compensation and benefits and administer our various stock option plans and other incentive compensation arrangements. The Committee will also seek to identify individuals qualified to become members of the Board and make recommendations to the Board of nominees to be elected by stockholders or to be appointed to fill vacancies on the Board.

In identifying and recommending nominees for positions on the Board, we anticipate that the Compensation and Nominating Committee will consider (i) a candidate's judgment, character, expertise, skills and knowledge useful to the oversight of our business; (ii) a candidate's business or other relevant experience; and (iii) the extent to which the interplay of the candidate's expertise, skills, knowledge and experience with that of other members of the Board will build a Board that is effective, collegial and responsive to our needs.

Our Board expects that Compensation and Nominating Committee will also consider director candidates recommended by stockholders. In considering candidates submitted by stockholders, the Committee will take into consideration the needs of the Board and the qualifications of the candidate. To have a candidate considered by the Committee, a stockholder should notify our Secretary by written notice delivered to, or mailed to and received at, our principal executive offices not less than thirty (30) days and not more than sixty (60) days prior to the scheduled annual meeting date, regardless of any postponements, deferrals or adjournments of that meeting to a later date. A stockholder's notice to the Secretary must set forth (i) as to each person whom the stockholder proposes to nominate for election to the Board, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to the Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’), including, without limitation, such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (ii) the name and address of the stockholder making the nomination and any other stockholders known by such stockholder to be supporting such nomination; (iii) the class and number of shares of stock owned by the stockholder on the date of such stockholder's notice and by any other stockholders known by such stockholder to be supporting such nomination on the date of such stockholder's notice; and (iv) any financial interest of the stockholder in such nomination.

The Board believes that the minimum qualifications for service as a director are that nominees possess an ability, as demonstrated by recognized success in his or her field, to make meaningful contributions to the Board's oversight of our business and affairs and an impeccable reputation of integrity and competence in his or her personal or professional activities. The Committee's evaluation of potential candidates shall be consistent with the Board's criteria for selecting new directors. Such criteria include an understanding of our business environment and the possession of such knowledge, skills, expertise and diversity of experience so as to enhance the Board's ability to manage and direct our affairs and business, including when applicable, to enhance the ability of committees of the Board to fulfill their duties and/or satisfy any independence requirements imposed by law, regulation or listing requirements. The Committee may also receive suggestions from our current Board members, executive officers or other sources, which may be either unsolicited or in response to requests from the committee for such candidates. In addition, the Committee may also, from time to time, engage firms that specialize in identifying director candidates.

Once a person has been identified by the Committee as a potential candidate, the Compensation and Nominating Committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the Committee determines that the candidate warrants further consideration, the chairman or another member of the Committee may contact the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the Committee may request information from the candidate, review the person's accomplishments and qualifications and may conduct one or more interviews with the candidate. The Committee will consider all such information in light of information regarding any other candidates that the Committee might be evaluating for membership on the Board. In certain instances, the committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand

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knowledge of the candidate's accomplishments. The Committee's evaluation process does not vary based on whether or not a candidate is recommended by a stockholder.

Limitation of Directors' Liability and Indemnification

Our certificate of incorporation, as amended, limits the liability of individual directors for specified breaches of their fiduciary duty. The effect of this provision is to eliminate the liability of directors for monetary damages arising out of their failure, through negligent or grossly negligent conduct, to satisfy their duty of care, which requires them to exercise informed business judgment. The liability of directors under the federal securities laws is not affected. A director may be liable for monetary damages only if a claimant can show receipt of financial benefit to which the director is not entitled, intentional infliction of harm on us or on our shareholders, a violation of section 174 of the Delaware General Corporation Law (dealing with unlawful distributions to shareholders effected by vote of directors), and any amended or successor provision thereto, or an intentional violation of criminal law.

Our certificate of incorporation, as amended, also provides that we will indemnify each of our directors or officers, and their heirs, administrators, successors and assigns against any and all expenses, including amounts paid upon judgments, counsel fees, and amounts paid or to be paid in settlement before or after suit is commenced, actually and necessarily incurred by such persons in connection with the defense or settlement of any claim, action, suit or proceeding, in which they, or any of them are made parties, or which may be asserted against them or any of them by reason of being, or having been, directors or officers of the corporation, except in relation to such matters in which such director or officer shall be adjudged to be liable for his own negligence or misconduct in the performance of his duty.

