188)
                                                                     ------------           ------------
      Total Stockholders' Deficit                                      (1,244,252)            (1,074,097)
                                                                     ------------           ------------

      Total Liabilities and Stockholders' Deficit                       5,851,100              3,350,107
                                                                     ============           ============


      (See accompanying notes to these consolidated financial statements)

                                       25

Omnicity Corp.
Consolidated Statements of Operations
For the Years Ended July 31, 2010 and 2009


                                                   2010                       2009
                                                ----------                 ----------
                                                    $                          $
                                                                     (Restated - Note 17)

Sales, net                                       3,475,828                  1,684,350
                                                ----------                 ----------
Expenses:
  Service costs                                    225,876                     30,712
  Plant and signal delivery                      1,511,067                    967,406
  Marketing and sales                               17,806                     45,375
  General and administration                       940,398                    744,616
  Salaries and benefits                          2,128,760                  1,276,016
  Stock based compensation                              --                    289,629
  Depreciation and amortization                    845,083                    536,113
                                                ----------                 ----------
      Total Expenses                             5,668,990                  3,889,867
                                                ----------                 ----------

Loss from Operations                            (2,193,162)                (2,205,517)
                                                ----------                 ----------
Other Income (Expense):
  Other income                                     216,667                         --
  Gain on sale of assets, net                       30,719                         --
  Financing expense (Note 12 (a))                 (166,416)                  (190,039)
  Interest                                        (374,968)                  (241,096)
                                                ----------                 ----------
      Total Other Income (Expense)                (293,998)                  (431,135)
                                                ----------                 ----------

Net Loss                                        (2,487,160)                (2,636,652)
                                                ==========                 ==========

Net Loss per Share - Basic and Diluted                (.06)                      (.08)
                                                ==========                 ==========

Weighted Average Shares Outstanding -
 Basic and Diluted                              41,737,000                 34,160,000
                                                ==========                 ==========


       (See accompanying notes to these consolidated financial statements)

                                       26

Omnicity Corp.
Consolidated Statement of Changes in Stockholders' Deficit
For The Years Ended July 31, 2010 and 2009

                                                                                 Additional   Common
                                                           Common                 Paid-in     Stock
                                                           Stock        Amount    Capital   Subscribed   Deficit       Total
                                                           -----        ------    -------   ----------   -------       -----
                                                             #            $          $          $           $            $

Balance, July 31, 2008 (Restated - Note 15)               5,501,355    3,383,487         --        --   (5,046,536)  (1,663,049)
Stock issued for cash on September 19, 2008                  11,112        5,000         --        --           --        5,000
Stock issued for cash on October 16, 2008                     1,429          500         --        --           --          500
Stock issued to settle debt on October 31, 2008           1,087,335      383,386         --        --           --      383,386
Stock awards to employees on January 2, 2009              1,655,009      289,629         --        --           --      289,629
Recapitalization Transactions - February 17, 2009                --           --         --        --           --           --
  Shares acquired by Omnicity Corp.                      (8,256,240)  (4,062,002) 4,062,002        --           --           --
  Shares of Omnicity Corp.                               43,967,007       43,967    (43,967)       --           --           --
  Cancellation of founders shares                       (33,880,000)     (33,880)    33,880        --           --           --
  Shares issued to shareholders of Omnicity,
   Incorporated to effect the recapitalization           23,000,000       23,000    (23,000)       --           --           --
  Net liabilities assumed of Omnicity Corp.                      --           --   (168,352)       --           --     (168,352)
Stock issued for acquisition of assets                    1,973,988        1,974    890,726        --           --      892,700
Stock issued for cash pursuant to a Unit and Unit for
 debt private placement at $0.35 per Unit                 2,607,387        2,607    909,978        --           --      912,585
Stock issued pursuant to an investor relations contract     350,000          350    123,900        --           --      124,250
Share issuance costs                                             --           --    (52,595)       --           --      (52,595)
Warrants issued pursuant to a Master Lease Agreement             --           --    196,907        --           --      196,907
Asset acquisition consideration to be paid in common
 shares as at July 31, 2010                                      --           --         --   164,000           --      164,000
Common stock subscribed for                                      --           --         --   477,594           --      477,594
Net loss (Restated -Note 17)                                     --           --         --        --   (2,636,652)  (2,636,652)
                                                        -----------  -----------  ---------  --------  -----------   ----------
Balance, July 31, 2009                                   38,018,382       38,018  5,929,479   641,594   (7,683,188)  (1,074,097)
Asset acquisition consideration paid in common shares
 on August 18, 2009                                         229,855          230    163,770  (164,000)          --           --
Asset acquisition consideration paid in common shares
 on October 13, 2009                                        268,818          269    124,731        --           --      125,000
Value of warrants issued on October 13, 2009 pursuant
 to a Master Lease Agreement                                     --           --     63,132        --           --       63,132
Stock issued on November 10, 2009 for cash pursuant to
 a Unit private placement at $0.35 per Unit               4,000,000        4,000  1,396,000  (400,000)          --    1,000,000
Stock issued on November 13, 2009 for cash pursuant to
 a Unit private placement at $0.35 per Unit                 278,840          279     97,315   (77,594)          --       20,000
Value of warrants issued and a beneficial conversion
 feature of a convertible debenture issued on
 December 24, 2009 (Note 10 (h))                                 --           --    659,873        --           --      659,873
Stock issued on February 17, 2010 to acquire a vehicle        5,000            5      1,495        --           --        1,500
Stock issued April 9, 2010 to settle debt                    14,285           14      4,986        --           --        5,000
Stock issued on April 26, 2010, at a fair value of
 $0.303 per share pursuant to an investor relations
 contract                                                   165,000          165     49,835        --           --       50,000
Stock issued on April 26, 2010, at a fair value of
 $0.2857 per share pursuant to a website development
 contract                                                    70,000           70     19,930        --           --       20,000
Stock issued on April 29, 2010 for debt settlement
 pursuant to a Unit for debt private placement at
 $0.35 per Unit                                             228,571          229     79,771        --           --       80,000
Asset acquisition consideration paid on July 26, 2010       166,667          166     59,834        --           --       60,000
Asset acquisition consideration to be paid as at
 July 31, 2010                                                   --           --         --   232,500           --      232,500
Net loss                                                         --           --         --        --   (2,487,160)  (2,487,160)
                                                        -----------  -----------  ---------  --------  -----------   ----------

Balance, July 31, 2010                                   43,445,418       43,445  8,650,151   232,500  (10,170,348)  (1,244,252)
                                                        ===========  ===========  =========  ========  ===========   ==========

                                       27

Omnicity Corp.
Consolidated Statements of Cash Flows
For the Years Ended July 31, 2010 and 2009

                                                                                    2010                 2009
                                                                                 ----------           ----------
                                                                                     $                    $
Cash flows from (to) operating activities:
  Net loss                                                                       (2,487,160)          (2,636,652)
  Adjustments to reconcile net loss to net cash used in operating
   activities:
     Depreciation and amortization                                                  845,085              536,113
     Stock based compensation                                                            --              289,629
     Other income                                                                  (143,653)                  --
     Gain on sale of assets, net                                                    (30,719)                  --
     Financing expense paid with equity                                               5,000              190,039
     Interest expense accreted                                                       60,562                   --
     Expenses settled with equity                                                   179,000               60,157
     Expenses settled through short-term borrowings                                      --               22,105
  (Increase) decrease in:
     Accounts and other receivable                                                 (195,380)             (23,352)
     Prepaid expenses                                                                (9,236)             (34,289)
  Increase (decrease) in:
     Accounts payable and accrued liabilities                                       850,820              484,625
     Customer deposits and unearned revenue                                         (42,000)             (20,000)
                                                                                 ----------           ----------
           Net cash used in operating activities                                   (967,680)          (1,131,625)
                                                                                 ----------           ----------
Cash flows from (to) investing activities:
  (Increase) in deposits                                                             (5,008)              19,677
  Proceeds from sale leaseback of property and equipment                            225,000              689,368
  Customers' relationships acquired                                                (518,036)                  --
  Acquisition of property and equipment                                          (1,861,188)            (854,706)
                                                                                 ----------           ----------
           Net cash used in investing activities                                 (2,159,432)            (145,661)
                                                                                 ----------           ----------
Cash flows from (to) financing activities:
  Proceeds from short-term notes                                                    602,000              411,000
  Repayment of short-term notes                                                    (200,017)            (128,173)
  Related party repayment (advance)                                                   5,000               (5,000)
  Repayment of bank borrowings                                                           --                 (909)
  Proceeds from long-term debt                                                    2,160,000              145,000
  Repayment of long-term debt and capital lease obligations                        (579,585)             (90,822)
  Proceeds from issuance of common stock, net of issuance costs                   1,020,000              627,715
  Proceeds from common stock subscriptions                                               --              477,594
                                                                                 ----------           ----------
           Net cash provided by financing activities                              3,007,398            1,436,405
                                                                                 ----------           ----------

(Decrease) increase in cash                                                        (119,714)             159,119
Cash, beginning of  year                                                            159,119                   --
                                                                                 ----------           ----------

Cash, end of year                                                                    39,405              159,119
                                                                                 ==========           ==========
Supplemental cash flow information:
  Cash paid for interest                                                            202,422               52,711

  Cash paid for income taxes                                                             --                   --
                                                                                 ==========           ==========
Supplemental disclosure of non-cash investing and financing activities:
  Net liabilities assumed in corporate reorganization                                    --             (168,352)
  Customer relationships acquired in exchange for debt and common stock             948,430            1,117,645
  Equipment acquired pursuant to debt and equity agreements                         236,595                6,800
  Conversion of short-term debt into equity                                          80,000              409,421
  Warrants issued pursuant to a financing arrangement                                    --              196,907


      (See accompanying notes to these consolidated financial statements)

                                       28

Omnicity Corp.
Notes to the Consolidated Financial Statements


1. Nature of Operations and Continuance of Business

The  Company  was  incorporated  as Bear River  Resources,  Inc. in the State of
Nevada on October 12, 2006 and was  registered  as an  extra-provincial  company
under the Business  Corporations Act of British Columbia on November 6, 2006. On
October 21, 2008 the Company changed its name to Omnicity Corp.

