NEXAIRA WIRELESS INC.

The fair value of the derivative related to the price protection of warrants related to the issuance of warrants in connection with the convertible note payable as of July 31, 2011 was $1,302,463. The Company’s stock price was $0.04, risk-free discount rate of 0.55% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $(180,684) recorded as other income in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011. The fair value of the derivative related to the price protection of warrants issued in connection with July 22, 2011 Private Placement as of July 31, 2011 was $58,944. The Company’s stock price was $0.04, risk-free discount rate of 0.55% and volatility of 130.0% was used to obtain fair value, resulting in the change in fair value of $(15,484) recorded as other income in the Company’s Consolidated Statements of Operations for the three and nine months ended July 31, 2011.

On August 20, 2010, the Company entered into a 10% Convertible Note Agreement with an investor for total proceeds of $400,000, less $8,500 debt issuance fees which was is amortized over twelve months to July 31, 2011. The Convertible Note Agreement bore interest at 10% per annum and was due to mature July 31, 2011. In connection with the Agreement, the Company issued 333,333 three year warrants to purchase shares of common stock with an exercise price of $0.15 per share. On March 21, 2011, the Company entered into an amendment with the lender to extend the maturity date of the note payable from July 31, 2011 to October 31, 2011. In exchange for the extension, the Company issued an additional 333,333 three year warrants to purchase shares of common stock with an exercise price of $0.15 per share. Using the Black-Scholes model, the Company determined the fair value of the 666,666 warrants is $27,762 which is recorded as interest expense in the period in the Company’s Condensed Consolidated Statements of Operations.

On August 4, 2011, the Company closed a Securities Purchase Agreement transaction for proceeds of $53,000. This transaction provides for the issuance of an 8% convertible promissory note in the principal amount of $53,000 and has a maturity date that is nine months from the date of issuance of the Note. At any time on or after the date that is 180 days from the issue date, the principal amount and accrued interest will be convertible into shares of the Company’s common stock at a variable conversion price. In connection with the possible conversion of the Note the Company reserved 8,688,525 common shares.

After months of testing, field trials, customer driven enhancements and modifications, we believe that we not only understand the customer requirements and the market verticals but have better control on the business and the challenges facing it. Our planned revenue growth and ability to achieve profitability is expected to come as a result of (1) the introduction of our innovative wireless router products and solutions (2) marketing and sales of our suite of products catering to the growing 3G/4G wireless business segment (3) expansion of our sales and operations team focused on the wireless marketplace and (4) the capability of securing a continuous stream of router hardware components to meet current and future sales demand. This, of course, is dependent on our ability to attract and raise new growth and working capital.

Revenues for the three months ended July 31, 2011 were $408,768 compared to $270,305 for the three months ended July 31, 2010, an increase of $138,463 or 51.2%. Total revenues for the nine months ended July 31, 2011 amounted to $947,826 compared to $1,301,696 for the same period in 2010, a decrease of $353,870. The decline in revenues for the nine months ended July 31, 2011 was attributable primarily as a result of our decision to focus our resources on marketing our own line of products and move away from our dependence on the sale of low margin non-Nexaira products such as data cards and modules, which for the same period in 2010 amounted to $853,617 or 65.5% of our $1,301,696 revenues. By comparison, for the nine months ended July 31, 2011, of the $947,826 in total revenues, only $66,506 related to non-Nexaira products with the remaining $881,320 or 93% related to our own proprietary higher margin router related products. One of the key contributing factors of the lower sales in the nine months ended July 31, 2011, was the lack of inventory on hand to meet customer orders. We anticipate being able to utilize our $2.2 million purchase order financing line which we closed on May 16, 2011 more effectively in the future to enable our company to acquire inventory as needed to meet the demand of our suite of products from our growing customer base. On a more positive trend, our router related revenue for the nine months ended July 31, 2011 increased from $448,079 in 2010 to $881,320, up $433,241 or 96.7% during the same period in 2010.