There is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which we are required or permitted to provide indemnification, except as set forth under ‘‘Certain Relationships and Related Party Transactions.’’ We are also not aware of any threatened litigation or proceedings that may result in a claim for indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or controlling persons under our certificate of incorporation, as amended,, we have been informed that, in the opinion of the Securities and Exchange Commission (the ‘‘Commission’’), indemnification is against public policy as expressed in the Securities Act and is unenforceable.

Compensation of Directors

During our 2005 fiscal year, each of the directors then serving was granted a stock option under our original compensation plan for 25,000 shares of Common Stock. In addition, each director was eligible to receive $500 for each meeting attended in person, plus reimbursement for out-of-pocket expenses, and $250 for each meeting attended telephonically.

On July 19, 2005, the Board adopted a new compensation plan for directors. Under the new plan, each non-employee director will, immediately upon his or her election or appointment to the Board, receive 40,000 shares of Common Stock, of which 20,000 shares will vest immediately and 20,000 will vest on the first anniversary of his or her election to the Board. If the director leaves the Board for any reason, voluntarily or involuntarily, before the first anniversary of his or her election to the Board, he or she will forfeit any unvested shares. In addition, each non-employee director will receive an annual director's fee of $5,000 and an option to purchase 5,000 shares of Common Stock, which option will become exercisable in equal quarterly installments and $250, plus reimbursement for actual out-of-pocket expenses, for each Board meeting attended in person and $125 for each Board meeting attended telephonically.

The Chairmen of the Audit Committee and the Compensation and Nominating Committee will each receive an annual fee of $1,000, payable in equal quarterly installments. Each member of the Audit Committee and the Compensation and Nominating Committee will receive $250, plus reimbursement for actual out-of-pocket expenses, for each committee meeting attended in person and

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$125 for each committee meeting attended telephonically, unless the committee meeting immediately precedes or follows a Board meeting, in which event the committee members will receive $150, for attending the committee meeting in person and $75.00 if they attend the committee meeting telephonically.

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning the compensation earned for services rendered to us in all capacities during each of the last three fiscal years by our Chief Executive Officer as of the end of the last fiscal year ended March 31, 2005. No other executive officer earned in excess of $100,000:

Summary Compensation Table

				Annual Compensation								Long-Term Compensation
Name and Principal Position				Year				Salary				Securities Underlying Options				Other Compensation
Harris A. Shapiro (1)					2005			$	71,250			25,000				$	1,750	(2)
Chief Executive Officer and					2004			$	150,000			—				$	2,500	(2)
Chairman of the Board					2003			$	150,000			35,000				$	2,250	(2)

(1)	Mr. Shapiro served as our Chief Executive Officer from September 2000 through April 19, 2005.

(2)	Mr. Shapiro was paid cash compensation for his services as a director in accordance with the fee arrangements for directors as described in the subsection captioned ‘‘Directors' Compensation’’.

Option, Grants, Exercises and Values

The following table provides certain summary information concerning the granting of options during our fiscal year ended March 31, 2005 to our Chief Executive Officer who is the sole executive officer named in the Summary Compensation Table:

Option Grants In Last Fiscal Year

Name

Number of Options Granted (#)

% of Total Options Granted to Employees in Fiscal Year

Exercise Price per Share

Expiration Date

Harris A. Shapiro

25,000

71%

$0.52

6/09/14(1)

(1)	On April, 19, 2005, as a result of the consummation of the Merger all outstanding options became immediately exercisable, even if not already exercisable, and their expiration date became April 19, 2008.

