This quarterly report contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. Except as required by applicable laws, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in U.S. dollars and are prepared in accordance with generally accepted accounting principles in the United States. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "common shares" refer to the common shares in our capital stock.

As used in this quarterly report and unless otherwise indicated, the terms "we", "us", "our" and "our company" mean On4 Communications Inc., a Delaware corporation, unless otherwise indicated.

Business Overview

We were incorporated as a Delaware company on June 4, 2001 under the name Sound Revolution Inc. On July 2, 2009 we changed our name to On4 Communications, Inc. Our fiscal year end is October 31. Our address is Suite 102 - 628 West 12th Avenue, Vancouver, BC, V5Z 1M8. Our telephone number is (480) 525-4361.

Our common stock is quoted on the Pink Sheets Quotation system under the symbol "ONCI.PK" and on the Berlin Stock Exchange under the symbol O4C:GR.

Corporate History

We were incorporated as a Delaware company on June 4, 2001 under the name Sound Revolution Inc. On July 2, 2009 we changed our name to On4 Communications, Inc.

On June 10, 2008, our company effected a 1 for 42 reverse stock split of the outstanding shares of common stock our company and also increased the number of authorized share capital of our company from 100,000,000 to 110,000,000 shares. 100,000,000 shares out the total authorized capital shall be common stock and 10,000,000 shall be preferred stock. On June 26, 2008, the reverse stock split and the increase in our company's authorized capital came into effect. As a result of the reverse split, the number of the outstanding shares of common stock of our company was decreased from 10,854,629 shares to 258,444 shares of common stock.

On April 29, 2010 we sold our interest in PetsMobility, excluding certain specific assets, to On4 Communications Inc., a private Canadian company and our shareholder ("On4 Canada"), pursuant to an asset purchase agreement in exchange for On4 Canada returning 2,000,000 shares of our common stock to our treasury for cancellation. On October 29, 2010 we amended the asset purchase agreement to clarify certain terms of the purchase and sale.

On March 16, 2011 we sold our interest in Charity Tunes and Sound Revolution to Empire Success, LLC, a private Nevada limited liability company, in exchange for $15,000 and 6,300 shares of Empire's common stock. As a result, we currently have no subsidiaries.

On November 3, 2011 we entered into a binding letter of intent to acquire 100% of the issued and outstanding shares of NetCents Systems Ltd., a private Alberta corporation engaged in the development and implementation of a unique and secure electronic payment system for online merchants and consumers. The letter of intent provides for a period of due diligence which will lead to a formal agreement whereby we will acquire 100% of the issued and outstanding capital of NetCents.

On December 15, 2011, we entered into a share exchange agreement with NetCents and the selling shareholders of NetCents. Pursuant to the terms of the share exchange agreement, our company and NetCents agreed to engage in a share exchange which, if completed, would result in NetCents becoming a wholly owned subsidiary of our company. The share exchange has not been completed as of the date of this Quarterly Report and is subject to completion of due diligence by the parties, and to the following material terms and conditions:

1. We will issue 2 shares of our common stock from treasury for every 1 share of NetCents stock issued and outstanding on the date of closing;

2. NetCents will have no more than 16,245,421 shares of its common stock issued and outstanding on the closing date of the Share Exchange Agreement. Additional issuances must be authorized by our company;

3. NetCents will have delivered to our company audited financial statements for its last two fiscal years and any applicable interim period ended no more than 35 days before the closing of the share exchange agreement, prepared in accordance with United States GAAP and audited by an independent auditor registered with the Public Company Accounting Oversight Board in the United States; and

4. NetCents will file all required documentation with the Province of Alberta to effect the share exchange.

Also on December 15, 2011, NetCents received the approval for the share exchange agreement and the share exchange transaction from holders of approximately 76% of its voting securities through written resolution in lieu of holding a meeting.

On December 28, 2011, we entered into a convertible promissory note agreement with Asher Enterprises, Inc. pursuant to which we received debt financing of $47,500. Pursuant to the agreement, the loan is convertible into shares of common stock at a variable conversion price equal to the lower of 51% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice. The loan bears interest at 8% per year and the principal amount and any interest thereon are due on September 30, 2012.

