10-Q

UNITED STATESD

ECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended:   March 31, 2011 (Third Quarter)

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from ________________to ________________

COMMISSION FILE NUMBER 000-52488

INFRAX SYSTEMS, INC.

(Exact name of Registrant as specified in charter)

NEVADA	20-2583185
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)

6365 53rd Street N, Pinellas Park, FL 33781

(Address of principal executive offices) (ZIP Code)

(727) 498-8514

(Registrant's telephone no., including area code)

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes o  Nox

The number of shares outstanding of each of the issuer’s classes of common equity, as of May 16, 2011 was 3,039,978,482 shares.

Transitional Small Business Disclosure Format (Check one):   Yes o  No x

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION	PAGE
Item 1	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2011 (unaudited) and June 30, 2010	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2011 and 2010 (unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2011 and 2010 (unaudited)	5
	Condensed Consolidated Notes to Financial Statements (unaudited)	6
Item 2	Management's Discussion and Analysis or Plan of Operation	21
Item 3	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4	Controls and Procedures	24
Item 4 T	Controls and Procedures	24
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	25
Item 1A	Risk Factors	25
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3	Defaults Upon Senior Securities	25
Item 4	Removed and Reserved	25
Item 5	Other Information	25
Item 6	Exhibits	22
Signatures		22

- 2 -

Infrax Systems, Inc.

(Previously A Development Stage Enterprise)

Balance Sheet

	March 31,			June 30,
	2011			2010
	(unaudited)			(audited)
Assets
Current assets
Cash	$	2,223		$	115,015
Accounts receivable		205,728			1,091
Inventory		85,689			110,726
Loan receivable from affiliate		580			580
Prepaid expenses		15,812			2,949
Total current assets		310,032			230,361
Property & equipment, net of accumulated
depreciation of  $37,162 and $11,229, respectively		158,425			183,251
Intangible property, net of accumulated
amortization of  $986,414 and $1,329, respectively		5,713,810			6,698,895
Total Assets	$	6,182,267		$	7,112,507
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	439,455		$	196,153
Accrued expenses		628,493			478,967
Customer deposits and deferred revenue		-			267,213
Notes payable		733,500			718,500
Loans and notes payable, related parties		7,802			7,802
Total current liabilities		1,809,250			1,668,635
Notes payable to Shareholder		550,987			185,704
Total liabilities		2,360,237			1,854,339
Stockholders' Equity
Preferred Stock, 50,000,000 authorized, $.001 par value:
Series A Convertible: 5,000,000 shares designated;
385,702 and 0 issued and outstanding		386			386
Series B Convertible: 100,000,000 shares designated;
258,418 and 0 issued and outstanding		258			258
Common Stock, $.001 par value,  5,000,000,000 shares
authorized; 3,039,978,482 and 2,835,417,440 shares
issued and outstanding, respectively		3,039,978			2,835,417
Additional paid-in capital		5,838,345			5,634,506
Subscriptions receivable		(350	)		(350	)
Accumulated deficit during development stage		(5,056,587	)		(3,212,049	)
Total stockholders' deficit		3,822,030			5,258,168
Total Liabilities and Stockholders' Equity	$	6,182,267		$	7,112,507

The accompanying notes are an integral part of these financial statements.

- 3 -

Infrax Systems, Inc.

(Previously A Development Stage Enterprise)

Statement of Operations

(unaudited)

		For the Three Months Ended March 31,				For the Nine Months Ended March 31,
			2011		2010		2011		2010
Revenues		$	86,315	$	-	$	466,558	$	1,995
Direct costs			69,496		-		138,685		-
Gross Profit			16,819		-		327,873		1,995
Operating expenses:
	Salaries and benefits		23,450		159,061		348,063		411,003
	Consulting		113,719		135,672		353,204		177,212
	Professional fees		12,500		15,631		78,939		41,631
	General and administrative		133,428		37,047		337,523		116,554
	Amortization and depreciation		337,033		230		1,011,018		477
	Total operating expenses		620,130		347,641		2,128,747		746,877
Other income (expense):
	Interest expenses		(16,976)		(3,289)		(43,664)		(8,644)
	Equity losses of investee		-		(4,700)		-		(5,697)
	Miscellaneous		-		-		-		-
	Total other income (expense)		(16,976)		(7,989)		(43,664)		(14,341)
Loss from operations before income taxes			(620,287)		(355,630)		(1,844,538)		(759,223)
Provision for income taxes			-		-		-		-
Net loss		$	(620,287)	$	(355,630)	$	(1,844,538)	$	(759,223)
Earnings (loss) per share:
	Basic	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.01)
	Dilutive	$	(0.00)	$	(0.00)	$	(0.00)	$	(0.01)
Weighted average shares outstanding
	Basic		2,987,515,565		150,894,571		2,247,366,326		142,769,176
	Dilutive		2,987,515,565		150,894,571		2,247,366,326		142,769,176

The accompanying notes are an integral part of these financial statements.

- 4 -

Infrax Systems, Inc.

(Previously A Development Stage Enterprise)

Statement of Cash Flows

(unaudited)

	For the Nine Months Ended
	March 31,
		2011		2010
Cash Flows from Operating Activities:
Net (loss) income	$	(1,844,538)	$	(759,223)
Adjustment to reconcile Net Income to net
cash provided by operations:
Depreciation and amortization		1,011,018		477
Issuance of stock in settlement of services		78,400		251,908
Equity loss in investee				5,697
Changes in assets and liabilities:
Accounts receivable		(204,637)		49,215
Inventory		25,037		-
Due from affiliate		-		(580)
Deferred contract costs		-		26,696
Prepaid expenses		(12,863)		(759)
Accounts payable		243,302		25,567
Accrued expenses		149,526		310,801
Customer deposits and deferred revenue		(12,213)		(49,215)
Net Cash (Used) Provided by Operating Activities		(566,968)		(139,416)
Cash Flows from Investing Activities:
Purchase of property and equipment		(1,107)		(799)
Decrease (increase) in other assets				(5,308)
Net Cash (Used) by Operating Activities		(1,107)		(6,107)
Cash Flows from Financing Activities:
Related party advances		455,283		143,527
Net Cash (Used) Provided by Operating Activities		455,283		143,527
Net increase/decrease in Cash		(112,792)		(1,996)
Cash at beginning of period		115,015		1,996
Cash at end of period	$	2,223	$	-
Supplemental cash flow information:
Interest paid	$	-	$	-
Taxes paid	$	-	$	-
Supplemental Schedule of Noncash Investing and Financing Activities
Issuance of common stock in exchange of debt	$	75,000	$	45,000
Issuance of common stock in exchage for accrued salaries	$	255,000	$	-
Investment in affiliate by trasfer of software	$	-	$	22,500
Conversion of convertible debentures into common stock	$	-	$	50,000

The accompanying notes are an integral part of these financial statements.

- 5 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

1.             History of the Company and Nature of the Business

History of the Company

Infrax Systems, Inc. (formerly OptiCon Systems, Inc.) (“the Company”, “Infrax”) was formed as a Nevada corporation on October 22, 2004.  On July 29, 2005, the stockholders of the Company entered into an agreement to exchange 100% of the outstanding common stock of the Company, for common and preferred stock of FutureWorld Energy, Inc. (formerly Isys Medical, Inc.), a publicly traded company, at which time, the Company became a wholly owned subsidiary of FutureWorld Energy, Inc..