The following table provides certain summary information concerning the exercise of options during the 2005 fiscal year and unexercisable options held as of the end of the 2005 fiscal year by the Chief Executive Officer who is the sole executive officer named in the Summary Compensation Table:

Aggregated Option Exercises In Last Fiscal Year
And Fiscal Year End Option Values

Name				Shares Acquired On Exercise				Value Realized				Number of Unexercised Options Held at Fiscal Year End				Value of Unexercised In-the-Money Options at FY-End(2)
				Exercisable								Unexercisable
Harris A. Shapiro				—				$    —					60,000	(1)		$	6,666			$	25,334

(1)	As of March 31, 2005, options were exercisable to purchase 23,332 shares.

(2)	Value is based upon the market value of the Common Stock as of March 31, 2005, less the exercise price payable per share under such options. An option for 10,000 shares has been excluded because the market value was less than the exercise price.

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Equity Compensation Plan Information

The following table sets forth, as of March 31, 2005, certain summary information with respect to compensation plans under which shares of the Common Stock are authorized for issuance:

				Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
				(a)				(b)				(c)
Equity compensation plans approved by security holders					324,000			$	0.93				1,686,000
Equity compensation plans not approved by security holders (1)					—				—				76,000
Total					324,000			$	0.93				1,762,000

(1)	In April 1999, the Board authorized a reserve of 100,000 shares of Common Stock for granting of warrants and options. Said warrants and options were to be sold for a price of five cents per share and would have an exercise price of $1.56 per share. The term was to be three years from date of issuance. This plan was cancelled by the Board effective April 18, 2005.

Employment Agreements

In September 2005, we agreed to retain John Rudy as our Vice President and Chief Financial Officer for a period of one year. Mr. Rudy's employment is on ‘‘as needed’’ basis and he will be paid $135 per hour for his services. We also have agreed to grant Mr. Rudy options to purchase 125,000 shares of our Common Stock at the fair market value on the date of grant.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

We paid Mr. Kreloff consulting fees of $20,000 per month from April 19, 2005 to October 31, 2005 and $12,500 for the month of November 2005. On December 1, 2005, Mr. Kreloff became a full-time employee. Mr. Glinsman was paid consulting fees of $12,500 per month from January 2005 to December 2005.

On July 18, 2005, we entered into a two-year consulting agreement with Mr. Frank Fanzilli, a director, under which we pay him $5,000 per month for consulting services.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of November 30, 2005, certain information regarding the beneficial ownership of our Common Stock by the following:

	•	each person, or group of affiliated persons, known by us to be the beneficial owner of more than 5% of our outstanding Common Stock;

	•	each of our directors and director nominees:

	•	each executive officer named in the Summary Compensation Table below (see page 44); and

	•	all of our directors and executive officers as a group.

Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all of the Common Stock owned by them. The individual shareholders have furnished all information concerning their respective beneficial ownership to us.

Name and Address of Beneficial Owner				Number of Shares of Common Stock Beneficially Owned(1)(2)				Percentage of Common Stock Beneficially Owned(2)
Shawn Kreloff(3) c/o Sona Mobile Holdings Corp. 825 Third Avenue, 32nd Floor New York, NY 10022				2,879,911				7.6%
John Bush(4) c/o Sona Mobile Holdings Corp. 825 Third Avenue, 32nd Floor New York, NY 10022				6,233,554(5)				16.5%
Nicholas H. Glinsman(6) c/o Sona Mobile Holdings Corp. 825 Third Avenue, 32nd Floor New York, NY 10022				2,405,579				6.4%
Bryan Maizlish(7) 9705 Conestoga Way Potomac, MD 20854				64,256(8)				*
Frank Fanzilli(9) 5 Old Lantern Place Norwalk, CT 06851				570,477				1.5%
Paul McAleese(9) 3 McAlpine Street Suite 501 Toronto, Ontario M5R 3T5 Canada				42,500				*
Michael P. Castellano(9) 16 Sheldrake Lane Palm Beach Gardens, FL 33418				41,250				*
Joseph V. Vittoria(9) 1616 S. Ocean Blvd. Palm Beach, FL 33480				41,250				*