On February 17,  2009,  the Company  acquired all of the issued and  outstanding
shares of Omnicity, Incorporated. Omnicity, Incorporated (incorporated on August
13, 2003) provides broadband access, including advanced services of voice, video
and data, in un-served and  underserved  small and rural markets and is planning
to be a consolidator of rural market  broadband  nationwide.  The total purchase
price was 23,000,000 common shares of the Company.

These financial  statements  have been prepared on a going concern basis,  which
implies  the Company  will  continue  to realize  its assets and  discharge  its
liabilities  in the  normal  course  of  business.  The  Company  has  generated
substantial revenues but has sustained losses since inception and has never paid
any dividends  and is unlikely to pay dividends in the immediate or  foreseeable
future. The continuation of the Company as a going concern is dependent upon the
ability of the Company to obtain  necessary debt and/or equity financing to fund
its growth strategy,  pay debt when due, to continue  operations,  and to attain
profitability. As at July 31, 2010, the Company had a working capital deficit of
$3,810,378  and a  stockholders'  deficit of  $1,278,121.  All of these  factors
combined raises substantial doubt regarding the Company's ability to continue as
a going concern.  These  financial  statements do not include any adjustments to
the   recoverability   and   classification   of  recorded   asset  amounts  and
classification  of  liabilities  that might be  necessary  should the Company be
unable to continue as a going concern.

Although the Company is  operationally  cash flow  positive as at July 31, 2010,
the Company must continue to address its liquidity and working  capital  issues.
The Company  continues  to raise  additional  capital  through  the  issuance of
short-term  and long-term  debt and equity to private  investors to maintain its
aggressive  acquisition  strategy,  increase  its  organic  growth  and to repay
principal and interest when due. Management believes this additional capital and
the expanded customer base through  acquisitions and organic growth will provide
the Company the opportunity to increase its operational cash flow and ultimately
to be profitable over the next twelve months.

2. Significant Accounting Policies

RECENTLY ISSUED OR ADOPTED ACCOUNTING PRONOUNCEMENTS

On July 1, 2009, the Financial  Accounting  Standards Board ("FASB")  officially
launched the FASB ASC 105 -- GENERALLY  ACCEPTED  ACCOUNTING  PRINCIPLES,  which
established the FASB Accounting Standards Codification ("the Codification"),  as
the single  official  source of  authoritative,  nongovernmental,  U.S. GAAP, in
addition to guidance  issued by the  Securities  and  Exchange  Commission.  The
Codification is designed to simplify U.S. GAAP into a single,  topically ordered
structure.  All guidance contained in the Codification carries an equal level of
authority.  The  Codification is effective for interim and annual periods ending
after September 15, 2009. Accordingly, the Company refers to the Codification in
respect of the  appropriate  accounting  standards  throughout  this document as
"FASB ASC".  Implementation  of the  Codification did not have any impact on the
Company's consolidated financial statements.

The following  FASB  pronouncements  have been adopted by the Company during the
twelve months ended July 31, 2010:

Effective  November  1,  2009,  the  Company  adopted  the FASB ASC "Fair  Value
Measurements  and  Disclosures"  guidance  with respect to  recurring  financial
assets and liabilities. Effective November 1, 2009, the Company adopted the FASB
ASC  "Fair  Value  Measurements  and  Disclosures"  guidance  as it  relates  to
nonrecurring  fair value  measurement  requirements for nonfinancial  assets and
liabilities.  The ASC guidance  defines fair value,  establishes a framework for
measuring  fair  value  in  GAAP,  and  expands   disclosure  about  fair  value
measurements.  The  adoption  of the  standard  had no impact  on the  Company's
financial statements.

On June 30, 2009,  FASB issued  Accounting  Standard  Update  (ASU) No.  2009-01
(Topic 105) - Generally Accepted  Accounting  Principles - amendments based on -
Statement of Financial  Accounting  Standards No. 168 "The FASB  Accounting  and
Standards  Codification  and the  Hierarchy  of  Generally  Accepted  Accounting
Principles".  Beginning  with  this  Statement  FASB  will no  longer  issue new
standards in the form of Statements,  FASB Staff  Positions,  or Emerging Issues
Task Force Abstracts.  Instead, it will issue Accounting Standard Updates.  This
ASU includes FASB  Statement  No. 168 in its  entirety.  While ASU's will not be

                                       29

considered  authoritative  in their own  right,  they will  serve to update  the
Codification, provide the bases for conclusions and changes in the Codification,
and provide background information about the guidance. The Codification modifies
the GAAP  hierarchy  to  include  only two  levels  of GAAP:  authoritative  and
non-authoritative.  ASU No. 2009-01 became  effective for the Company's  quarter
ended October 31, 2009.  Implementation of this Standard did not have any impact
on the Company's financial statements.

In August  2009,  FASB  issued  ASU No.  2009-05 - Fair Value  Measurements  and
Disclosures  (Topic  820) -  Measuring  Liabilities  at  Fair  Value.  This  ASU
clarifies the fair market value  measurement of  liabilities.  In  circumstances
where a quoted  price in an active  market for the  identical  liability  is not
available,  a reporting  entity is  required to measure  fair value using one or
more of the  following  techniques:  a technique  that uses quoted  price of the
identical  or a similar  liability  or  liabilities  when  traded as an asset or
assets, or another valuation technique that is consistent with the principles of
Topic 820 such as an income or market  approach.  ASU No.  2009-05 was effective
upon issuance and it did not result in any significant  financial  impact on the
Company upon adoption.

In September  2009,  FASB issued ASU No. 2009-12 - Fair Value  Measurements  and
Disclosures  (Topic 820) - Investments  in Certain  Entities That  Calculate Net
Asset Value per Share (or its  equivalent).  This ASU permits use of a practical
expedient,  with  appropriate  disclosures,  when measuring the fair value of an
alternative investment that does not have a readily determinable fair value. ASU
No. 2009-12 became  effective for the Company's  quarter ended January 31, 2010.
Since the Company does not currently have any such investments,  the adoption of
the ASU did not have any significant financial impact on the Company's financial
statements.

In January 2010, FASB issued ASU No. 2010-06  regarding fair value  measurements
and disclosures and improvement in the disclosure about fair value measurements.
This ASU requires additional  disclosures regarding significant transfers in and
out of Levels 1 and 2 of fair value measurements, including a description of the
reasons for the transfers.  This section of the ASU is effective for interim and
annual  reporting  periods  beginning after December 15, 2009 Further,  this ASU
requires  additional  disclosures  for  the  activity  in  Level  3  fair  value
measurements,  requiring  presentation of information  about  purchases,  sales,
issuances,  and settlements in the reconciliation  for fair value  measurements.
This section of the ASU is effective  for interim and annual  reporting  periods
beginning  after  December  15,  2010.  The  adoption of this ASU did not have a
material impact on its financial statements.

In February 2010, the FASB issued ASU No. 2010-09  regarding  subsequent  events
and amendments to certain  recognition and disclosure  requirements.  Under this
ASU, a public  company  that is a SEC filer,  as  defined,  is not  required  to
disclose the date through which subsequent events have been evaluated.  This ASU
is  effective  upon  issuance.  The adoption of this ASU did not have a material
impact on its financial statements.

Other  recently  issued ASC  guidance  has either  been  implemented  or are not
significant to the Company.

FAIR VALUE

The Company's  financial  instruments  consist  principally of notes payable and
convertible  debentures.  Notes payable and convertible debentures are financial
liabilities  with  carrying  values that  approximate  fair  value.  The Company
determines the fair value of notes payable and convertible  debentures  based on
the effective  yields of similar  obligations.  The Company  believes all of the
financial  instruments' recorded values approximate fair market value because of
their nature and respective durations.

The Company  complies with the provisions of ASC 820,  "FAIR VALUE  MEASUREMENTS
AND DISCLOSURES"  ("ASC 820"),  previously  referred to as SFAS No. 157. ASC 820
defines fair value, establishes a framework for measuring fair value and expands
disclosures  about fair  value  measurements  required  under  other  accounting
pronouncements.  ASC  820-10-35,  "FAIR VALUE  MEASUREMENTS  AND  DISCLOSURES  -
SUBSEQUENT MEASUREMENT" ("ASC 820-10-35"),  clarifies that fair value is an exit
price,  representing the amount that would be received from the sale of an asset
or paid to  transfer  a  liability  in an  orderly  transaction  between  market
participants.  ASC 820-10-35 also requires that a fair value measurement reflect
the assumptions  market  participants would use in pricing an asset or liability
based on the best information available.  Assumptions include the risks inherent
in a particular  valuation  technique (such as a pricing model) and/or the risks
inherent in the inputs to the model.  The Company  also follows ASC 825 "INTERIM
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL  INSTRUMENTS",  previously referred to
as FAS 107-1 to expand required disclosures.