FutureWorld Energy, Inc. (“FutureWorld”), Infrax’s parent company, announced its intention to spin off Infrax (formerly OptiCon Systems, Inc.) through by the payment of a stock dividend.  In connection with the proposed spinoff, Infrax’s board of directors approved a stock dividend of 99,118 shares to FutureWorld, its sole shareholder.  On August 31, 2007, FutureWorld paid a stock dividend to its stockholders, consisting of 100% of the outstanding common stock of the Company, at the rate of one share of Infrax’s stock for every two shares they own of FutureWorld.  As of August 31, 2007, Infrax ceased being a subsidiary of FutureWorld.

 Nature of Business

Since its inception, the Company has been dedicated to selling and/or licensing a fiber optic management software system under the name OptiCon Network Manager, originally developed, and acquired from Corning Cable System, Inc. through a related company, FutureTech Capital, LLC.    In October 2009, the Company began developing smart grid energy related products. As of June 29, 2010, the Company acquired the assets and management of Trimax Wireless Systems, Inc. (“Trimax”), in exchange for equity and a note payable.    The Trimax product lines are expected to provide an operating platform and enhanced operating effectiveness to the OptiCon Network Manager.

While we continue to enhance the OptiCon Network Management platform, the Company has shifted its focus and energies towards the “Smart Grid” energy sector. The Company believes our secure integrated platform will hasten the deployment of all Smart Grid technology for resource constrained small and mid-sized utilities.  Infrax’s advantage comes from our products ability to enable the creation of a secure platform scalable to deliver a broad set of intelligent Smart Grid initiatives across millions of endpoints for Utilities.

2.             Summary of Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet as of March 31, 2011, the consolidated statements of operations and statements of cash flows for the respective periods presented, have been prepared by the Company without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures, normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the nine months ended March 31, 2011 are not necessarily indicative of results expected for the full year ending June 30, 2011.

In the opinion of management, all adjustments necessary to present fairly the financial position at March 31, 2011, and the results of operations and changes in cash flows for all periods presented, have been made.  These financial statements should be read in conjunction with our audited financial statements and notes thereto included in our annual report for the year ended June 30, 2010 on Form 10-K filed with the SEC on September 28, 2010.

Use of Estimates

The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States of America. These principals require 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. Management believes that these estimates are reasonable and have been discussed with the Board of Directors; however, actual results could differ from those estimates.

- 6 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

 Principles of Consolidation

The consolidated financial statements include the accounts and operations of Infrax Systems, Inc., and its wholly owned subsidiary, Infrax Systems SA (Pty) Ltd, an inactive foreign subsidiary (collectively referred to as the “Company”) and Trimax Wireless Inc.  Accordingly, the assets and liabilities, and expenses of this company have been included in the accompanying consolidated financial statements, and material intercompany transactions have been eliminated.

The Trimax Wireless, Inc. acquisition was effective June 29, 2010.  The Company, per the agreement, acquired all the assets and liabilities of Trimax Wireless, Inc.  As an asset purchase the acquired assets and liabilities are included in the accounts of Infrax Systems, Inc.

Previously a Development Stage Enterprise

The Company, in prior periods, presented financial statements as a development stage enterprise.   In the initial years the Company, devoted substantially all of its efforts to raising capital, planning and implementing the principal operations.   The Company may continue to incur significant operating losses and to generate negative cash flow from operating activities.  The Company's ability to eliminate operating losses and to generate positive cash flow from operations in the future will depend upon a variety of factors, many of which it is unable to control.   However, based on current events, primarily the acquisition of Trimax Wireless Systems, Inc., management believes that the Company has established the primary business development plan.

Variable Interest Entities

The Company considers the consolidation of entities to which the usual condition (ownership of a majority voting interest) of consolidation does not apply, focusing on controlling financial interests that may be achieved through arrangements that do not involve voting interest.  If an enterprise holds a majority of the variable interests of an entity, it would be considered the primary beneficiary.  The primary beneficiary is generally required to consolidate assets, liabilities and non-controlling interests at fair value (or at historical cost if the entity is a related party) and subsequently account for the variable interest as if it were consolidated based on a majority voting interest.    The Company has evaluated all related parties, contracts, agreements and arrangements in which it may hold a variable interest.   The Company has determined it is not the primary beneficiary in any of these entities, arrangements or participates in any of the activities.

Financial Instruments

The Company’s balance sheets include the following financial instruments: cash, accounts receivable, inventory, accounts payable, accrued expenses, and notes payable and notes payable to stockholder. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization. The carrying values of the note payable to stockholder  approximates fair value based on borrowing rates currently available to the Company for instruments with similar terms and remaining maturities.

In September 2006, the Financial Accounting Standards Board (FASB) introduced a framework for measuring fair value and expanded required disclosure about fair value measurements of assets and liabilities.  The Company adopted the standard for those financial assets and liabilities as of the beginning of the 2008 fiscal year and the impact of adoption was not significant. FASB Accounting Standards Codification (ASC) 820 “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:

- 7 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

● Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

● Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

● Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2011. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include accounts receivable, other current assets, accounts payable, accrued compensation and accrued expenses. The fair value of the Company’s notes payable is estimated based on current rates that would be available for debt of similar terms which is not significantly different from its stated value.

The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.

As of March 31, 2011 and June 30, 2010, the fair values of the Company’s financial instruments approximate their historical carrying amount.

Cash and Cash Equivalents

The majority of cash is maintained with major financial institutions in the United States.  Deposits with these banks may exceed the amount of insurance provided on such deposits.  Generally, these deposits may be redeemed on demand and, therefore, bear minimal risk.  The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable and Credit

Accounts receivable consist of amounts due for the delivery of sales to customers.   Prepayments on account are recorded as customer deposit, a current liability, as they represent deferred revenue.   Additionally, the Company invoices projects when signed agreements are received.  Amounts are recorded at the anticipated collectible amount and recorded as deferred revenue until such time that the work is performed.  Contract revenue is recognized as the contract is completed, based on defined milestones (see policy on revenue recognition).  An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company’s customer credit worthiness, and current economic trends.  Based on management’s review of accounts receivable, no allowance for doubtful accounts was considered necessary.   Receivables are determined to be past due, based on payment terms of original invoices.  The Company does not typically charge interest on past due receivables.

Inventories

Inventories are stated at the lower of standard cost or market, which approximates actual cost. Cost is determined using the first-in, first-out method.  Inventory is comprised of component parts and accessories available for sale.  Parts are generally purchased for projects, as minimal inventory is held to supply customers.

 Property & Equipment

Property and equipment are recorded at historical cost or acquisition value. Depreciation is computed on the straight-line method over estimated useful lives of the respective assets, ranging from three to five years. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon the Company's most recent analysis, management believes that no impairment of property and equipment exists a  and June 30, 2010.