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Name and Address of Beneficial Owner				Number of Shares of Common Stock Beneficially Owned(1)(2)				Percentage of Common Stock Beneficially Owned(2)
Lance Yu c/o Sona Mobile Holdings Corp. 44 Victoria Street, Suite 801 Toronto, Ontario M5C1Y2 Canada				1,178,734				3.1%
Harris A. Shapiro (10) c/o PerfectData Corporation 1445 East Los Angeles Avenue Simi Valley, CA 93065				344,500				*
All directors and officers as a group (9 in number)(11)				13,457,511				35.5%
Thomas R. Ellis 2323 North 30th Street, Suite 100 Tacoma, WA 98403					3,961,190	(12)		10.5%
Steven L. Martin c/o Slater Asset Management, LLC 825 Third Avenue, 33rd Floor New York, NY 10022					3,430,104	(13)		8.93%

*	Less than 1%.

(1)	Effect is given, pursuant to Rule 13-d(1)(i) under the Exchange Act, to shares issuable upon the exercise of options or warrants currently exercisable or exercisable within 60 days of the date of this prospectus.

(2)

None of the information in this table regarding number of shares and percentage of Common Stock beneficially owned takes into account the Additional Shares (as described on page 16) that we will issue to the holders of the Series A Preferred Stock and Series B Preferred Stock if and when we satisfy certain conditions relating to our operating results. As of the date of this prospectus, none of these conditions have been met and none of the Additional Shares have been issued. The shares of Series A Preferred Stock and the Series B Preferred Stock have been converted into shares of our Common Stock. As of November 30, 2005, 37,927,350 shares of our Common Stock were outstanding.

(3)	Mr. Kreloff became Chairman of the Board and a director effective with the Merger.

(4)	Mr. Bush became President, Chief Executive Officer and a director effective with the Merger.

(5)	The shares of our Common Stock reported in the table reflect 6,153,366 shares owned by Mr. Bush and 80,168 shares owned by his wife.

(6)	Mr. Glinsman became Secretary and a director effective with the Merger and Interim Chief Financial Officer as of June 1, 2005.

(7)	Mr. Maizlish continues to serve as a director.

(8)	The shares reported in the table include 60,000 shares issuable upon the exercise of options granted under our Stock Option l Plan of 2000 (the ‘‘Original Plan’’). All these options expire on April 19, 2008.

(9)	Includes (a) 40,000 shares issued to the securityholder upon his appointment to the Board, of which 20,000 vested immediately and 20,000 will vest one year from the date of grant and (b) 1,250 shares underlying options that are currently exercisable and (c) in the case of Messrs. Fanzilli and McAleese 1,250 shares underlying currently exercisable options.

(10)

Mr. Shapiro was the Chairman of the Board, Chief Executive Officer and a director until April 19, 2005 when he resigned in connection with the Merger. The shares of the Common Stock reported in the table reflect (a) 284,500 shares owned by Millennium Capital Corporation (‘‘Millennium’’), for which Mr. Shapiro has voting power as its President; (b) 10,000 shares issuable upon the exercise of an option expiring June 19, 2012 under the Original Plan (c) 25,000 shares issuable upon the exercise of an option expiring September 25, 2012 under the Original Plan; and

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	(d) 25,000 shares issuable upon the exercise of a an option expiring June 9, 2014 under the Original Plan. As a result of the Merger, all three options expire April 19, 2008.

(11)	Does not include Mr. Shapiro's beneficial ownership.

(12)	All shares are registered in the name of Lohrey LLC of which Mr. Ellis is the sole member and manager.

(13)

Includes shares owned directly by Mr. Martin (278,104) as well as shares he is deemed to beneficially own through his wife (8,000), through his IRA (152,400) and through his wife's IRA (76,200). Mr. Martin also has voting and investment control over shares owned by Slater Equity Partners, L.P. (1,372,000), Slater Equity Partner's Offshore Fund Ltd. (762,200) and Slater FF&E Fund, LLC (152,400) by virtue of the fact that he is the Manager and controlling owner of Slater Asset Management, L.L.C. (‘‘SAM’’) and Slater Capital Management, L.L.C. (‘‘SCM’’). SAM is the general partner of investment limited partnerships of which SCM is the investment advisor, including Slater Equity Partners, L.P. SCM is also the investment advisor to Slater Equity Partners Offshore Fund Ltd. and the manager of Slater FF&E Fund, LLC. Also includes 628,800 shares underlying warrants held by Mr. Martin and certain of the above-mentioned individuals and entities.