ASC 820-10-35  establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted  quoted prices in active markets for identical  assets or

                                       30

liabilities (level 1 measurement) and the lowest priority to unobservable inputs
(level 3  measurements).  The three levels of the fair value hierarchy under ASC
820-10-35 are described below:

Level 1 -  Valuations  based on quoted  prices in active  markets for  identical
assets or liabilities that an entity has the ability to access.

Level 2 - Valuations  based on quoted prices for similar assets or  liabilities,
quoted  prices for  identical  assets or  liabilities  in  markets  that are not
active, or other inputs that are observable or can be corroborated by observable
data for substantially the full term of the assets or liabilities.

Level 3 - Valuations  based on inputs that are  supported by little or no market
activity  and  that  are  significant  to  the  fair  value  of  the  assets  or
liabilities.

BASIS OF PRESENTATION

These  financial  statements and related notes are presented in accordance  with
accounting principles generally accepted in the United States, and are expressed
in US  dollars.  The  Company's  fiscal  year-end  is July 31.  These  financial
statements include the accounts of the Company's  wholly-owned Indiana operating
subsidiary, Omnicity, Incorporated.

USE OF ESTIMATES

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

CASH AND CASH EQUIVALENTS

The Company  considers all highly liquid  instruments  with  maturities of three
months or less at the time of issuance to be cash  equivalents.  Amount due bank
represents  checks  written and released  but not yet  presented to the bank for
payment, effectively outstanding checks in excess of bank balances.

CONCENTRATION OF BUSINESS AND CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of
credit risk consist  principally of accounts  receivable.  The Company reviews a
customer's  credit history  before  extending  credit.  There were no individual
customers with balances in excess of 10% of the accounts receivable or net sales
balances at July 31, 2010 and 2009.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company  records an allowance for doubtful  accounts  based on  specifically
identified  amounts  that  are  believed  to  be  uncollectible.  An  additional
allowance is recorded based on certain  percentages of aged  receivables,  which
are  determined  based on historical  experience  and  assessment of the general
financial   conditions   affecting  the  Company's   customer  base.  If  actual
collections  experience  changes,  revisions to the  allowance  may be required.
After all  attempts to collect a  receivable  have  failed,  the  receivable  is
written-off  against the  allowance.  The  allowance  for doubtful  accounts was
$10,000 at July 31, 2010 and 2009.

PROPERTY AND EQUIPMENT

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

                                       31

Computers and wireless  equipment also consists of spare  equipment and supplies
not put in use such as  radios,  antennas,  cable  and wire and is stated at the
lower of cost (first-in,  first-out basis) or market. The carrying value of such
equipment  was $392,132  (2009 - $234,867).  The spare  electronic  equipment is
maintained  to  provide  replacement  parts  when and if needed in a short  time
period to provide  minimal  service  disruption  to  customers in the event of a
parts  failure  and to install new  customers'  premises  equipment  timely when
ordered. Spare equipment and supplies are not depreciated until put into use.

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

Description                                   Life
-----------                                   ----
Computer and wireless equipment              3 years
Towers and infrastructures                   5 years
Furniture and fixtures                       7 years
Vehicles                                     5 years
Software                                     3 years

The  Company  periodically  evaluates  the  useful  lives  of its  property  and
equipment.  The  Company's  property and  equipment  is reviewed for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability is measured by comparison of the
carrying  amount to the  future  net  undiscounted  cash  flows  expected  to be
generated by the related  assets.  If such assets are considered to be impaired,
the  impairment to be  recognized  is measured by the amount the carrying  value
exceeds the fair market value of the assets.  No impairment was recorded at July
31, 2010 or 2009.

CUSTOMERS' RELATIONSHIPS

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

LONG-LIVED ASSETS

The Company evaluates  property and equipment and amortizable  intangible assets
for impairment  whenever current events and circumstances  indicate the carrying
amounts  may  not be  recoverable.  The  evaluation  of  long-lived  assets  for
impairment  requires  a  high  degree  of  judgment  and  involves  the  use  of
significant  estimates and  assumptions.  If the carrying amount is greater than
the  expected  future  undiscounted  cash  flows to be  generated,  the  Company
recognizes an impairment loss equal to the excess, if any, of the carrying value
over the fair value of the asset.  The  Company  generally  measures  fair value
based  upon the  present  value of  estimated  future net cash flows of an asset
group over its remaining useful life.

FINANCIAL INSTRUMENTS

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

FOREIGN CURRENCY TRANSACTIONS

The Company's  functional  and reporting  currency is the United States  dollar.
Monetary assets and liabilities denominated in foreign currencies are translated
using the exchange rate  prevailing at the balance sheet date.  Gains and losses
arising on settlement of foreign currency  denominated  transactions or balances
are included in the determination of income.  Foreign currency  transactions are
minimal but primarily  undertaken in Canadian  dollars.  The Company has not, to
the date of these financials statements,  entered into derivative instruments to
offset the impact of foreign currency fluctuations.

REVENUE RECOGNITION

The  Company  charges  a  recurring  subscription  fee  for  providing  wireless
broadband  services to its  subscribers.  Revenue from service is  recognized as
monthly   services  are  rendered  in  accordance   with   individual   customer
arrangements.  Credit risk is managed by  disconnecting  services  to  customers
whose accounts are delinquent for a specified  number of days.  Consistent  with
SFAS No. 51, installation revenue obtained from the connection of subscribers to
the system is recognized in the period installation services are provided to the
extent of related  direct selling  costs.  Any remaining  amount is deferred and
recognized  over the  estimated  average  period that  customers are expected to
remain  connected  to the system.  From time to time,  the  Company  enters into

                                       32

barter  arrangements   whereby  it  provides  certain  customers  with  wireless
broadband  services  in  exchange  for use of  towers  and  equipment  owned  by
customers.  Revenue and expenses recorded under barter  arrangements was $99,336
(2009 - $66,851).

ADVERTISING COSTS

The Company incurs advertising costs in the normal course of business, which are
expensed as incurred. Advertising costs were $6,473 (2009 - $3,459).

STOCK-BASED COMPENSATION

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

BASIC AND DILUTED NET INCOME (LOSS) PER SHARE

Basic loss per share is computed by dividing  net loss by the  weighted  average
number of common  shares  outstanding  for the year.  Diluted  loss per share is
computed by dividing net loss by the weighted  average  number of common  shares
outstanding plus common stock equivalents (if dilutive) related to stock options
and warrants for each year. There were no common equivalent  shares  outstanding
at July 31, 2010 and 2009 that have been  included  in  dilutive  loss per share
calculation  as the effects  would have been  anti-dilutive.  There are no stock
options issued and outstanding as at July 31, 2010 and 2009.  Total  potentially
dilutive  common  shares,  relating to stock purchase  warrants  issuable in the
future, as at July 31, 2010 totals 10,666,730  including 5,614,929 common shares
issuable on the exercise of warrants,  4,285,714  common shares  issuable if the
$1,500,000  convertible  debenture is converted  into common shares at $0.35 per
share and 766,087  common shares to be issued in connection  with the completion
of two asset purchase agreements.

3. Property and Equipment

Property and equipment consists of the following:

                                                       2010           2009
                                                    ----------     ----------
                                                        $              $
Computer and wireless equipment                      1,094,215        320,041
Tower equipment, infrastructures and house drops     1,441,707        768,643
Fiber build-out and test equipment                     121,601             --
Furniture and fixtures                                  74,562         44,959
Vehicles                                               168,629         74,529
Software                                                78,841         42,183
                                                    ----------     ----------
                                                     2,979,555      1,250,355
Less: accumulated depreciation                        (961,595)      (462,547)
                                                    ----------     ----------
                                                     2,017,960        787,808
Land                                                    15,000             --
Network replacement parts not put in use               392,132        234,867
                                                    ----------     ----------

Property and equipment, net                          2,425,092      1,022,675
                                                    ==========     ==========

4. Deposits and Other Assets

Deposits and other assets consist of the following:

                                                      2010            2009
                                                    --------        --------
                                                       $               $

Non-refundable deposits                                   --          10,000
Operating lease deposits                              86,682          86,682
Other long-term deposits                              38,412          33,204
                                                    --------        --------

                                                     125,094         129,886
                                                    ========        ========

                                       33

5. Customers' Relationships

The carrying value of customers' relationships acquired consists of:

                                                    2010           2009
                                                 ----------     ----------
                                                     $              $

Capitalized value                                 3,406,167      1,939,700
Less: accumulated amortization                     (432,454)       (98,453)
                                                 ----------     ----------

Customers' relationships, net                     2,973,713      1,841,247
                                                 ==========     ==========

6. Acquisitions

a) NDWave, LLC (Indiana)