- 8 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

Intangible Property

On June 29, 2010 the Company acquired the assets of Trimax Wireless Systems, Inc., including licenses and trademarks.  The purchase price was allocated first to the identifiable assets received, allocating the remaining costs to the intellectual property.  The valuation considered future cash flows of the operating intangible assets acquired.  The valuation of the intellectual property was limited to the acquisition price (valuation of stock consideration and note payable), less the fair market value of identifiable assets.  The shares issued in exchange for the acquired property were valued at the fair market value of the equivalent common stock as of the date of closing.  The fair market value of consideration issued (stock and note payable) to the sellers was an aggregate amount of $6,511,364.  The value assigned to the carrying value of the acquired intellectual property was $6,329,342.  Intellectual property has an estimated useful life of 59 months (remaining life of patents).

Capitalized Software Development Costs

The Company capitalizes software development costs, under which certain software development costs incurred subsequent to the establishment of technological feasibility have been capitalized and are being amortized over the estimated lives of the related products. Capitalization of computer software costs is discontinued when the computer software product is available to be sold, leased, or otherwise marketed.

Amortization begins when the product is available for release and sold to customers. Software development costs will be amortized based on the estimated economic life of the product, anticipated to be 10 years.  

Impairment of Long-Lived Assets

Periodically, the Company assesses the recoverability of the Company’s intangible assets, consisting of the Trimax acquired intellectual property, OptiCon Network Manager software and its trademark, and record an impairment loss to the extent that the carrying amounts of the assets exceed its fair value.  Based upon management's most recent analysis, the Company believes that no impairment of the Company’s tangible or intangible assets exist at March 31, 2011 and June 30, 2010.

Revenue Recognition

The Company is principally in the business of providing solutions for a secure intelligent energy platform that incorporates our secure wireless technology.  Contracts include multiple revenue components, comprised of our software licensing, hardware platforms, installation, training and maintenance.  In accordance with ASC 605-25 Multiple-Element Arrangements, revenue from licensing the software will be recognized upon installation and acceptance of the software by customers.  When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year.  Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.

 Revenue associated with software sales to distributors is recognized, net of discounts, when the Company has performed substantially all its obligations under the arrangement.  Until such time as substantially all obligations under the arrangement are met, software sales are recognized as deferred revenue.  Costs and expenses associated with deferred revenue are also deferred.  When a software sales arrangements include a commitment to provide training and/or other services or materials, the Company estimates and records the expected costs of these training and/or other services and/or materials.

Stock Based Compensation

The Company issues restricted stock to consultants for various services.  Cost for these transactions are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty's performance is complete.   The Company recognized consulting expenses and a corresponding increase to additional paid-in-capital related to stock issued for services.  Stock compensation for the periods presented were issued to consultants for past services provided, accordingly, all shares issued are fully vested, and there is no unrecognized compensation associated with these transactions.  

- 9 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

Shipping Costs

The Company includes shipping costs and freight-in costs in cost of goods sold.  

Advertising Costs

The costs of advertising are expensed as incurred.  Advertising expenses are included in the Company’s operating expenses.   Advertising expense was $61,464, $0, $75,659, and $0 for the three and nine month periods ending March 31, 2011 and 2010, respectively

Research and Development

The Company expenses research and development costs when incurred.  Indirect costs related to research and developments are allocated based on percentage usage to the research and development.

Income Taxes

The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized.

Earnings (Loss) Per Share

Basic EPS is calculated by dividing the loss available to common shareholders by the weighted average number of common shares outstanding during each period.  Diluted EPS is similarly calculated, except that the denominator includes common shares that may be issued subject to existing rights with dilutive potential, except when their inclusion would be anti-dilutive.

Based on an estimated current value of the Company’s stock being equal to or less than the exercise price of the warrants, none of the shares assumed issued upon conversion of the warrants, nor any of the stock assumed issued under the Company's 2004 Non statutory Stock Option Plan, are included in the computation of fully diluted loss per share, since their inclusion would be anti-dilutive.  Convertible preferred shares have been included in the dilutive computation, as if they would have been converted at the end of the period.

Earnings (Loss) per share:
Net Loss	$	(1,844,538	)	$	(759,223	)
Common shares		2,247,366,326			142,769,176
Common share equivalents		592,469,388			-
Dilutive common shares		2,839,835,714			142,769,176
Earnings (loss) per share, basic	$	(0.00	)	$	(0.01	)
Earnings (loss) per share, dilutive	$	(0.00	)	$	(0.01	)

Potentially issuable preferred shares, if converted to common, were considered but not included in the calculation of diluted earnings per share for the period ended March 31, 2011 and 2010, respectively, because their inclusion would be anti-dilutive.

- 10 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

Recently Issued Accounting Pronouncements

In December 2010, the FASB issued ASU 2010-28, “Intangibles — Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts.”  For reporting units with zero or negative carrying amounts, if it is more likely than not that a goodwill impairment exists, ASU 2010-28 requires performance of an additional test to determine whether goodwill has been impaired and to calculate the amount of impairment. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist.  ASU 2010-28 is effective for fiscal years and interim periods within those years beginning after December 15, 2010.  The Company adopted ASU 2009-28 in the first quarter of 2011 and the impact of adopting ASU 2010-28 will not be known until evaluations for goodwill impairment are performed at our annual impairment testing date or more frequently if indicators of potential impairment exist.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations (Topic 805): Disclosure of Supplementary Pro Forma Information for Business Combinations.  ASU 2010-29 specifies that for material business combinations when comparative financial statements are presented, revenue and earnings of the combined entity should be disclosed as though the business combination had occurred as of the beginning of the comparable prior annual reporting period.  ASU 2010-29 also expands the supplemental pro forma disclosures to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. ASU 2010-29 is effective prospectively for business combinations with an acquisition date on or after the beginning of the first annual reporting period after December 15, 2010.  The Company adopted this standard in 2011, and noted it had no impact on its disclosures through March 31, 2011.

Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification™ (“ASC”) is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.  Management has reviewed the aforementioned rules and releases and believes any effect will not have a material impact on the Company's present or future consolidated financial statements.

3.             Going Concern

As of March 31, 2011, the Company has a working capital deficit and has incurred a loss from operations and recurring losses since its inception resulting in a significant accumulated deficit.  As of March 31, 2011, the Company had negative working capital of approximately $1.5 million and approximately $2,000 in cash with which to satisfy any future cash requirements. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company’s is attaining revenues and management expects profitability in the future; however operations have not yet attained a profit or break-even.  Accordingly, the Company depends upon capital to be derived from future financing activities such as loans from its officers and directors, subsequent offerings of its common stock or debt financing in order to operate and grow the business. There can be no assurance that the Company will be successful in raising such capital. The key factors that are not within the Company's control and that may have a direct bearing on operating results include, but are not limited to, acceptance of the Company’s business plan, the ability to raise capital in the future, to continue receiving funding from its officers, directors and shareholders, the ability to expand its customer base, and the ability to hire key employees to grow the business. There may be other risks and circumstances that management may be unable to predict.

4.             Accounts Receivable

Accounts receivable reflect the amounts that have billed at their anticipated collectible amount.  The Company receives contract acceptances on submitted quotes.  Due to the advanced planning required, contract modifications occur, therefore, management invoices contracts upon signing, however, may reserve against invoicing until final scope of project negotiations or good faith deposits are made.  At March 31, 2011 the Company had a backlog of signed work orders totaling $852,820.