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DESCRIPTION OF SECURITIES

Our authorized capital stock consists of 92,000,000 shares, including 90,000,000 shares of common stock, par value $0.01 per share, and 2,000,000 shares of preferred stock, par value $0.01 per share. Our Board of Directors may designate the rights and preferences of the preferred stock. Preferred stock could be used, under certain circumstances, as a way to discourage, delay or prevent a takeover of the company. As of November 30, 2005, 37,927,350 shares of our Common Stock were issued and outstanding.

The authorized but unissued shares of Common Stock and Preferred Stock are available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued Common Stock and Preferred Stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or bylaws, unless the corporation's certificate of incorporation or bylaws, as the case may be, requires a greater percentage. Our certificate of incorporation does not impose any super-majority vote requirements.

Common Stock

Under our Certificate of Incorporation, as amended, shares of our Common Stock are identical in all respects, and each share entitles the holder to the same rights and privileges as are enjoyed by other holders and is subject to the same qualifications, limitations and restrictions as apply to other shares.

Holders of our Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of our Common Stock do not have cumulative voting rights. Accordingly, subject to any voting rights of the holders of any other preferred stock that may be issued by us from time to time, holders of a plurality of our Common Stock present at a meeting at which a quorum is present are able to elect all of the directors eligible for election.

The presence of a majority of the voting power of our outstanding capital stock constitutes a quorum.

The holders of our Common Stock are entitled to dividends when and if declared by our Board of Directors from legally available funds. The holders of our Common Stock are also entitled to share pro rata in any distribution to stockholders upon our liquidation or dissolution.

None of the shares of our Common Stock:

	•	have preemptive rights;

	•	are redeemable;

	•	are subject to assessments or further calls;

	•	have conversion rights; or

	•	have sinking fund provisions.

Preferred Stock

We are currently authorized to issue 2,000,000 shares of preferred stock in one or more series. Our Board of Directors may determine the terms of the authorized but unissued shares of preferred stock at the time of issuance without action by our stockholders. The terms of any issuance of preferred stock may include:

	•	voting rights, including the right to vote as a series on particular matters, which could be superior to those of our Common Stock;

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	•	preferences over our Common Stock as to dividends and distributions in liquidation;

	•	conversion and redemption rights, including the right to convert into shares of our Common Stock; and

	•	sinking fund provisions.

Outstanding Options and Warrants

At November 30, 2005, we had outstanding stock options granted to employees and consultants to purchase 1,949,000 shares of Common Stock. These options have exercise prices ranging from $0.52 to $3.43 per share, with an average weighted exercise price of $1.40, and expire between April 18, 2008 and October 13, 2010. Of the options outstanding at November 30, 2005, 895,176 are vested and currently exercisable. We also had outstanding non-compensatory Warrants issued to purchase 962,175 shares of Common Stock. These Warrants have exercise prices of $1.968 per share, and expire June 21, 2009.

Registration Rights

We have not granted any registration rights, other than the registration rights with respect to the shares offered by this Prospectus.

Transfer Agent

The transfer agent and registrar for our Common Stock is U. S. Stock Transfer Corporation, 1745 Gardena Ave., Glendale, California 91204-2991.

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SELLING STOCKHOLDERS

The selling stockholders include holders of our Common Stock and Warrants to purchase 962,175 shares of our Common Stock.

The following table sets forth certain information known to us with respect to the beneficial ownership of our Common Stock by the selling stockholders as of November 30, 2005. The share numbers in the column labeled ‘‘Number of Shares Offered’’ represent all of the shares that the selling stockholders may offer under this prospectus. The table assumes that each selling stockholder exercises all of his or its Warrants and sells all of his or its shares of our Common Stock. We are unable to determine the exact number of shares that actually will be sold. We do not know how long the selling stockholders will hold the shares before selling them. Other than our agreement with the selling stockholders to maintain the effectiveness of the registration statement of which this prospectus forms a part for two years, we currently have no agreements, arrangements or understandings with the selling stockholders regarding the sale of any of their shares.