On March 13, 2012, we received written consent from the board of directors and the holders of 52.40% of our company's voting securities to amend the Articles of Incorporation to increase our authorized capital.

On March 21, 2012, we entered into a second convertible promissory note agreement with Asher pursuant to which we received debt financing of $42,500. Pursuant to the agreement, the loan is convertible at a variable conversion price equal to the lower of 51% of the average of the lowest two closing bid prices for the common stock during the 100 trading days prior to the date of the conversion notice. The loan bears interest at 8% per year and the principal amount and any interest thereon are due on December 26, 2012.

On April 19, 2012, the Delaware Secretary of State accepted for filing of a Certificate of Amendment, wherein, we amended our Articles of Incorporation to increase the authorized number of shares of our common stock from 100,000,000 to 200,000,000 shares of common stock, par value of $0.0001 per share, effective April 20, 2012. Our preferred stock remains unchanged.

On May 4, 2012, we amended the terms of our convertible promissory note agreements with Asher dated December 28, 2011 and February 13, 2012, respectively. Pursuant to the amendments, the promissory notes shall be convertible at an average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice to an average of the two lowest closing bid prices for the common stock during the 100 trading days prior to the date of the conversion notice.

On May 8, 2012, we entered into a third convertible promissory note agreement with Asher pursuant to which we received debt financing in the amount of $32,500. Pursuant to the agreement, the loan is convertible 180 days after issuance into shares of common stock at a variable conversion price equal to the lower of 51% of the average of the lowest three closing bid prices for the common stock during the 10 trading days prior to the date of the conversion notice. The loan bears interest at 8% per year and the principal amount and any interest thereon are due on February 11, 2013.

Our Current Business

We are a development stage company, providing wireless communications services to telecommunication companies, consumers and businesses. Our platform comprises global positioning system ("GPS") device management, location-based services ("LBS") capabilities, and the broadcasting of proprietary and non-proprietary content. LBS is a term used to describe the delivery of information and entertainment content to consumers with mobile devices based on the geographical position of the mobile device. We intend to deliver LBS via two-way communication tracking devices with applications that are able to track people, pets, assets and inventory. Our solution platform integrates various location-aware devises, such as GPS receivers, and transmits data to a range of devices, including Web browsers, instant messengers, short message service/mail, and mobile phones.

Research and Development Expenditures

We have incurred $Nil in research and development expenditures over the last two fiscal years.

Employees

As of July 31, 2012, our only employees are our directors and officers. We plan to hire additional employees when circumstances warrant.

Results of Operations

Three and Nine Months Ended July 31, 2012 and July 31, 2011, and the Period from
June 5, 2006 (Date of Inception) to July 31, 2012.

Our results of operations are presented below:

                                                                                  Accumulated
                                                                                     from
                                                                                 June 5, 2006
               Three Months     Three Months     Nine Months     Nine Months       (Date of
                  Ended            Ended            Ended           Ended        Inception) to
                 July 31,         July 31,        July 31,        July 31,         July 31,
                   2012             2011            2012            2011             2012
               (unaudited)      (unaudited)      (unaudited)     (unaudited)      (unaudited)
                   ($)              ($)              ($)             ($)              ($)
Revenue                 Nil              Nil             Nil             Nil               Nil
Total                26,220           22,230         166,628          90,582        11,542,934
operating
expenses
Total other          94,453           33,641         158,347          77,309           982,133
expenses
Loss from               Nil              Nil             Nil           8,085         1,282,616
discontinued
operations
Gain on                 Nil              Nil             Nil         (76,834 )         (76,834 )
disposal of
discontinued
operations
Net loss           (120,673 )        (55,871 )      (324,975 )       (99,142 )     (13,730,849 )

From our inception on June 5, 2006 to July 31, 2012, we did not generate any revenue.