- 11 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

5.             Property and Equipment

Property and equipment consists of the following:
	March 31,		June 30,
	2011		2010
	(unaudited)		(audited)
Office and computer equipment	$	137,129	$	137,129
Furniture and fixtures		52,990		51,883
Computer software		5,468		5,468
		195,587		194,480
Accumulated depreciation		37,162		11,229
	$	158,425	$	183,251

For the three and nine months ended March 31, 2011 and 2010, the total depreciation expense charged to operations totaled $8,671, $17, $25,933, and $477, respectively. 

6.             Intangible Assets

Intangible assets consists of the following:
	December 31,		June 30,
	2010		2010
	(unaudited)		(audited)
Opticon fiber optic management software	$	189,862	$	189,862
Trademarks		1,000		1,000
TriMax  intellectual property		6,329,342		6,329,342
TriMax software		180,020		180,020
		6,700,224		6,700,224
Accumulated amortization		986,414		1,329
	$	5,713,810	$	6,698,895

For the three and nine months ended March 31, 2011 and 2010, the total amortization expense charged to operations totaled $328,362, $0, $985,085 and $0, respectively.  During the prior quarter management reassessed the life of the acquired intellectual property of Trimax, reducing the life from 15 years to 59 months, to reflect the remaining life of the patents.

Opticon fiber optic management software

The Company purchased all rights, titles and interest in the Opticon fiber optic management software on July 26, 2005, from FutureTech, LLC. in exchange for common stock.  The agreement became effective upon FutureTech purchasing the acquired assets from Corning Cable Systems, LLC in exchange for $100,000 in cash.  The Company recorded the common stock at the transferor’s historical cost basis determined under generally accepted accounting principles.

On July 26, 2005, the Company purchased the OptiCon Network Manager software system which consisted of version R3 and R4.  At the time of the purchase, the software system was out of date and had to be updated and integrated with other current business software systems, before it could be distributed to customers.  The development of R3 software system was completed during the quarter ended December 31, 2006, and is available for distribution to customers. In June 2010 a transfer of 50% of the R3 license was returned to FutureTech, LLC at a carrying cost value of $22,250.

During the years ended June 30, 2009 and 2008, the Company did not allocate any direct labor costs, and indirect costs and expenses to this effort.  The capitalized software costs are amortized when the software is actually sold to customers.  Amortization is provided based on the number of software units sold relative to the number of expected to be sold during the software’s economic life.  

- 12 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

TriMax intellectual property

On June 29, 2010 the Company acquired the assets of Trimax Wireless Systems, Inc., including licenses and trademarks.  The purchase price was allocated first to the identifiable assets received, allocating the remaining costs to the intellectual property.  The valuation considered future cash flows of the operating intangible assets acquired.  The valuation of the intellectual property was limited to the acquisition price (valuation of stock consideration and note payable), less the fair market value of identifiable assets.  The shares issued in exchange for the acquired property were valued at the fair market value of the equivalent common stock as of the date of closing.  The acquisition carrying value assigned to the intellectual property was $6,329,342.

TriMax software

Software development costs, in the amount of $180,020, were acquired in the Trimax acquisition.  The proprietary software was an identified asset of the acquisition and valued at the historical carrying value, cost.  The capitalized software is available for sale and is to be amortized over a 5 year period.

Future amortization of intangible property is expected as follows:

For the year ended June 30,:
2011	$	333,057
2012		1,332,227
2013		1,332,227
2014		1,332,027
2015		1,332,027
thereafter		52,245
	$	5,713,810

7.              Accrued Expenses

Accrued expenses at March 31, 2011 and June 30, 2010 were as follows:

	December 31,		June 30,
	2010		2010
	(unaudited)		(audited)
Accrued salaries	$	339,486	$	278,034
Accrued consulting		129,618		125,118
Accrued professional		94,000		47,000
Accrued interest		61,217		24,649
Accrued expenses		4,172		4,166
	$	628,493	$	478,967

 8.             Debt Agreements

On June 29, 2010 the Company entered into an agreement with the shareholders of Trimax Wireless, Inc. (“Trimax”) for the purchase of their business assets and technology for preferred shares of the Company, the assumption of liabilities and a note payable, in the amount of $712,500.  The note is interest bearing at 6% per annum until fully paid with a start period of 90 (September 29, 2010) days for the first payment.  The Company shall make interest-only payments on the first day of each month from the date of this Note until the earlier of (a) receipt of Investment Funding as defined; or (b) 180 days from the date hereof ("Maturity Date") (December 29, 2010).  Principal plus all accrued and unpaid interest on such principal shall be due and payable on the Maturity Date.  As of the balance sheet date the Company is currently in default, as no payments have been made on this loan and is currently in negotiations to extend terms.  See note 14, legal matters.

- 13 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

On August 31, 2010, Mr. Talari assigned part of his debt, in the amount of $15,000.  The note is interest bearing at 8%, with a maturity date of one year.  This note is convertible into the Company’s common stock at a discounted rate.

The Company issued a demand note to an unrelated party, with an unpaid balance in the amount of $6,000, with an annual interest rate of 18%.  There are no repayment terms.  As of March 31, 2011 accrued interest, since inception, is $4,450.

The Company has a Master Note Agreement, as an unsecured line of credit, from Mr. Sam Talari.  The Master Note is for operational capital, in the amount of $350,000 and bears interest at 5% per annum.   Mr. Talari has pledged additional funding for operating capital, up to $500,000, under the same terms as the original Master Note.

On June 17, 2010 the Company entered into a Bridge Loan Agreement with Blue Diamond Consulting, LLC (“Lender”).  The Company may be advanced up to $500,000, secured by the Company’s common stock.  Advances may be requested in increments of $25,000 and bear interest of 8% per annum.   Advances have repayment terms of nine months from the date of the requested advance.  The Lender has the right, at their option, to convert any amounts due, plus interest, into the Company’s common stock at a conversion rate, as defined, at 50% of the closing bid price at the date of conversion request.  As of March 31, 2011, there have been no requested advances and no amount is due to Lender.

9.             Related Parties Disclosures

Employment Agreements

The following agreements are with Shareholders, Directors and Members of the Board:

Saed (Sam) Talari

Effective August 1, 2009, the Company entered into a three-year employment agreement with Saed (Sam) Talari, one of the Company’s directors.  The agreement was automatically renewed for an additional one-year period, and subsequently renewed by the Board for an additional one-year period through July 31, 2013.  The Agreement provides for (a) a base salary of $15,000 per month, (b) a signing bonus equal to one month salary, (c) four weeks’ vacation within one year of the starting date, and (d) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Paul J. Aiello

On October 19, 2010, as amended January 1, 2010, the Company entered into a three-year employment agreement with Paul Aiello, one of the Company’s directors.  The Agreement provides for (a) a base salary of $12,000 per month, (b) a signing bonus of $10,000, (c) four weeks’ vacation within one year of the starting date, and (d) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.  Additionally Mr. Aiello has the option to purchase 15,000,000 shares of common stock at $.02 per share, ratably vesting at the employment anniversary date.