Selling Stockholders				Number of Shares Owned Before the Offering				Percentage of Class of Shares				Number of Shares Offered				Number of Shares Owned After the Offering				Percentage of Class of Shares
																—				—
Slater Equity Partners LP (1)(2)(14)					1,715,000			4.5%					1,715,000			—				—
Slater Equity Partners Offshore Fund Ltd (1)(3)(14)					952,750			2.5%					952,750			—				—
Slater FF&E Fund, LLC (1)(4)(14)					190,500			*					190,500			—				—
Steven L. Martin Rollover IRA (5)(6)					190,500			*					190,500			—				—
Jodee R. Martin Rollover IRA (5)(7)					95,250			*					95,250			—				—
Potomac Capital Partners LP (8)(9(15))					630,250			1.7%					630,250			—				—
Potomac Capital International Ltd (8)(10)(15)					380,125			1.0%					380,125			—				—
Pleiades Investment Partners-R LP (8)(11)(15)					418,750			1.1%					418,750			—				—
Free Market Capital, LP (12)					142,500			*					142,500			—				—
James Fuld Jr. (13)					95,250			*					95,250			—				—

*	Less than 1%.

(1)	Address is Slater Capital Management, LLC, 825 Third Avenue, New York, New York 10022.

(2)	Includes 343,000 shares underlying Warrants.

(3)	Includes 190,550 shares underlying Warrants.

(4)	Includes 38,100 shares underlying Warrants.

(5)	Address is 201 East 87th Street, New York, New York 10128.

(6)	Includes 38,100 shares underlying Warrants.

(7)	Includes 19,050 shares underlying Warrants.

(8)	Address is Potomac Capital Management, 825 Third Avenue, New York, New York 10022.

(9)	Includes 126,050 shares underlying Warrants.

(10)	Includes 76,025 shares underlying Warrants.

(11)	Includes 83,750 shares underlying Warrants.

(12)	Address is 48 South Franklin Turnpike, Ramsey, New Jersey 07446. Includes 28,500 shares underlying warrants.

(13)	Address is 114 East 72nd Street, New York, New York 10021. Includes 19,050 shares underlying warrants.

(14)	Steven L. Martin has voting and investment control over these securities because he is the Manager and controlling owner of Slater Asset Management, L.L.C. (‘‘SAM’’) and Slater Capital Management, L.L.C. (‘‘SCM’’). SAM is the

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	general partner of investment limited partnerships, of which SCM is the investment advisor, including Slater Equity Partners, L.P. SCM is also the investment advisor to Slater Equity Partners Offshore Fund Ltd. and the Manager of Slater FF&E Fund, LLC.

(15)

P.J. Solit has voting and investment control over these securities because he is the sole managing member of Potomac Capital Management LLC (‘‘PCM LLC’’) and the President and sole shareholder of Potomac Capital Management Inc. (‘‘PCM Inc.’’). PCM LLC is the general partner of Potomac Capital Partners L.P. PCM Inc. is the investment manager of Potomac Capital International Ltd. and Pleiades Investment Partners-R LP.

The securities sold in our June 2005 private placement were exempt from registration pursuant to Rule 506 of Regulation D, Sections 4(2) and 4(6) of the Securities Act. Securities issued for services rendered by the law firm of Wachtel & Masyr were issued pursuant to an exemption from registration under Section 4(2) of the Securities Act.

All of the share and warrant certificates issued in connection with the above private placement or issued in compensatory transactions or under Regulation S of the Act were imprinted with a legend restricting transfer unless pursuant to an effective registration statement or an available exemption under the Securities Act.

In private placements, the investors were required to represent and warrant (i) that the securities were purchased entirely for their own account with no intention, at the time of purchase, of dividing the securities with others or of reselling or otherwise disposing of any portion of the securities unless covered by an effective registration statement or pursuant to an available exemption from such registration; (ii) that the securities will be held for investment purposes and not with a view toward further distribution or sale; and (iii) further agree that they will not engage in any short selling.