Expenses

                                                                                    Accumulated
                                                                                       from
                 Three Months     Three Months     Nine Months     Nine Months     June 5, 2006
                    Ended            Ended            Ended           Ended          (Date of
                   July 31,         July 31,        July 31,        July 31,       Inception) to
                     2012             2011            2012            2011         July 31, 2012
                 (unaudited)      (unaudited)      (unaudited)     (unaudited)      (unaudited)
                     ($)              ($)              ($)             ($)              ($)
Amortization              Nil              242             241             725            32,677
of property
and equipment
Consulting                Nil              Nil          48,750          (2,191 )       2,165,016
fees
Foreign                (2,702 )           (666 )          (303 )        15,395           254,204
exchange
(gain) loss
General and             2,345            7,288          15,325          22,789         1,105,653
administrative
Impairment of             Nil              Nil             885             Nil         2,220,609
assets
Management             16,519              Nil          44,174             Nil         1,206,770
fees
Professional           10,058           15,366          57,556          53,864           735,700
fees

Our total expenses during the three months ended July 31, 2012 consisted of $2,345 in general and administrative expenses, $16,519 in management fees and $10,058 in professional fees. During this period we also incurred $ 31,257 in loss on change in fair value of derivative liability, $17,629 in accretion expense and $45,567 in the form of interest expenses.

Our total expenses during the three months ended July 31, 2011 consisted of $242 in amortization of property and equipment, a $Nil in consulting fees, $666 in foreign exchange gain $7,288 in general and administrative expenses, and $15,366 in professional fees. During this period we also incurred $35,626 in the form of interest expenses.

Our total expenses during the nine months ended July 31, 2011 consisted of $725 in amortization of property and equipment, $15,395 in foreign exchange loss $22,789 in general and administrative expenses, and $53,864 in professional fees. During this period we also incurred $79,294 in the form of interest expenses.

Our total expenses from our inception on June 5, 2006 to July 31, 2012 consisted of $182,182 in advertising and marketing expenses, $18,138 in amortization of intangible assets, $32,677 in amortization of property and equipment, $2,165,016 in consulting fees, $254,204 in foreign exchange loss, $1,105,653 in general and administrative expenses, $3,274,109 in impairment of goodwill, $2,220,609 in impairment of intangible assets, $1,206,770 in management fees, $29,516 in payroll, $735,700 in professional fees and $318,360 in research and development expenses.

Our general and administrative expenses consisted of travel, meals and entertainment, office maintenance, communication expenses (cellular, internet, fax and telephone), office supplies and courier and postage costs. Our professional fees consisted of legal, accounting and auditing fees.

The decrease in our operating expenses during the three months ended July 31, 2012 compared to the same period in 2011 was primarily due to decreases in consulting fees, general and administrative expenses, management fees and professional fees.

The increase in our operating expenses during the nine months ended July 31, 2012 compared to the same period in 2011 was primarily due to increased consulting fees, management fees and professional fees.

During the three months ended July 31, 2012 we incurred a $26,220 operating loss, and a net loss of $120,673. During the same period in fiscal 2011 we incurred an operating loss of $22,230 and a net loss of $55,871. During the nine months ended July 31, 2012 we incurred a $166,628 operating loss, and a net loss of $324,975. During the same period in fiscal 2011 we incurred an operating loss of $90,582 and a net loss of $99,142. We did not experience any net loss per share during the three and nine months ended July 31, 2012 and 2011. From our inception on June 5, 2006 to July 31, 2012 we incurred a $12,525,067 loss from continuing operations, a $1,205,782 loss from discontinued operations and incurred a net loss $13,730,849.

Liquidity and Capital Resources

Working Capital

                                At             At
                             July 31,      October 31,
                               2012           2011
                               ($)             ($)
Current Assets                  43,418             Nil
Current Liabilities          1,865,394       1,546,877
Working Capital/(Deficit)   (1,821,976 )    (1,546,877 )

--------------------------------------------------------------------------------
Cash Flows

                                                                          Period from
                                         Nine Months     Nine Months       Inception
                                            Ended           Ended        (June 5, 2006)
                                          July 31,        July 31,        to July 31,
                                            2012            2011              2012
                                             ($)             ($)              ($)
Net Cash used in Operating Activities       (107,138 )       (21,945 )       (2,783,472 )
Net Cash provided by/(used in)               (37,563 )        15,000         (1,350,762 )
Investing Activities
Net Cash provided by Financing               145,000             Nil          4,081,194
Activities
Net Increase (Decrease) in Cash During           229          (6,945 )              229
Period

As of July 31, 2012 we had $229 in cash, $43,418 in total assets, $1,865,394 in total liabilities and a working capital deficit of $1,821,976. As of July 31, 2012 we had an accumulated deficit of $13,814,321.