Malcolm F. Welch

On October 6, 2009, the Company entered into a one-year employment agreement with Malcolm F. Welch, one of the Company’s directors and Co-Chairman of the Board.    The agreement is automatically extended for successive one one-year periods, unless previously terminated.    The Agreement, as amended effective January 1, 2010 provides for (a) a base salary of $2,000 per month; (b) eligibility to receive 375,000 shares of  the Company ’s common stock based on the employee’s achievement of goals and objectives approved by the Board; (c) an option to purchase 375,000 shares of  the Company common stock at $0.025 per share to be granted over a 3 years based on the achievement of goals and objectives established by the Board; (d) a bonus based on the level of funding  the Company achieves through  June 30, 2011 ; (e) two weeks vacation during first year of employment; and (f) all group insurance plans and other benefit plans and programs made available to the Company’s management employees.

Other employment agreements exist with employees.

- 14 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

Line of Credit, Master Agreement

On September 6, 2005, Mr. Sam Talari, one of the Company’s directors, agreed to make advances to the Company as an interim unsecured loan for operational capital of $350,000, evidenced by a master promissory note, with interest at the rate of 5% per annum, based on amounts advanced from time to time, payable annually.  Mr. Talari, time to time, has converted advances and accrued interest in exchange for equity shares. Mr. Talari continued making advances to the Company on the loan, of which $448,804 and $185,704 remains outstanding at March 31, 2011 and June 30, 2010, respectively.  In addition, the Company has accrued interest on this loan in the amount of $21,499 and $5,390 at March 31, 2011 and June 30, 2010, respectively.

Mr. Talari has pledged additional funding for operating capital, up to $500,000, under the same terms as the original Master Note.

 Loan from Related Parties

During the year ended June 30, 2008, FutureWorld Energy, Inc. (formerly Isys Medical), OptiCon’s former parent company, paid expenses on behalf of the Company and made cash advances.  Most of these expenses were paid, and the advances made, by FutureWorld Energy at the time OptiCon was still a subsidiary, and are included in Loan & Note Payable – Related Parties on the balance sheet. At March 31, 2011 and June 30, 2010, the amount owed to FutureWorld Energy on this promissory note was $7,802 and $7,802 respectively, and has accrued interest of $2,361 and $655, respectively.

Accounts Payable

The Company relies on advances from the majority shareholder and other key members.  Advances are normally in the form of a loan.   Payments are made on behalf of the Company by these individual and are treated as trade payables.  These amounts are considered liquid and if payment is not made, may be formally converted in the form of a note.  The Company currently has an aggregate of $99,337 due to three individuals as of March 31, 2011.

Stock Transactions

On May 13, 2009, the Company agreed to convert the principal amount of a $163,000 convertible promissory note dated September 30, 2008, plus accrued thereon of $5,292, and $78,694 principal amount of the $500,000 (increased from $350,000) master promissory note with a balance of $99,583, plus accrued interest thereon of $3,014 due to Mr. Sam Talari, the Company’s acting Chief Executive Officer, into 50,000,000 shares of the Company’s common stock.  The convertible and the master promissory notes are convertible into shares of the Company’s common stock at 50% discount to the lowest recorded year closing price or $0.005.

On October 3, 2009, the Company agreed to split a portion of the existing debt balance on the Master Note, described above, into two (2) $25,000 convertible notes, with interest at the rate of 5% per annum, and convertible into shares of the Company’s common stock at 40% discount to the 5-day average bid price per share.  Mr. Talari assigned these notes to Eventus Capital, Inc., an unrelated company, for business unrelated to the Company.  On February 9, 2010 and March 25, 2010 respectively, the Company agreed to the conversion of these notes by Eventus Capital into 1,860,119 and 5,000,000 shares respectively of the Company’s restricted common stock.

On January 15, 2010, the Company agreed to issue Mr. Talari 1,500,000 shares of the Company’s common stock in exchange for the cancellation of $45,000 of accrued salary owed to Mr. Talari.  The number of shares issued was determined based on the market price of $.03 per share on January 15, 2010.  The Board agreed to issue these shares from shares previously authorized under the Company’s 2009 Employees and Consultants Stock Compensation Plan.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties.

10.           Stock Options and Warrants

On December 2, 2005, the Company granted two unrelated individuals Series A Warrants to purchase 2,192 shares, at an adjusted average exercise price of $34.60.  All of the Warrants expire on November 11, 2011.  All of the Warrants granted were non-qualified fixed price warrants.

- 15 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

The following table summarizes the activity related to the stock purchase warrants and options and weighted average assumptions for the period ended March 31, 2011:

					Weighted Average				Remaining
	Options		Options		Intrinsic		Exercise		Contractual
	Outstanding		Vested		Value		Price		Term
Options, June 30, 2009		2,192		2,192	$	34.60	$	34.60	.625 years
Granted		-		-
Exercised		-		-
Forfeited		-		-
Options, June 30, 2010		2,192		2,192
Granted		-		-
Exercised		-		-
Forfeited		-		-
Options, March 31, 2011		2,192		2,192

The following are the weighted average assumptions for the options granted:

Weighted Average:
Dividend rate	0.0	%
Risk-free interest rate	3.990	%
Expected lives (years)	5.0
Expected price volatility	455.0	%
Forfeiture Rate	0.0	%

11.           Stock Option Plan

On October 2, 2009, the Company adopted a 2009 Employees and Consultants Stock Compensation Plan (“Stock Plan”) for the benefit of employees and consultants (including officers and employee directors). The Stock Plan is intended to provide those persons who have substantial responsibility for the management and growth of the Company with additional incentives and an opportunity to obtain or increase their proprietary interest in the Company, encouraging them to continue in employment, and to pay independent consultants that perform services to the Company. The Board of Directors authorized 5,000,000 shares of the Company's common stock to be set aside, which may be issued under the Stock Plan.

On November 24, 2009, the Company filed a registration statement on Form S-8 with the Securities and Exchange Commission registering the 5,000,000 shares (S-8 shares) under the Stock Plan.  As of March 31, 2011, all shares have been issued.

12.          Income Taxes

There is no current or deferred income tax expense or benefit allocated to continuing operations for the period ended March 31, 2011 and 2010 or for the period October 22, 2004 (date of inception) through March 31, 2011.

- 16 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

The income tax provision differs from the amount of tax determined by applying the federal statutory rate as follows:

	March 31, 2011
Income tax benefit at statutory rate	$	(694,100	)	$	(156,756	)
Increase (decrease) in income taxes due to:
Change in valuation allowance		694,100			156,756
	$	-		$	-

The Company has not recognized an income tax benefit for its operating losses generated through March 31, 2011 based on uncertainties concerning the Company’s ability to generate taxable income in future periods.  The tax benefit is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not.  In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not.

For income tax purposes the Company has available a net operating loss carry-forward of approximately $1,197,000 from inception to June 30, 2010, which will expire, unless used to offset future federal taxable income beginning in 2024.