PLAN OF DISTRIBUTION

The shares of Common Stock covered by this prospectus may be sold from time to time by the selling stockholders. Such sales may be made on one or more exchanges or in the over-the-counter market, or otherwise at prices and at terms then prevailing or at prices related to the then-current market price, or in negotiated transactions. The shares may be sold by selling stockholders in one or more of the following types of transactions: (i) a block trade in which the broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; (ii) purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to the registration statement of which this prospectus is a part; (iii) an exchange distribution in accordance with the rules of such exchange; (iv) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (v) transactions between sellers and purchasers without a broker/dealer. In addition, any securities covered by the registration statement which qualify for sale pursuant to Rule 144 may be sold under Rule 144, rather than pursuant to the registration statement. From time to time the selling stockholders may engage in short sales, short sales versus the box, puts and calls and other transactions in securities of the issuer or derivatives thereof, and may sell and deliver the shares in connection therewith. In effecting sales, brokers or dealers engaged by the selling Investors may arrange for other brokers or dealers to participate. Brokers or dealers will receive commissions or discounts from selling stockholders in amounts to be negotiated immediately prior to the sale.

The selling stockholders will be subject to the prospectus delivery requirements of the Securities Act. We have informed the selling shareholders that the anti-manipulative provisions of Regulation M under the Securities Exchange Act of 1934 may apply to their sales in the market.

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LEGAL MATTERS

The validity of the shares of Common Stock offered by this prospectus will be passed upon for us by Morse, Zelnick, Rose & Lander LLP, New York, New York.

EXPERTS

Our consolidated financial statements as of December 31, 2004 and for the period from November 12, 2003 (date of inception) to December 31, 2003 included in this prospectus have been audited by Horwath Orenstein, LLP, independent registered public accounting firm, as stated in their report dated March 18, 2005. Such consolidated financial statements have been so included in reliance upon the authority of such firm as experts in accounting and auditing.

COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

Our certificate of incorporation, as amended, provides that none of our directors will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:

	•	for any breach of the director's duty of loyalty to us or our stockholders;

	•	for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of the law;

	•	under section 174 of the Delaware General Corporation Law for the unlawful payment of dividends; or

	•	for any transaction from which the director derives an improper personal benefit.

These provisions require us to indemnify our directors and officers unless restricted by Delaware law and eliminate our rights and those of our stockholders to recover monetary damages from a director for breach of his fiduciary duty of care as a director except in the situations described above. The limitations summarized above, however, do not affect our ability or that of our stockholders to seek non-monetary remedies, such as an injunction or rescission, against a director for breach of his fiduciary duty.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, we have been advised that in the opinion of the Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

WHERE YOU CAN FIND MORE INFORMATION

In connection with the shares of our Common Stock offered by this prospectus, we have filed a registration statement on Form SB-2 under the Securities Act with the Commission. This prospectus, filed as part of the registration statement, does not contain all of the information included in the registration statement and the accompanying exhibits and schedules. For further information with respect to our securities, and us you should refer to the registration statement and the accompanying exhibits and schedules. Statements contained in this prospectus regarding the contents of any contract or any other document are not necessarily complete, and you should refer to the copy of the contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by the actual contents of the contract or other document referred to. You may inspect a copy of the registration statement and the accompanying exhibits and schedules without charge at the Commission's public reference facilities, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies of all or any part of the registration statement from the Commission for a fee. You may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The Commission maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically. The address of the site is http://www.sec.gov.

52

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Index to Financial Statements

				PAGE
Unaudited Interim Financial Statements
Consolidated Balance Sheet as at September 30, 2005				F-2
Consolidated Statement of Operations and Comprehensive Loss for the Three and Nine Month Periods Ended September 30, 2005 and 2004				F-3
Consolidated Statement of Cash Flows for the Nine Month Period Ended September 30, 2005 and 2004				F-4
Notes to Unaudited Consolidated Financial Statements				F-5
Audited Financial Statements
Report of Independent Registered Public Accounting Firm				F-12
Consolidated Balance Sheets as at December 31, 2004 and 2003				F-13
Consolidated Statement of Operations and Comprehensive Loss for the Year Ended December 31, 2004 and the Period from November 12, 2003 to December 31, 2003				F-14
Consolidated Statement of Cash Flows for the Year Ended December 31, 2004 and the Period from November 12, 2003 to December 31, 2003				F-15
Consolidated Statement of Shareholders' Deficiency for the for the Period from November 12, 2003 to December 31, 2004				F-16
Notes to Audited Consolidated Financial Statements				F-17