During the nine months ended July 31, 2012 we spent $107,138 on operating activities, compared to spending of $21,945 on operating activities during the same period in fiscal 2011. The increase in our expenditures on operating activities during the nine months ended July 31, 2012 was largely due to an increase in operating expenses and the fact that the Company received financial from the issuance of notes payable to support payment of operating costs. From our inception on June 5, 2006 (inception) to July 31, 2012 we spent $2,783,472 on operating activities.

During the nine months ended July 31, 2012 we spent $37,563 on investing activities, whereas we received $15,000 on investing activities during the same period in fiscal 2011. From our inception on June 5, 2006 to July 31, 2012 we spent $1,350,762 on investing activities, the bulk of which was in the form of advances for notes receivable.

During the nine months ended July 31, 2012 we received $145,000 from financing activities, all of which was in the form of proceeds from notes payable, whereas we received $Nil during the same period in fiscal 2011. From our inception on June 5, 2006 to July 31, 2012 we received $4,081,194 from financing activities, primarily in the form of proceeds from the issuance of our common stock and preferred stock.

For the next 12 months (beginning August 2012), we estimate our planned expenses to be approximately $1,700,000, as summarized in the table below:

Description                         Potential  Estimated
                                    Completion Expenses
                                       Date       ($)
General and administrative expenses 12 months    250,000
Research and development            12 months    100,000
Sales and marketing                 12 months    200,000
Professional fees                   12 months    150,000
Unallocated working capital         12 months    100,000
Debt repayment                      12 months    900,000
Total                                          1,700,000

Based on our planned expenditures, we require additional funds of approximately $1,700,000 to proceed with our business plan over the next 12 months (beginning August 2012). If we are not able to obtain additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

We have not generated significant revenues since inception and are unlikely to generate significant revenues or earnings in the immediate or foreseeable future. We rely upon the sale of our securities and proceeds from related parties to fund our operations. We anticipate that we will incur substantial losses for the foreseeable future, and we are dependent upon obtaining outside financing to carry out our operations.

We will require approximately $1,700,000 over the next 12 months (beginning August 2012) to enable us to proceed with our plan of operations, including paying our ongoing expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we intend to raise funds from private placements, loans or possibly a registered public offering (either self-underwritten or through a broker-dealer). At this time we do not have a commitment from any broker-dealer to provide us with financing, and there is no guarantee that any financing will be available to us or if available, on terms that will be acceptable to us.

If we are unable to obtain the necessary additional financing, then we plan to reduce the amounts that we spend on our operations, our professional fees and our general and administrative expenses so as not to exceed the amount of capital resources that are available to us. If we do not secure additional financing our current cash reserves and working capital will be not be sufficient to enable us to sustain our operations for the next 12 months, even if we do decide to scale them down.

Going Concern

Our financial statements for the three and nine months ended July 31, 2012 have been prepared on a going concern basis and contain an additional explanatory paragraph in Note 1 which identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

Inflation

The amounts presented in our financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.

Critical Accounting Policies

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our financial statements for the three and nine months ended July 31, 2012. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, fair value of convertible debt, stock-based compensation, derivative liabilities and deferred income tax asset valuation allowances. Our 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 our company may differ materially and adversely from our 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

Our company considers all highly liquid instruments with maturity dates of three months or less at the time of issuance to be cash equivalents.

Property and Equipment

Property and equipment, consisting primarily of computer hardware and office equipment, is stated at cost and is amortized using the straight-line method over the estimated lives of the related assets of three and five years, respectively.

Impairment of Long-Lived Assets

. . .