13.           Capital Equity

The Company has issued convertible preferred shares.  Shares are convertible into the Company’s common stock, at the option of the holder, at the prescribed conversion rate.  Conversions are as follows:

	Shares		Conversion
	Outstanding		Rate to Common
Preferred Series A		200,000		3,000
Preferred Series A1		52,425		800
Preferred Series A2		107,431		500
Preferred Series A3		25,846		400
Preferred Series B		258,418		300
		644,120

14.            Commitments and Contingencies

Lease/Rental Agreements

On March 11, 2010, the Company entered into a lease with Accu Centre, an unrelated party for executive offices and computer center in Pinellas Park, Florida. The lease is for a three year period, commencing May 2010, with option to terminate the lease after one year, upon adequate notification (90 days).  Base rent is $2,756 per month, with annual cost increases.  The future annual minimum rental for each of the next three years is $33,075, subject to 4% increases per year.

On August 1, 2010, the Company entered into a one year lease, with an unrelated party, for location occupied by Trimax Wireless. The premise, located in Naples Florida is allocated to executive offices and storage center. The lease commenced August 1, 2010 with an annual base rent of $24,000 for the twelve month period ending July 31, 2011.

Rent expense for the three and nine months ended March 31, 2011 and 2010 amounted to $14,848, $5,642, $44,475 and $17,074, respectively.  

Foreign Currency Translation

The balance sheets of the Company's foreign subsidiaries are translated at period-end rates of exchange, and the statements of earnings are translated at the weighted-average exchange rate for the period. Gains or losses resulting from translating foreign currency financial statements are included in accumulated other comprehensive income (loss) in the consolidated statements of stockholders' equity and comprehensive income. At March 31, 2011 and 2010 no foreign currency translation was conducted due to the immaterial nature of its subsidiary’s balance sheet.

- 17 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

Legal Matters

From time to time the Company may be a party to litigation matters involving claims against the Company.  Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations as of March 31, 2011 and June 30, 2010.

Subsequent to the end of the March 31, 2011 quarter, Trimax Wireless filed a complaint relating to the unpaid balance of the Promissory Note executed with the acquisition of Trimax Wireless. The Company has filed a motion to dismiss such action which is set for hearing. The note is unsecured, however, if holders prevail, they may be entitled to legal cost, in addition to payments per the term of the agreement.  The Company believes that it has sufficient affirmative defenses to this complaint and does not believe that it will have a material effect on the Company.

 15.          Subsequent Events

The Company is currently in merger or acquisition negotiations with entities which management believes to be key components of the Smart Grid solutions we envision.  Management believes that acquisitions will be a catalyst for advancing the Company’s existing technology to attain greater market share.  We are currently in valuation negotiations with the targeted companies; acquisitions will be primarily share exchanges.  Additionally, we are seeking capital financing for the purposes of furthering our plan of operations.  These negotiations have not advanced, at this point, to an issuance of a letter of intent; however management believes this ongoing strategy will best serve existing shareholders.

The Company has been approached as a potential target for acquisition.  Preliminary discussions were brought to the attention of the Board of Directors.  Although negotiations have not advanced, we believe that those discussions were validation of our technology.   Management and the Board of Directors are aware of our position and potential of our technology and will consider any offer that increases shareholder value.

The Company's Board of Directors has agreed to reduce the issued and outstanding shares by approximately 500,000,000 common shares held by related parties.   The Company will reduce the issued and outstanding shares by having several major shareholders exchange their common shares for preferred.  As of the date of filing the reduction plan has not been implemented, but is anticipated to occur before the fiscal year end (June 30, 2011).

On April 16, 2011 the Company completed the acquisition of controlling interest in Lockwood Technology Corporation, a leading RFID software and hardware solutions provider, from Daedalus Capital, LLC.   Infrax Systems acquired 70% interest in Lockwood Technologies from Daedalus Capital in a stock based transaction valued at $1,650,000. As part of the transaction, Daedalus Capital provided additional working capital to Infrax to fund current development activities of Infrax Systems and Lockwood.  Infrax also plans to utilize their expertise in future smart grid deployment projects.

- 18 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

16.           Acquisition

 Proforma financial statements are provided for the acquisition of Lockwood Technology Corporation (“Lockwood”):

Infrax Systems, Inc.

Unaudited Proforma Balance Sheet

As of December 31, 2010

		Combined			Infrax			Lockwood			Adjustment
Assets
Current assets
	Cash	$	242,863			33,501			59,362	(a)		150,000
	Accounts receivable		1,087,491			1,073,191			14,300
	Inventory		90,483			90,483
	Prepaid and other		18,708			16,208			2,500
Total current assets			1,439,545			1,213,383			76,162			150,000
Property & equipment, net of accumulated			202,236			165,989			36,247
Intangible property, net of accumulated			6,478,713			6,478,713
Goodwill, unallocated acquisition costs			1,428,662			-				(a)		1,428,662
Total Assets		$	9,549,156			7,858,085			112,409			1,578,662
Liabilities and Stockholders' Equity
Current liabilities
	Accounts payable	$	325,165			325,165
	Accrued expenses		878,602			868,105			10,497
	Customer deposits and deferred revenue		946,251			946,251
	Notes payable		733,500			733,500
	Loans and notes payable, related parties		7,802			7,802
Total current liabilities			2,891,320			2,880,823			10,497			-
Notes payable to Shareholder			448,804			448,804
Total liabilities			3,340,124			3,329,627			10,497			-
Stockholders' Equity
	Capital		10,178,217			8,528,217			101,912	(a)		1,548,088
	Minority interest		30,574							(a)		30,574
	Accumulated deficit during development stage		(3,999,759	)		(3,999,759	)
Total stockholders' deficit			6,209,032			4,528,458			101,912			1,578,662
Total Liabilities and Stockholders' Equity		$	9,549,156			7,858,085			112,409			1,578,662
(a)	Adjustment $150,000 cash provided at acquisition for funding by sellers. Shares valued at $1.5MM for 70% interest in Lockwood.

- 19 -

Infrax Systems, Inc. 

 (Previously A Development Stage Enterprise)

Notes to Condensed Consolidated Financial Statements

For the Nine Months Ended March 31, 2011 and the Period from

(Unaudited)

Infrax Systems, Inc.

Unaudited Proforma Statement of Operations

For the Years Ended June 30, 2010 and December 31, 2010 *

	Combined			Infrax			Lockwood			Adjustments
Revenues	$	298,858			9,895			288,963			-
Direct costs		66,003			-			66,003			-
		232,855			9,895			222,960			-
Operating expenses:
Salaries and benefits		1,027,733			644,512			383,221			-
Consulting		128,111			128,111
Professional fees		65,990			60,886			5,104			-
Depreciation and amortization		2,398			2,398
General and administrative		267,309			127,556			139,753			-
Total operating expenses		1,491,541			963,463			528,078			-
Operating earnings		(1,258,686	)		(953,568	)		(305,118	)		-
Other income (expense)		(33,142	)		(33,142	)
Loss from operations before minority interest and  income taxes		(1,291,828	)		(986,710	)		(305,118	)		-
Minority interest		91,535						91,535			-
Loss from operations before income taxes		(1,200,293	)		(986,710	)		(213,583	)		-
Provision for income taxes		-			-			-			-
Net loss	$	(1,200,293	)		(986,710	)		(213,583	)		-
* For comparative purposes, annual year end periods have been used: Infrax, as of June 30, 2010 and Lockwood, as of December 31, 2010.