On February  26, 2009 the Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of NDWave, LLC, located in Anderson
County,  Indiana,  pursuant to an Asset Purchase Agreement dated October 7, 2008
and  amended  February  26,  2009.  The total  purchase  price  was  $1,000,000.
Consideration was $135,000 cash,  $365,000 note payable at 5% and $500,000 to be
paid in common shares.  The number of common shares was determined  based on the
15 trading day average  closing  price of the  Company's  common shares prior to
April 27, 2009,  being $0.35.  The total number of common shares issued on April
28, 2009 was 1,428,571.  The purchase  price was allocated  $375,000 to property
and  equipment and $625,000 to  customers'  relationships  based on the relative
fair values of the assets acquired.

b) Cue Connex, LLC (Indiana)

On April 1,  2009 the  Company  acquired  the  customers'  relationships  of Cue
Connex,  LLC, located in Hartford City,  Indiana,  pursuant to an Asset Purchase
Agreement   dated  March  18,  2009.  The  total  purchase  price  was  $99,000.
Consideration  was  $10,000  cash and $89,000 to be paid in common  shares.  The
number of common  shares  was  determined  based on the 15 trading  day  average
closing  price of the  Company's  common  shares  prior to May 30,  2009,  being
$0.733. The total number of common shares issued on August 18, 2009 was 121,474.
The purchase price was allocated $99,000 to customers' relationships.

c) ForePoint Networks, LLC (Indiana)

On  March  31,  2009 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of ForePoint Networks, LLC, located
in Lafayette,  Indiana,  pursuant to an Asset Purchase  Agreement dated October,
2008 and  amended  March 25,  2009.  The total  purchase  price was  $1,225,700.
Consideration  was $332,200 cash,  $499,800 note payable at 5% and $392,700 paid
in common  shares.  The number of common shares was  determined  based on the 15
trading day average  closing price of the  Company's  common shares prior to May
30, 2009,  being $0.72. The total number of common shares issued on June 9, 2009
was 545,417. The purchase price was allocated $285,000 to property and equipment
and $940,700 to  customers'  relationships  based on the relative fair values of
the assets acquired.

d) North Central Communications, Inc. (Indiana)

On  April  30,  2009 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system  assets of North  Central  Communications,
Inc.,  located in Peru,  Indiana,  pursuant to an Asset Purchase Agreement dated
October  30, 2008 and  amended  April 24,  2009.  The total  purchase  price was
$350,000.  Consideration was $14,000 cash,  $199,000 in notes payable at 5%, and
the assumption of SBA loans totaling  $62,000 and $75,000 paid in common shares.
The number of common shares was  determined  based on the 15 trading day average
closing  price of the  Company's  common  shares prior to June 30,  2009,  being
$0.692. The total number of common shares issued on August 18, 2009 was 108,381.
The purchase price was allocated  $75,000 to property and equipment and $275,000
to  customers'  relationships  based on the  relative  fair values of the assets
acquired.

e) Rushville Internet Services LLC (Indiana)

On May 23, 2009 the  shareholders  of  Rushville  Internet  Services LLC ("RIS")
agreed to  wind-up  RIS and sell its assets to the  Company  for  $125,000.  The
Company   received   their   assets,   being   wireless   equipment   and  tower
infrastructures,  having a fair value of  $68,706,  and to settle  inter-company

                                       34

debt of  $56,294.  On October 13, 2009 the  Company  issued  268,818  restricted
common  shares to the  shareholders  of RIS at a fair value of $0.465 per common
share.

f) AAA Wireless, Inc. (Indiana)

On January 7, 2010 the Company acquired the telecommunication network and system
assets of AAA Wireless,  Inc. The total purchase  price was $493,545,  which was
paid in cash.  The  purchase  price was  allocated  as follows:  land - $15,000;
towers,  infrastructures  and house and school drops - $315,232;  automobiles  -
$16,500;  and computer and wireless equipment  including spare parts - $146,813.
No value was placed on customers' relationships as these relationships had to be
renewed  through the efforts of the Company.  The purchase price  allocation was
based on relative fair market values of all of the assets acquired.

g) Clinton County Wireless, LLC (Indiana)

On January  14, 2010 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of Clinton  County  Wireless,  LLC,
located in Clinton County,  Indiana.  The total purchase price was $60,000 to be
paid in common shares.  The number of common shares was determined  based on the
15 trading day average  closing  price of the  Company's  common shares prior to
March 15, 2010,  being $0.36. The total number of common shares on July 26, 2010
was 166,667.  The purchase price was allocated $10,000 to property and equipment
and $50,000 to customers' relationships based on the relative fair values of the
assets acquired.

h) USppp, Inc. (Indiana)

On  March  23,  2010 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of USppp, Inc., located in Decatur,
Indiana. The total purchase price was $225,000.  Consideration was $55,000 cash,
$20,000  payable upon receiving  certain  deliverables,  a long-term 5% note for
$67,500 and $82,500 to be paid in common shares. The number of common shares was
determined  based on the 15 trading day average  closing  price of the Company's
common shares prior to May 22, 2010,  being $0.3167.  The total number of common
shares to be issued is  260,526;  these  shares  have not yet been  issued.  The
purchase price was allocated  $140,000 to  telecommunication  network assets and
$85,000 to  customers'  relationships  based on the relative  fair values of the
assets acquired.

i) Bright Choice, Inc. (Ohio)

On  March  31,  2010 the  Company  acquired  the  customers'  relationships  and
telecommunication network and system assets of Bright Choice, Inc., a subsidiary
of Consolidated  Electric  Cooperative,  a rural electric cooperative located in
North Central Ohio.  The total purchase  price was $231,050.  Consideration  was
$220,000  cash and a 5% note for  $11,050.  The  purchase  price  was  allocated
$126,400 to telecommunication network and system assets, $48,600 to vehicles and
$56,050 to  customers'  relationships  based on the relative  fair values of the
assets acquired.

j) Digital Solutions Network, Inc. dba Lightspeed Wireless (Ohio)

On  April  22,  2010 the  Company  acquired  the  customers'  relationships  and
telecommunication  network and system assets of Lightspeed  Wireless  located in
Berlin,  Ohio.  The total  purchase  price  was  $1,400,000.  Consideration  was
$700,000  cash,  a note  payable of $50,000 and a long-term  6% note payable for
$500,000 and $150,000 to be paid in common  shares.  The number of common shares
will be  determined  based on the 15 trading  day average  closing  price of the
Company's common shares prior to June 21, 2010 being $0.2967 per common share. A
total of  505,561  common  shares  are to be  issued;  these  shares are not yet
issued. The purchase price was allocated $237,000 to  telecommunication  network
and  system   assets,   $13,000  to  vehicles  and   $1,150,000   to  customers'
relationships based on the relative fair values of the assets acquired.

7. Accrued Liabilities

                                                        2010           2009
                                                      --------       --------
                                                         $              $

Accrued interest                                       184,838         65,822
Commitment to issue warrants pursuant to
 equipment leasing arrangement                              --         63,132
Due to Rushville Internet Services, LLC                     --         56,294
Payroll and severance liabilities                      177,090         55,486
Real property and sales taxes and other accruals        36,482         35,829
                                                      --------       --------

                                                       398,410        276,563
                                                      ========       ========

                                       35

8. Short-term Notes Payable

                                                                             2010               2009
                                                                          ----------         ----------
                                                                              $                  $
Notes payable, due on demand, unsecured and bearing interest
 at rates between 8% and 9.5% per annum (a $30,000 note does
 not bear interest)                                                         340,000             223,500

Notes payable to the Chairman of the Board of the Company
 and a company beneficially owned bearing interest at 8% per annum           35,000               8,416

Note  payable due to a company  controlled  by a director, due
 January 1, 2011, unsecured and bearing interest at 9% per annum
 with interest payable quarterly                                            150,000                  --

Note payable due to a director, unsecured, due on September 27, 2010
 and bearing interest at 8% per annum. This note was renewed and is
 now due on March 27, 2011                                                   30,000                  --

Vendor Note, unsecured and bearing interest at 5% per annum.
 See Note 15 for legal proceedings                                          326,000             365,000

Vendor Notes, unsecured and bearing interest at 5% per annum.
 These notes were re-negotiated into long-term debt, see Note 9                  --             625,800

Vendor  Note,  unsecured,  bearing  interest at 5% and repayable
 in 4 quarterly installments of $2,762 plus interest with first
 payment due September 28, 2010                                              11,050                  --

Vendor Note, unsecured, non-interest bearing and due on August 20, 2010.
 See Note 15 for legal proceedings                                           50,000                  --
                                                                         ----------          ----------

                                                                            942,050           1,222,716
                                                                         ==========          ==========

9. Long-term Debt

                                                                            2010                2009
                                                                         ----------          ----------
                                                                             $                   $
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                         291,411             296,911

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                                                                    590,247             629,388

Note payable to Muncie Industrial Revolving Loan Fund Board
 Repayable in monthly installments 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             283,741

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                              187,846             193,170

Notes payable to First Farmers Trust & Bank. These notes were
 repaid in full                                                                  --              43,076

Unsecured notes payable to the Chairman of the Company, the
 son of the Chairman of the Company and to companies controlled
 by the Chairman. (See Note 10 (d) for repayments over the
 next five years)                                                           210,755             217,663

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. (See Note 10 (h))                                       900,689                  --

                                       36

Unsecured notes payable to a director of the Company, interest
 only at 8% and maturing April 2012                                         470,000                  --

Unsecured notes payable to a director of the Company
 Repayable in monthly installments of principal and interest
 totaling $4,613. Interest is 10% per annum                                  59,644             102,733

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                                               190,000              20,000

Unsecured vendor and investor notes payable with monthly
 or quarterly payments of principal and interest ranging
 from 5% to 10%. (See Note 15 for two long-term vendor notes
 that are subject to legal proceedings)                                   1,237,164             160,892
                                                                         ----------          ----------

Total                                                                     4,386,981           1,947,574
Less: current portion                                                     1,455,137             511,521
                                                                         ----------          ----------

Long-term portion                                                         2,931,844           1,436,053
                                                                         ==========          ==========

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

     Year          $                    Year               $
     ----      ---------                ----           ---------

     2011      1,455,137                2014             174,616
     2012      1,135,441                2015           1,032,311
     2013        188,960                Thereafter       400,516

10. Related Party Transactions and Balances

a)  Included  in  accrued  liabilities  at July 31,  2009 was  $56,294  owing to
Rushville  Internet Services,  LLC ("RIS") which represented  amounts due to RIS
under certain lease agreements. The Company and RIS have shareholders in common.
The shareholders of RIS agreed to wind-up RIS and sell its assets to the Company
for $125,000.  The Company received their assets,  being wireless  equipment and
tower   infrastructures,   having  a  fair  value  of  $68,706,  and  to  settle
inter-company  debt of  $56,294.  All  shareholders  of RIS  accepted to receive
restricted common shares of the Company.  On October 13, 2009 the Company issued
268,818 common shares to the  shareholders  of RIS at a fair value of $0.465 per
common share.

b) The  Company's  capital  lease  obligations  relate to assets leased from the
Chairman of the Company or a company  beneficially  owned by the Chairman of the
Company, totaling $58,186 (July 31, 2009 - $97,015 (See Note 13).

c) The Wabash Rural Electric Membership Cooperative's ("Wabash") Chief Executive
Officer was a director of the Company up until his resignation on July 26, 2010.
See Note 9 for notes owing to Wabash.

d)  Unsecured  notes  payable to the  Chairman of the Company and the son of the
Chairman of the Company  and to  companies  controlled  by the  Chairman,  total
$245,755  (July 31,  2009 -  $217,663).  During  2009 the  Chairman of the Board
converted a $150,000  short-term note plus accrued interest into common stock of
Omnicity, Incorporated prior to the reverse merger on February 17, 2009. A total
of $30,000 is  repayable on October 15,  2010,  $5,000 is repayable  over twelve
months ending July 31, 2011,  and $210,755 is repayable in monthly  installments
of principal and interest at 8% as follows:

                       $
                    ------

     2011           78,913
     2012           57,605
     2013           37,317
     2014           36,920

e)  During  2009 a  director  and  two  companies  controlled  by two  directors
subscribed  for  499,886  Units at $0.35 per Unit and  received  499,886  common
shares and  warrants  to acquire a further  249,943  common  shares at $0.50 per
share expiring May 8, 2011.

f) On October 20, 2009 the Company received $1,000,000 from a director and major
shareholder  in addition to  $400,000  received on July 3, 2009.  On October 20,
2009 the director  subscribed for 4,000,000 units at $0.35 per unit. These units
were issued on November 10, 2009.  Each unit  contained one common share and one
half of one common share  purchase  warrant.  Each whole warrant is  exercisable
into one common share at an exercise price of $0.50 per share expiring  November
10, 2011.

                                       37

g) On November 23, 2009 the Company received $150,000 from a company  controlled
by a director of the Company and issued a  promissory  note due January 1, 2011,
which is  unsecured  and bears  interest at 9% per annum with  interest  payable
quarterly. The Company is also indebted to the director in the amount of $20,000
which is secured by a debenture  which bears interest at 8% per annum,  interest
paid quarterly and due January 2, 2011.  The director can request  settlement in
common shares or cash on the maturity date. During 2009 a company owned 1/3 by a
director  loaned the Company  $15,000  which was repaid  during  2009  including
$1,500 of bonus interest.

h) On December  24, 2009 the Company  received  $1,500,000  from a director  and
major  shareholder  of the Company and issued a convertible  debenture  having a
face value of $1,500,000, plus warrants to acquire up to 1,500,000 common shares
at $0.50 per share  expiring  December  24,  2014.  This  convertible  debenture
accrues  interest at 8% per annum and principal and interest is convertible into
common shares at a price of $0.35 per common share up to December 24, 2014 being
the maturity date. The Company  discounted  this debenture by $222,794 being the
relative fair market value of the  beneficial  conversion  feature.  The Company
also  valued the  warrants  at  $437,079  being the  relative  fair value of the
warrants.  The value of the warrants was  discounted  from the face value of the
debenture. The total discounted value of the debenture, being $840,127, is being
accreted  up to its face value to  maturity,  being  December  24,  2014.  Total
accreted  interest  expense  for the period  ended July 31,  2010 is $60,562 and
accrued interest as at July 31, 2010 is $71,753.

i) In April,  2010 the Company  received  $500,000  from a director to close two
acquisitions.  Two notes,  totaling $470,000 are unsecured,  bear interest at 8%
per annum and mature in April 2012. A $30,000 note is unsecured,  bears interest
at 8% per annum and is due  September  27, 2010.  During the year this  director
loaned $100,000 on a short-term  basis and was repaid  including a $10,000 bonus
interest  payment  90 days  later.  The  Company is also  indebted  to this same
director as at July 31, 2010  pursuant to two long-term  notes payable  totaling
$59,644 (2009 - $102,733). These two notes are repayable as follows:

                        $
                     ------

       2011          48,717
       2012          10,927

j) On April 20,  2010 the  Company  received  $225,000  from a  director  of the
Company pursuant to a sale of towers to the director.  The towers had a net book
value of $184,281 and the Company recorded a gain on sale of assets of $40,719.

11. Common Stock

a) On October 21, 2008 the Company  increased,  by way of a stock dividend,  its
issued share capital on a 7.7 new for 1 old basis.  There were 43,967,007 common
shares  outstanding  after the forward  split.  As part of a stock  dividend the
Company also  increased its  authorized  share capital to  1,540,000,000  common
shares.

b) On February 17, 2009, the Company  acquired,  by way of an Agreement and Plan
of Merger, all of the issued and outstanding  shares of Omnicity,  Incorporated,
an  Indiana  company  (See Note 1).  The  Company  issued a total of  23,000,000
post-forward  split restricted  common shares of the Company to the shareholders
of Omnicity,  Incorporated for 100% of Omnicity,  Incorporated. In addition, the
Company  caused  33,880,000  founders'  post-forward  split common shares of the
Company to be cancelled  leaving  33,087,007  post-forward  split common  shares
issued and outstanding as at February 17, 2009.

c) On April 29,  2009 and June 9, 2009 the Company  issued a total of  1,973,988
common shares of the Company at an average fair value of $0.45 per common share,
totaling  $892,700,  to acquire tower  infrastructures,  wireless  equipment and
customers' relationships.

d) In May and June,  2009 the Company  issued a total of 2,607,387  Units of the
Company at $0.35 per Unit  pursuant to Unit and Unit for Debt Private  Placement
Offerings.  Each Unit  contained  one  common  share and  one-half  of one share
purchase  warrant.  Each whole warrant is  exercisable  into one common share at
$0.50 per share  expiring  two years after  issuance.  A total of  $912,585  was
received  ($674,810 of cash and $237,775 of debt  settled)  pursuant to Unit and
Unit for Debt Subscription  Agreements. A total of $52,595 of legal expenses was
netted against this offering for total net proceeds of $859,990.

e) On June 1, 2009 the Company  entered into an agreement  with Onyx  Consulting
Group,  LLC ("Onyx") to manage all aspects of the  Company's  investor and media
relations  program.  The Company paid a fee to Onyx in the amount of $40,000 for
the period June 1, 2009 to November 30, 2009 and issued 350,000 common shares of
the Company having a fair value of $0.355 per common share or $124,250 in total.