- 20 -

Item 2. Management’s Discussion and Analysis or Plan of Operation

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This filing contains a number of forward-looking statements which reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this filing other than statements of historical fact, including statements addressing operating performance, events, or developments which management expects or anticipates will or may occur in the future, including statements related to distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, statements expressing general optimism about future operating results, and non-historical information, are forward looking statements. In particular, the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements, and their absence does not mean that the statement is not forward-looking. These forward-looking statements are subject to certain risks and uncertainties, including those discussed below. Our actual results, performance or achievements could differ materially from historical results as well as those expressed in, anticipated, or implied by these forward-looking statements. We do not undertake any obligation to revise these forward-looking statements to reflect any future events or circumstances.

Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions (including those described below), and apply only as of the date of this filing. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the risks to be discussed in our Annual Report on form 10-K and in the press releases and other communications to shareholders issued by us from time to time which attempt to advise interested parties of the risks and factors which may affect our business. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

The following discussions should be read in conjunction with our financial statements and the notes thereto presented in “Item 1 – Financial Statements” and our audited financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our report on Form 10-K for the fiscal year ended June 30, 2010. The information set forth in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements that involve risks and uncertainties. Many factors could cause actual results to differ materially from those contained in the forward-looking statements.

Name Changes

Effective December 2, 2009, with the majority shareholder’s approval, the name of the Company was changed from OptiCon Systems, Inc. to Infrax Systems, Inc.

Changes in Management

The Company terminated its relationship with Ulrich Altvater, former CTO of Infrax, for Breach of Contract. The Company has divided Mr. Altvater’s responsibilities among other senior executives and does not contemplate replacing him at this time.

Sales Activity

The Company’s backlog of proposal activity substantially increased in the quarter, both domestically and internationally.  Interest in our core products and development projects continues to increase.  Our field trials with utilities and telecommunications providers continue to move forward and the Company expects to receive additional product orders at the end of these trials.

As we continue to refine and enhance our product portfolio, we have received inquiries from a variety of channels relating to our products. In addition to our direct sales efforts and our existing agent program, the Company has begun developing an indirect sales channel for specific product applications. We are in discussions with several large, nationwide distribution channels to add our products to their portfolios and are in contract discussions with a national sales channel to sell preconfigured versions of select Infrax products. We anticipate results from these relationships in the coming quarters.

- 21 -

The Company has also started the Lockwood Technology integration process and has begun presenting Lockwood’s Asset Management and RFID solutions to utilities and municipalities in the Southeastern U.S.. These efforts will augment the current opportunities that Lockwood is in the process of finalizing..

Critical Accounting Policies

Our significant accounting policies are more fully described in Note 2 to the financial statements. However, certain accounting policies are particularly important to the portrayal of our financial position and results of operations and require the application of significant judgment by our management; as a result they are subject to an inherent degree of uncertainty. In applying these policies, our management uses its judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Those estimates are based on knowledge of our industry, historical operations, terms of existing contracts, our observance of trends in the industry and information available from other outside sources, as appropriate.

Our critical accounting policies include:

●   Principals of Consolidation -The consolidated financial statements include the accounts and operations of the Infrax Systems, Inc., and its wholly owned subsidiary Infrax Systems SA (Pty) Ltd. (collectively referred to as the “Company”).  Accordingly, the assets and liabilities, and expenses of this company have been included in the accompanying consolidated financial statements, and intercompany transactions have been eliminated.

●   Revenue Recognition -The Company is principally in the business of providing solutions for a secure intelligent energy platform that incorporates our secure wireless technology.  Contracts include multiple revenue components, comprised of our software licensing, hardware platforms, installation, training and maintenance.  In accordance with ASC 605-25 Multiple-Element Arrangements, revenue from licensing the software will be recognized upon installation and acceptance of the software by customers.  When a software sales arrangement includes rights to customer support, the portion of the license fee allocated to such support is recognized ratably over the term of the arrangement, normally one year.  Revenue from professional services arrangements will be recognized in the month in which services are rendered over the term of the arrangement.   Revenue associated with software sales to distributors is recognized, net of discounts, when the Company has performed substantially all its obligations under the arrangement.  Until such time as substantially all obligations under the arrangement are met, software sales are recognized as deferred revenue.  Costs and expenses associated with deferred revenue are also deferred.  When a software sales arrangements include a commitment to provide training and/or other services or materials, the Company estimates and records the expected costs of these training and/or other services and/or materials.

●   Long-Lived Assets - We depreciate property and equipment and amortize intangible assets, including software development costs over the respective assets’ estimated useful life and periodically review the remaining useful lives of our assets to ascertain that our estimate is still valid. If we determine a useful life has materially changed, we either change the useful life or write the asset down or if we determine the asset has exhausted its useful life, we write the asset off completely.

●   Capitalized Software Development Costs - We capitalize software development costs incurred subsequent to the establishment of technological feasibility and amortize them over the estimated lives of the related products. We discontinue capitalization of software when the software product is available to be sold, leased, or otherwise marketed. Amortization of software costs begins when the developed product is available for sale to our customers. We amortize our software development costs over the estimated economic life and estimated number of units of the product to be sold.

●   Stock Based Compensation -We recognize stock-based compensation expense net of an estimated forfeiture rate and therefore only recognize compensation cost for those shares expected to vest over the service period of the award.  Calculating stock-based compensation expense requires the input of subjective assumptions, including the expected term of the option grant, stock price volatility, and the pre-vesting option forfeiture rate.  We estimate the expected life of options granted based on historical exercise patterns.  We estimate stock price volatility based on historical implied volatility in our stock.  In addition, we are required to estimate the expected volatility rate and only recognize expense for those shares expected to vest.  We estimate the forfeiture rate based on historical experience of our stock-based awards that are granted, exercised or cancelled.

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Recent Accounting Pronouncement

We have reviewed accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term.  The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.  Those standards have been addressed in the notes to the unaudited financial statement and in our Annual Report, filed on Form 10-K for the period ended June 30, 2010. 

Off-Balance Sheet Arrangements:

We do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as special purpose entities or variable interest entities, which have been established for the purpose of facilitating off-balance sheet arrangements or other limited purposes.

Subsequent Events:

The Company is currently in merger or acquisition negotiations with entities which management believes to be key components of the Smart Grid solutions we envision.  Management believes that acquisitions will be a catalyst for advancing the Company’s existing technology to attain greater market share.  We are currently in valuation negotiations with the targeted companies; acquisitions will be primarily share exchanges.  Additionally, we are seeking capital financing for the purposes of furthering our plan of operations.  These negotiations have not advanced, at this point, to an issuance of a letter of intent; however management believes this ongoing strategy will best serve existing shareholders.

The Company has been approached as a potential target for acquisition.  Preliminary discussions were brought to the attention of the Board of Directors.  Although negotiations have not advanced, we believe that those discussions were validation of our technology.   Management and the Board of Directors are aware of our position and potential of our technology and will consider any offer that increases shareholder value.

The Company's Board of Directors has agreed to reduce the issued and outstanding shares by approximately 500,000,000 common shares held by related parties.   The Company will reduce the issued and outstanding shares by having several major shareholders exchange their common shares for preferred.  As of  the date of filing the reduction plan has not been implemented, but is anticipated to occur before the fiscal year end (June 30, 2011).