                                       38

The Company  charged  $55,250 as an expense in 2009 and  $109,000  in 2010.  The
Company is  considering  seeking an injunction on these shares issued due to non
performance of their contract.

f) On August 18, 2009, pursuant to two completed Asset Purchase Agreements,  the
Company  issued  229,855  common  shares having a fair value of $0.71 per share,
totaling  $164,000,  to acquire tower  infrastructures,  wireless  equipment and
customers'  relationships.  This amount was recorded as common stock reserved as
at July 31, 2009.

g) On October 13, 2009 the Company acquired tower  infrastructures and tower and
customer premises equipment and settled an inter-company  liability. The Company
issued, as consideration, 268,818 common shares at $0.465 per share.

h) The Company received $97,594 pursuant to Unit Private Placement  Subscription
Agreements with certain private  investors.  The Company issued 278,840 units at
$0.35 per unit on November 13, 2009.  Each unit  contained  one common share and
one half of one common share purchase warrant. Each whole warrant is exercisable
into one common share at $0.50 per share expiring November 13, 2011.

i) The Company  received  $1,000,000  from a director and major  shareholder  on
October  20,  2009.  These  funds plus  $400,000  received  on July 3, 2009 were
combined and a subscription  agreement for 4,000,000 units at $0.35 per unit was
executed on October 20, 2009. These units were issued on November 11, 2009. Each
unit  contained  one  common  share and one half of one  common  share  purchase
warrant.  Each whole warrant is exercisable into one common share at an exercise
price of $0.50 per common share expiring November 11, 2011.

j) The Company issued  254,285 common shares as follows:  5,000 common shares to
acquire a vehicle  valued at $1,500;  14,285  common  shares valued at $5,000 to
settle a financing  obligation;  and  235,000  common  shares  valued at $70,000
pursuant to two consulting contracts.

k) On April 26, 2010 the Company  settled  $80,000 of short-term debt by issuing
228,571 Units at $0.35 per unit pursuant to two Unit for Debt Private  Placement
Subscription  Agreements.  Each unit  contained one common share and one half of
one common share purchase  warrant.  Each whole warrant is exercisable  into one
common share at an exercise  price of $0.50 per common share  expiring April 29,
2011.

l) On July 26, 2010,  pursuant to a completed  Asset  Purchase  Agreement  dated
January 10, 2010,  the Company  issued 166,667 common shares having a fair value
of $0.36 per share, totaling $60,000, to acquire tower infrastructures, wireless
equipment and customers' relationships.

m) See Note 6 (h) and (j) for  766,087  common  shares  committed  to be  issued
pursuant to two completed asset purchase agreements to settle $232,500 of common
share commitments.

12. Warrants and Capital Stock Issuable Upon Conversion of Debentures

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

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

Pursuant to Warrant  Agreements  appended to the Master  Lease  Agreements  with
Agility and Agility II, the Company was obligated to provide the Lessor with 30%
warrant coverage.  On June 24, 2009, the Company settled the commitment to issue
warrants  under the November 6, 2006 Master Lease  Agreement and issued  155,556
warrants  exercisable at $0.45 per common share expiring  December 1, 2011. Also
on June 24, 2009 the Company  settled the  commitments  to issue warrants on the
first two of four sale leaseback  schedules.  The Company issued 77,569 warrants
exercisable  at $0.51 per common  share  expiring  February  17, 2019 and issued

                                       39

184,914 warrants  exercisable at $0.58 per common share expiring March 27, 2019.
These  warrants  were valued at $126,907  and charged as a financing  expense in
2009. The Company was committed to issuing  139,490 share  purchase  warrants to
acquire  139,490  common  shares at an exercise  price of $0.56 per common share
expiring  July 14,  2019  pursuant  to the July 9,  2009 and July 14,  2009 sale
leaseback  arrangements.  These  warrants  were issued on October 13, 2009.  The
Company recorded $63,132 as an accrued liability and financing expense as at and
for the year ended July 31, 2009. This amount was calculated using Black-Scholes
Option Pricing Model using the following  assumptions:  5 year expected life, 0%
expected  dividends,  90% volatility and an average  risk-free  interest rate of
2.36%.

As at July 31, 2010 the Company has common share  purchase  warrants  issued and
outstanding  to purchase up to 5,614,929  common  shares at an average  exercise
price of $.50 per common share having an average remaining life of 2.54 years as
follows:

                               Exercise
                                Price
         #                        $                Expiry Date
     ---------                  -----              -----------
     1,199,408                   .50             May 8, 2011
       100,000                   .50             June 24, 2011
         4,287                   .50             September 17, 2011
     2,000,000                   .50             November 10, 2011
       139,420                   .50             November 13, 2011
       155,556                   .45             December 1, 2011
        77,569                   .51             February 17, 2019
       184,914                   .58             March 27, 2019
       139,490                   .56             July 14, 2019
       114,285                   .50             April 29, 2011
     1,500,000                   .50             December 24, 2014
    ----------

     5,614,929
    ==========

Pursuant  to an 8%  convertible  debenture  having a face  value of  $1,500,000,
interest  payable  quarterly,  the Company has reserved up to  4,285,714  common
shares to be issued upon conversion at $0.35 per share.

13. Lease Obligations

Future  minimum lease  payments for  equipment  acquired  under  non-cancellable
capital leases and operating leases with initial terms of more than one year are
as follows:

                                                      Capital          Operating
                                                      Leases            Leases
                                                     --------          --------
                                                        $                 $
Year ending July 31,
  2011                                                 80,675           375,963
  2012                                                 18,613           260,899
  2013                                                  9,374                --
                                                     --------          --------

Total minimum lease payments                          108,662

Less: amounts representing interest                     8,163
                                                     --------

Present value of net minimum lease payments           100,498
Less: current portion                                  74,569
                                                     --------

Long-term capital lease obligations                    25,929
                                                     ========

The principal portion of capital lease obligations is to be repaid as follows:

                                    $
                                  ------

                     2011         74,569
                     2012         16,872
                     2013          9,057

                                       40

14.  401(K) Plan

The Company  established a 401(K) plan (the "Plan")  effective  October 1, 2008.
All employees having attained the age of 21 and having completed three months of
service are eligible to participate in the Plan. Plan  participants may elect to
have 1% to 15% of their annual compensation contributed to the Plan. The Company
plans to provide a discretionary  match of up to 4% of the  participants'  basic
compensation.  To date  the  Company  has not made  any  discretionary  matching
payments.

15. Legal Proceedings

The  Company has been served  with two  Complaints  filed with the Rush  Circuit
Court in the State of Indiana  dated  August 25, 2010 and  September 1, 2010 and
one  Complaint  filed  with the Holmes  County  Court in the State of Ohio dated
September  16, 2010.  The  plaintiffs  have made claims  against the Company for
failure  to make  required  installment  payments  that  were  due  pursuant  to
promissory  notes. The Company has recorded all debt relating to these claims as
current  liabilities  under current  portion of long-term debt. On September 14,
2010 the Company filed an  Appearance  and Notice of Extension of Time to answer
the Complaints. 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. Also on November 8, 2010 the Company filed
an Answer to one of the Rush Circuit Court  Complaints  and is in the process of
filing the second  Answer.  As the Company  has  recorded  all amounts  owing as
current  liabilities  the Company expects to receive  favorable  outcomes on all
three legal proceedings mentioned above.

16. Income Taxes

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

The Company has  consolidated  net  operating  losses  ("NOL") of  approximately
$4,800,000 to carry  forward.  These NOLs are available to offset taxable income
in future  years and begin  expiring in fiscal  2027.  Pursuant to SFAS 109, the
potential  benefit of these NOLs carried forward have not been recognized in the
consolidated financial statements since the Company cannot be assured that it is
more likely than not that such  benefit  will be realized in future  years.  The
following is a summary of the components of the provision for income tax benefit
and related valuation allowance for the years ended July 31:

                                              2010                 2009
                                            --------             --------
                                               $                    $
Deferred income tax benefit:
  Federal (34%)                              927,000              660,000
  State (8.5%)                                64,000               45,000
                                            --------             --------
                                             991,000              705,000
Valuation allowance                         (991,000)            (705,000)
                                            --------             --------

Total income tax benefit                          --                   --
                                            ========             ========

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

                                             2010                 2009
                                            ------               ------
                                              $                    $

Statutory tax rate Federal and State:         42.5%               42.5%
  Change in valuation allowance              (42.5%)             (42.5%)
                                            ------               ------

Effective Tax Rate                               0%                   0%
                                            ======               ======

                                       41

17. Restatement of Prior Periods due to Correction

The Company has restated  previously issued financial  statements pursuant to an
error  correction.   Previously  issued  financial  statements  and  comparative
financial  statements  issued  currently  are to be restated for  correction  of
errors.  Cumulative  effects of errors are  reflected in  beginning  balances of
assets and liabilities with the offsetting adjustment reflected in the beginning
deficit balance.

On May 21,  2009 a stock  subscription  in the amount of $4,594 was  incorrectly
recorded as revenue.  This error was identified by management in November,  2009
and  the  correction  of  this  error  resulted  in  a  net  increase  to  stock
subscriptions  as at May 21,  2009 of $4,594 and a decrease to revenue of $4,594
and an increase  to net loss and deficit of $4,594 for 2009.  The effect of this
error on the balance sheet and statement of operations as at July 31, 2009 is as
follows:
                                   Previously        Error
                                    Reported      Correction      Restated
                                    --------      ----------      --------
                                       $              $              $
Balance Sheet (Equity Section):
  Common Stock Subscribed             637,000        4,594         641,594
  Deficit                           7,678,594        4,594       7,683,188

Statement of Operations:
  Revenue                           1,688,944       (4,594)      1,684,350
  Net Loss                          2,632,058        4,594       2,636,652

18. Subsequent Events

Subsequent to July 31, 2010 the Company has:

a) received loans from two directors of the Company totaling $150,000.  No terms
of repayment has been specified;

b) legal proceedings in progress as discussed in Note 15;

c) issued  299,996 common shares at $0.15 per share to settle an amount owing of
$30,000 pursuant to a Services Agreement dated June 29, 2010; and

d)  entered  into a  Debenture  Agreement  and  related  Purchase  Order  to buy
equipment  from a vendor.  The total value of equipment  the Company can acquire
under the Purchase Order and Debenture Agreement is $200,000.