On April 16, 2011 the Company completed the acquisition of controlling interest in Lockwood Technology Corporation, a leading RFID software and hardware solutions provider, from Daedalus Capital, LLC.   Infrax Systems acquired 70% interest in Lockwood Technologies from Daedalus Capital in a stock based transaction valued at $1,650,000. As part of the transaction, Daedalus Capital provided additional working capital to Infrax to fund current development activities of Infrax Systems and Lockwood.  Infrax also plans to utilize their expertise in future smart grid deployment projects.

RESULTS OF OPERATIONS

For the three and nine months ended March 31, 2011 and 2010:

During the three and nine month period ended March 31, 2011, we had sales from the delivery of equipment and services in the amount of $86,315 and $466,558, compared to $0 and $1,995 for the comparable three and nine month period ended March 31, 2010.   The Company has increased its marketing efforts with the new service and product offerings of Trimax.

Our expenses increased by approximately $272,000 and $1,381,000 from $347,641 and $746,877 to $620,130 and $2,128,749 for the three and nine month periods ended March 31, 2011 and 2010, respectively.   Expenses increased due to the additional costs incurred with our acquisition of Trimax, particularly salaries and consulting expenses.   We also incurred $311,100, $0, $985,085 and $0 of amortization costs, recognized from our acquisition, for the three and nine month periods ended March 31, 2011 and 2010, respectively.  General and administrative costs increased during the period, primarily for the additional infrastructure required.

For the three and nine months ended March 31, 2011, we incurred a net loss of $620,287 and $1,844,538 compared to a loss of $355,630 and $759,223 for the three and nine months ended March 31, 2011, reflecting primarily the additional employees and infrastructure as we advance our operations from an R&D company to a service provider.

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LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2011, we had $2,223 in cash with which to satisfy our cash requirements for the next twelve months, along with approximately $299,000 (including extension of an additional $500,000) remaining on the line of credit from Mr. Talari to pay normal operating expenses, while we attempt to secure other sources of financing.  Additionally, our $500,000 Bridge loan remains unused, however, available.  

Since the inception of our Master Note Agreement, Mr. Talari has continued to advance funds to us as needed.  Mr. Talari remains committed to continue funding the Company and has regularly converted amounts outstanding and accrued interest, under the note agreement, to our common stock, in order to have money available.   At March 31, 2011, we owe Mr. Talari $550,987 on the master promissory note, and accrued interest of $21,499.   Mr. Talari has pledged additional funding for operating capital, up to $500,000, under the same terms as the original Master Note.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a Smaller Reporting Company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. Controls and Procedures

Not Applicable

.

Item 4T. Controls and Procedures

Disclosure controls and procedures:  As of March 31, 2011, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, with the participation of our principal executive and principal financial officers.   Disclosure controls and procedures are defined in Exchange Act Rule 15d–15(e) as “controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms and include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.”  Based on our evaluation, our President/Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2011, such disclosure controls and procedures were not effective.

Changes in internal control over financial reporting: Based upon an evaluation by our management of our internal control over financial reporting, with the participation of our principal executive and principal financial officers, there were no changes made in our internal control over financial reporting during the quarter ended March 31, 2011 that have materially affected or are reasonably likely to materially affect this control.

Limitations on the Effectiveness of Internal Control: Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material errors.  An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations on all internal control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control.  The design of any system of internal control is also based in part upon certain assumptions about risks and the likelihood of future events, and there is no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of ---changes in circumstances and the degree of compliance with the policies and procedures may deteriorate.  Because of the inherent limitations in a cost-effective internal control system, financial reporting misstatements due to error or fraud may occur and not be detected on a timely basis.

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PART II - OTHER INFORMATION

Item 1 Legal Proceedings.

We are not currently involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.   Below is a summary of existing legal matters:

·   During the March 31, 2011 quarter, the Company had terminated a closely tied contracted consultant of the Company for breach of fiduciary responsibilities on March 31, 2011.  Subsequent to the termination, the Company also filed a lawsuit in the Circuit Court in Pinellas County Florida seeking injunctive relief and other remedies against Ulrich Altvater for violation of his contractual non-disclosure and non-compete agreement, civil theft of intellectual property, tortuous interference in business relations and fraud. Such case is pending under Pinellas Circuit Court Case Number  11-003233-CI. The management and counsel for the Company believe that they have sufficient evidence to win on such a suit and to receive a large damage award for actual damages and punitive damages. As well the company is seeking immediate injunctive relief against and for seizure of all shares issued to Altvater. 

·   Subsequent to the end of the March 31, 2011 quarter, Trimax Wireless filed a complaint relating to the unpaid balance of the Promissory Note executed with the acquisition of Trimax Wireless. The Company has filed a motion to dismiss such action which is set for hearing. The Company believes that it has sufficient affirmative defenses and counter-claims against Trimax and related parties  that the Company’s counsel and management does not believe that such suit will have a material effect on the Company. As a result of such counter claims, if necessary, the Company will be seeking enforcement and court injunctions to freeze all shares issued to recipients of the Trimax agreement and rescind all such shares. The Company and legal counsel believe there is a probability that all shares of the Trimax would be cancelled in the matter, and other remedies will be available to Infrax.

Item 1A Risk Factors.

There have been no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended June 30, 2010 filed on September 28, 2010 with the Securities and Exchange Commission.

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

None.

Item 3 Defaults Upon Senior Securities.

Not applicable.

Item 4 Removed and Reserved.

Not applicable.

Item 5  Other Information.

None.

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Item 6 Exhibits

31.A	Principal Executive Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.B	Principal Financial & Accounting Officer's Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.A	Principal Executive Officer’s Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.B	Principal Financial & Accounting Officer’s Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant cause this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Infrax Systems, Inc.
	(Registrant)
Date: May 16, 2011	By:  /s/  Paul J. Aiello
	Paul J. Aiello
	Principal Executive Officer
Date: May 16, 2011	By:  /s/ Peter Messineo
	Peter Messineo
	Principal Financial & Accounting Officer

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EX-31.A

Exhibit 31.A

CERTIFICATION

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Paul J. Aiello, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infrax Systems, Inc. for the quarter ended March 31, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and  

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 16, 2011

/s/ Paul J. Aiello

Paul J. Aiello

Principal Executive Officer

EX-31.B

Exhibit 31.B

CERTIFICATION

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Peter Messineo, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Infrax Systems, Inc. for the quarter ended March 31, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;  

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and  

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and  

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and  

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 16, 2011

/s/ Peter Messineo

Peter Messineo

Principal Accounting Officer

EX-32.A

Exhibit 32.A

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 In connection with the filing of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 as filed with the Securities and Exchange Commission (the “Report”) by Infrax Systems, Inc. (the “Registrant”), I, Paul J. Aiello, hereby certify that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of Registrant.

	/s/ Paul J. Aiello
	Paul J. Aiello
Dated: May 16, 2011	Chief Executive Officer

EX-32.2B

Exbibit 32.B

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 as filed with the Securities and Exchange Commission (the “Report”) by Infrax Systems, Inc. (the “Registrant”), I, Peter Messineo, hereby certify that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

2. The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of Registrant.

 /s/ Peter Messineo

 Peter Messineo

Principal Accounting Officer

Dated: May 16, 2011