                                       42

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

We have had no disagreements with our principal independent accountants.

ITEM 9A(T). CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

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

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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

The  management  of the Company  assessed  the  effectiveness  of the  Company's
internal  control over financial  reporting  based on the criteria for effective
internal   control   over   financial   reporting    established   in   Internal
Control--Integrated   Framework   issued   by  the   Committee   of   Sponsoring
Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting
such assessments.  Based on this assessment,  management determined that, during
the year ended July 31, 2010,  our internal  controls  and  procedures  were not
effective  to detect the  inappropriate  application  of US GAAP rules,  as more
fully described  below.  This was due to deficiencies in the design or operation
of the Company's internal control that adversely affected the Company's internal
controls and that may be considered to be material weaknesses.

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

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

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

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

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

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes to our internal  control  over  financial  reporting  that
occurred  during the last  quarter of our fiscal  year ended July 31,  2010 that
have materially  affected,  or are reasonably likely to materially  affect,  our
internal control over financial reporting.

                                       43

ITEM 9B. OTHER INFORMATION

Not applicable.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

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

Name and Municipality of Residence     Age         Current Office
----------------------------------     ---         --------------

Richard Beltzhoover                    71          Chairman, Director
Carmel, Indiana, USA

Greg Jarman                            47          President, Chief Executive
Rushville, Indiana, USA                            Officer, Director

Don Prest                              50          Chief Financial Officer,
Vancouver, Canada                                  Director

David Bradford                         62          Chief Operating Officer,
Angola, Indiana, USA                               Director

Paul Brock                             46          Director
Vancouver, Canada

Richard Reahard                        61          Director
Carmel, Indiana, USA

William Herdrich                       64          Director
Rushville, Indiana, USA

Gregory Dunn                           57          Director
Columbus, Ohio, USA

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

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

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

DAVID BRADFORD - Mr.  Bradford  became our Chief  Operating  Officer on July 30,
2009 and is in charge of managing the profitability of the Company's  day-to-day
operations  in support  of  established  policies,  goals and  objectives  while
providing  leadership,  strategic  direction and vision to the Company.  He also
assists  senior  officers  of the Company in the design and  development  of the
Company's long-term strategic planning, organization of resources to execute its
plan, and the timely and accurate  reporting and analysis of operating  results.

                                       44

His  responsibilities  include  management  of  acquisitions,   operations,  and
financial  matters,   and  ensuring  their  most  effective   synthesis  to  the
maximization of the Company's  strategic and operating  plans.  Mr. Bradford has
devoted the majority of his senior management  career to the  telecommunications
industry. From 1977 through 1987 he served in executive positions at the Chicago
Tribune's  broadcast and cable  television  divisions.  Positions  included Vice
President and General Manager for Tribune Cable  Communications,  Vice President
of Operations  for WGN  Electronic  Systems  Company,  and Director of Strategic
Planning for Tribune Cable and subsidiaries. After leaving the Tribune companies
Mr.  Bradford  served  as  President  of  Empire   Communications  and  Bradford
Communications,  Inc., both rural cable television multi-system  operators.  Mr.
Bradford  subsequently  served as  President of National  Telsat,  Inc., a rural
wireless television and data provider.  Mr. Bradford brings over thirty years of
successful  subscriber  based  telecommunications  operating  experience  to the
Company as well as  participation  and  oversight  of  numerous  debt and equity
financings, acquisitions, and restructurings.

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

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

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

RICHARD  REAHARD - Mr.  Reahard  earned his BS in Business  Administration  from
Indiana  University  in 1971 and his MBA from  Butler  University  in 1975.  Mr.
Reahard was President of Telecom  Resource,  Inc from 1993 to December 31, 2004.
His background over the last 35 years is in sales and marketing.

GREGORY DUNN - Mr. Dunn is a resident of Columbus, Ohio. Mr. Dunn graduated from
A.B.  Davidson  College in 1975 and the J.D.,  Capital  University Law School in
1978. Mr Dunn was admitted to the Ohio Bar Association and the US District Court
- S.D.  Ohio in 1978.  Mr Dunn  belongs to  numerous  professional  associations
including:  American Bar Association,  Ohio State Bar Association,  Columbus Bar
Association, Ohio Cable Telecommunications  Association,  Federal Communications
Bar Association and the National Association of Telecommunications, Officers and
Advisors, Ohio Chapter. Mr. Dunn was formerly an Assistant City Attorney for the
City of  Columbus  and then became VP of Legal  Affairs  for Time Warner  Cable,
responsible  for 26 States and over 90 cable systems.  In 1987 Mr. Dunn joined a
company which consulted in Eastern Europe regarding cable television franchising
and  deployment.  In 1993 Mr. Dunn  returned  to the  practice of law at Crabbe,

                                       45

Brown and James, joining  Schottenstein,  Zox and Dunn ("SZD") in 1998. Mr. Dunn
has a  comprehensive  knowledge of the  telecommunications  industry from both a
legal  and  consulting   perspective.   Mr.  Dunn's  clients'   include  ove  40
municipalities,  the State of Ohio, the Georgia  Municipal  Association  and The
Ohio  Supercomputer  Center. In Mr. Dunn's capacity as counsel for such entities
he has been  involved  in  RFP's/RFI's  for a  variety  of  technology  projects
including Wi-Fi systems, fiber optic systems, and  telecommunications  services.
Mr. Dunn also  consults on  telecommunications  public  policy issues with SZD's
ancillary service, SZD Whiteboard.

TERM OF OFFICE

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

SIGNIFICANT EMPLOYEES

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

FAMILY RELATIONSHIPS

There are no family relationships among our directors or officers.

INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS

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

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

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

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


                    No. of Late/Unfiled Reports    No. of Late/Unfiled Reports
                      During the  Fiscal Year        During the Fiscal Year
Reporting Person        Ended July 31, 2010           Ended July 31, 2009
----------------        -------------------           -------------------

Don Prest                     Nil                   1 - late Form 4 regarding
                                                        one transaction
William Herdrich              Nil                   1 - failed to file Form 3

CODE OF ETHICS

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

                                       46

COMMITTEES

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

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

Two out of our three  independent  directors  sitting on our audit committee are
considered "financial experts".

                                       47

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

The table below summarizes all compensation awarded to, earned by or paid to our
executive  officers by any person for all services rendered in all capacities to
us during our fiscal years ended July 31, 2010 and 2009.


                                                                        Non-Equity      Nonqualified
 Name and                                                               Incentive         Deferred
 Principal                                       Stock       Option        Plan         Compensation     All Other
 Position          Year   Salary($)  Bonus($)   Awards($)   Awards($)  Compensation($)   Earnings($)   Compensation($)  Totals($)
 --------          ----   ---------  --------   ---------   ---------  ---------------   -----------   ---------------  ---------

Greg Jarman(1)     2009    73,455      nil       93,187       nil          nil              nil             nil          166,642
Chief Executive    2010    90,000      nil        nil         nil          nil              nil             nil           90,000
Officer and
President

Richard            2009    30,000      nil      104,125       nil          nil              nil             nil          134,125
Beltzhoover(1)     2010      n/a       n/a        n/a         n/a          n/a              n/a             n/a            n/a

Don Prest          2009    35,750      nil        nil         nil          nil              nil             nil           35,750
Chief Financial    2010    78,000      nil        nil         nil          nil              nil             nil           78,000
Officer

David              2009      n/a       n/a        n/a         n/a          n/a              n/a             n/a            n/a
Bradford(2)        2010    66,000      nil        nil         nil          nil              nil             nil           66,000
Chief Operating
Officer

----------
(1)  Mr.  Beltzhoover  resigned as our Chief Executive  Officer on June 17, 2009
     and Mr. Jarman was appointed  our Chief  Executive  Officer in his place on
     June 17,  2009.  Mr.  Beltzhoover  is our  Chairman of the Board and is not
     considered an Executive Officer.
(2)  Mr. Bradford became our Chief Operating Officer on August 1, 2009. Prior to
     that Mr. Bradford was our Vice President of Corporate Development.  In 2009
     Mr. Bradford was not considered an Executive Officer.

OUTSTANDING EQUITY AWARDS

As at July 31,  2010,  there  were no  unexercised  options,  stock that had not
vested or  outstanding  equity  incentive plan awards with respect to any of our
officers or directors.

COMPENSATION OF DIRECTORS

Except  as  disclosed  below,  we did not pay our  directors  any  fees or other
compensation for acting as directors during our fiscal year ended July 31, 2010.
Certain of our current or former  directors  serve or have served as officers of
the Company,  and any  compensation  they  received  due to their  service as an
officer is disclosed in the table above and is not included in the table below:

                              DIRECTOR COMPENSATION


                        Fees                              Non-Equity       Nonqualified
Name and               Earned                              Incentive         Deferred
Principal              Paid in      Stock      Option        Plan          Compensation      All Other
Position               Cash($)     Awards($)  Awards($)  Compensation($)    Earnings($)    Compensation($)   Total($)
--------               -------     ---------  ---------  ---------------    -----------    ---------------   --------

Richard Beltzhoover      nil          nil        nil           nil              nil             nil             nil
Greg Jarman              nil          nil        nil           nil              nil             nil             nil
Don Prest                nil          nil        nil           nil              nil             nil             nil
David Bradford           nil          nil        nil           nil              nil             nil             nil
Paul Brock               nil          nil        nil           nil              nil             nil             nil
Richard Reahard          nil          nil        nil           nil              nil             nil             nil
William Herdrich         nil          nil        nil           nil              nil             nil             nil
Gregory Dunn             nil          nil        nil           nil              nil             nil             nil


                                       48

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

The following  table sets forth  certain  information  concerning  the number of
shares of our common  stock owned  beneficially  as of November 17, 2010 by: (i)
each person  (including  any group) known to us to own more than 5% of any class
of our voting securities, (ii) each of our directors, (iii) each of our officers
and  (iv)  our  officers  and  directors  as a group.  Each  stockholder  listed
possesses sole voting and investment power with respect to the shares shown.

                                                                        Amount and nature          Percentage of
Title of class          Name and address of beneficial owner (2)      of beneficial owner            class (1)
--------------          ----------------------------------------      -------------------            ---------

Common Stock            Richard Beltzhoover (3)
                        Carmel, Indiana, USA                               5,919,800                  13.53

Common Stock            Greg Jarman (4)
                        Rushville, Indiana, USA                            1,633,855                   3.73

Common Stock            Don Prest (7)
                        Vancouver, Canada                                    227,143                   0.5

Common Stock            David Bradford
                        Angola, Indiana, USA                                     nil                    Nil

Common Stock            Paul Brock
                        Vancouver, Canada                                        nil                    Nil

Common Stock            Richard Reahard
                        Carmel, Indiana, USA                               4,971,648                  11.36

Common Stock            William Herdrich (6)
                        Rushville, Indiana, USA                              499,248                   1.14

Common Stock            All executive officers and directors
                        as a group (seven persons)                        13,251,694                  30.29

Shareholders of Greater than 5% of Issued and Outstanding Stock

Common Stock            Schwarz Partners LLC (5)                           5,515,059                  12.61

----------
(1)  Based on  43,745,414  shares of common stock issued and  outstanding  as of
     November 17, 2010.  Under Rule 13d-3 of the Exchange Act a beneficial owner
     of a security includes any person who, directly or indirectly,  through any
     contract,  arrangement,  understanding,  relationship,  or otherwise has or
     shares:  (i) voting power,  which  includes the power to vote, or to direct
     the voting of shares;  and (ii) investment power,  which includes the power
     to dispose  or direct the  disposition  of  shares.  Certain  shares may be
     deemed to be  beneficially  owned by more than one person (if, for example,
     persons share the power to vote or the power to dispose of the shares).  In
     addition,  shares  are deemed to be  beneficially  owned by a person if the
     person has the right to acquire the shares (for  example,  upon exercise of
     an  option)  within  60 days of the date as of  which  the  information  is
     provided.  In computing the percentage  ownership of any person, the amount
     of  shares   outstanding   is  deemed  to  include  the  amount  of  shares
     beneficially owned by such person (and only such person) by reason of these
     acquisition rights.
(2)  The  address of the  executive  officers  and  directors  is c/o  Omnicity,
     Incorporated, 807 South SR 3, Rushville, Indiana, USA, 46173.
(3)  Richard  Beltzhoover  is the  beneficial  owner of 892,612  shares owned by
     Insul Reps  Profit  Sharing  Plan and 225,912  shares  owned by Insul Reps,
     Inc.,  and  43,000  shares  owned by  Linda  Beltzhoover,  wife of  Richard
     Beltzhoover.
(4)  Greg Jarman is a beneficial owner of 11,143 shares owned by Lea Ann Jarman.
     (5) John Schwarz is beneficial owner of Schwarz Partners LLC.
(6)  William Herdrich is the beneficial owner of 321,448 shares owned by Capital
     Investors Limited.
(7)  Don Prest beneficially owns one-third of FBP Capital Corp.

                                       49

SECURITIES AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS

The  table  set  forth  below  presents   information  relating  to  our  equity
compensation plans as of the date of July 31, 2010:

                                Number of Securities to be                                           Number of Securities
                                 Issued Upon Exercise of         Weighted-Average Exercise         Remaining Available for
                                   Outstanding Options,        Price of Outstanding Options,       Future Issuance Under
                                   Warrants and Rights             Warrants and Rights           Equity Compensation Plans
   Plan Category                           (a)                             (b)                      (excluding column (a))
   -------------                   -------------------             -------------------           -------------------------

Equity Compensation Plans to               n/a                             n/a                               n/a
be Approved by Security
Holders

Equity Compensation Plans Not              n/a                             n/a                               n/a
Approved by Security Holders

CHANGES IN CONTROL

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

ITEM  13.  CERTAIN   RELATIONSHIPS   AND  RELATED   TRANSACTIONS   AND  DIRECTOR
           INDEPENDENCE

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

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

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

TRANSACTIONS

TRANSACTIONS WITH WILLIAM HERDRICH:

Included in accrued  liabilities at July 31, 2009 was $56,294 owing to Rushville
Internet  Services,  LLC  ("RIS")  which  represented  amounts  due to RIS under
certain lease agreements.  The Company and RIS have shareholders in common.  The
shareholders of RIS agreed to wind-up RIS and sell its assets to the Company for
$125,000.  The Company received their assets, being wireless equipment and tower
infrastructures,  having a fair value of  $68,706,  and to settle  inter-company
debt of $56,294.  All shareholders of RIS accepted to receive  restricted common
shares of the Company.  On October 13, 2009 the Company  issued  268,818  common
shares to the shareholders of RIS at a fair value of $0.465 per common share.

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

                                       50

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

On November 23, 2009 the Company received $150,000 from a Riverpoint  Financial,
LLC., a company  controlled  by Mr.  Herdrich  and issued a promissory  note due
January 1, 2011,  unsecured  and bearing  interest at 9% per annum with interest
payable  quarterly.  On  April  20,  2010 the  Company  received  $225,000  from
Riverpoint  Financial,  LLC  pursuant to a sale of towers.  The towers had a net
book  value of  $184,281  and the  Company  recorded a gain on sale of assets of
$40,719.

TRANSACTIONS WITH GREG DUNN:

None.

TRANSACTIONS WITH PAUL BROCK:

None.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Weaver & Martin, LLC served as our independent registered public accounting firm
and audited our  consolidated  financial  statements  for the fiscal years ended
July 31, 2010 and 2009. Aggregate fees for professional  services rendered to us
by our current and predecessor auditors are set forth below:

                          Year Ended Year Ended
                             July 31, 2010               July 31, 2009
                             -------------               -------------

Audit Fees                      $28,500                     $28,250
Audit-Related Fees              $12,100                     $ 6,800
Tax Fees                        $   nil                     $   nil
All Other Fees                  $   nil                     $   nil
                                -------                     -------

Total                           $40,600                     $26,800
                                =======                     =======

AUDIT FEES

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

AUDIT RELATED FEES

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

TAX FEES

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

ALL OTHER FEES

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

POLICY ON PRE-APPROVAL OF SERVICES PERFORMED BY INDEPENDENT AUDITORS

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

                                       51

ITEM 15. EXHIBITS

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

Exhibit No.                         Description
-----------                         -----------

 10.1          Promissory Notes between Company and Richard Beltzhoover and
               Insulreps Profit Sharing Plan all dated July 15, 2010

 10.2          Asset Purchase Agreement with USppp, Inc.

 10.3          Memorandum of Understanding between Company and Tipmont Holding,
               Inc. to convert

 31.1          Certifications of Chief Executive Officer Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002

 31.2          Certifications of Chief Financial Officer Pursuant to Section 302
               of the Sarbanes-Oxley Act of 2002

 32.1          Certifications of Chief Executive Officer and Chief Financial
               Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

                                       52

                                   SIGNATURES

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

                                   OMNICITY CORP.


                                   By: /s/ Greg Jarman
                                       -----------------------------------------
                                       Greg Jarman
                                       Chief Executive Officer, President, and
                                       a director
                                   Date: November 17, 2010


                                   By: /s/ Don Prest
                                       -----------------------------------------
                                       Don Prest
                                       Chief Financial Officer and a director
                                   Date: November 17, 2010

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

Signature                                                   Title                                         Date
---------                                                   -----                                         ----


/s/ Richard Beltzhoover                      Chairman of the Board and Director                     November 17, 2010
----------------------------------
Richard Beltzhoover


/s/ Greg Jarman                              President, Chief Executive Officer and Director        November 17, 2010
----------------------------------
Greg Jarman


/s/ Don Prest                                Chief Financial Officer and Director                   November 17, 2010
----------------------------------
Don Prest


/s/ David Bradford                           Chief Operating Officer and Director                   November 17, 2010
----------------------------------
David Bradford


/s/ Paul Brock                               Director                                               November 17, 2010
----------------------------------
Paul Brock


/s/ Greg Dunn                                Director                                               November 17, 2010
----------------------------------
Greg Dunn


/s/ Bill Herdrich                            Director                                               November 17, 2010
----------------------------------
William Herdrich


/s/ Richard Reahard                          Director                                               November 17, 2010
----------------------------------
Richard Reahard


                                       53

OMNICITY CORP. 10-K