F-1

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Item 1. Financial Statements
Sona Mobile Holdings Corp. and Subsidiaries
 Consolidated Balance Sheet

				As at September 30, 2005
				(unaudited)
Assets
Current
Cash				$	3,782,400
Accounts receivable (net of allowance for doubtful accounts of $26,933)					233,967
Tax credits receivable					93,493
Prepaid expenses & deposits					215,363
Total current assets					4,325,223
Property and equipment:
Computer equipment					62,556
Furniture and equipment					16,707
Less: accumulated depreciation					(20,839	)
Total Property and equipment					58,424
Total assets				$	4,383,647
Liabilities and Shareholders' Equity
Current:
Accounts payable				$	605,144
Accrued liabilities					251,753
Deferred service revenue					23,342
Total current liabilities					880,239
Shareholders' equity:
Preferred stock – 2,000,000 shares authorized, par value$.01 per share:
Series A Convertible Preferred Stock – 600,000 shares authorized, 568,140 shares issued and outstanding (Liquidation preference – $3,250,000 in aggregate)					5,681
Series B Convertible Preferred Stock – 10,000 shares authorized, 3,848.7 shares issued and outstanding (Liquidation preference – $5,049,494 in aggregate)					38
Common Stock – 10,000,000 shares authorized, par value $.01 per share – 6,584,530 shares issued and outstanding					65,845
Common stock purchase warrants – 962,175 issued and outstanding					498,407
Additional paid-in capital					7,347,618
Accumulated other comprehensive income					(58,489	)
Accumulated deficit					(4,355,692	)
Total shareholders' equity					3,503,408
Total liabilities and shareholders' equity				$	4,383,647

See accompanying notes to consolidated financial statements.

F-2

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Item 1. Financial Statements (Continued)
Sona Mobile Holdings Corp. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss

				Three months ended September 30,
				2005				2004
				(unaudited)				(unaudited)
Revenue				$	121,315			$	116,804
Operating expenses
Advertising and communication					113,419				13,416
Amortization and depreciation					15,847				35,701
Office and administrative					626,853				56,490
Payroll wages and benefits					241,742				58,694
Professional fees					218,270				24,911
Consulting fees					726,111				61,531
Software purchases					35,630				—
Total operating expenses					1,977,872				250,743
Operating loss					(1,856,557	)			(133,939	)
Interest income					43,009				—
Research and development tax credits					—				7,683
Net loss					(1,813,548	)			(126,256	)
Gain (Loss) on currency translation					(96,146	)			(18,086	)
Comprehensive loss				$	(1,909,694	)			(144,342	)
Net loss per share of Common Stock – basic and diluted				$	(0.28	)		$	(0.10	)
Weighted average number of shares of Common Stock outstanding – basic and diluted					6,584,530				1,303,491

See accompanying notes to consolidated financial statements.

F-3

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Item 1. Financial Statements (Continued)
Sona Mobile Holdings Corp. and Subsidiaries
Consolidated Statements of Cash Flows

				Nine Months ended September 30,
				2005				2004
				(unaudited)				(unaudited)
Cash provided by (used in):
Operating activities
Net loss				$	(3,614,714	)		$	(384,464	)
Adjustments for:
Depreciation and amortization					432,839				106,854
Changes in non-cash working capital assets and liabilities:
Accounts receivable					(102,338	)			(77,155	)
Research and development tax credits receivable					(3,060	)			81,387
Prepaid expenses and deposits					(197,510	)			—
Accounts payable					504,735				(17,037	)
Accrued liabilities					(55,942	)			86,115
Deferred revenue					21,909				—
Accrued payroll					(60,898	)			50,451
Net cash provided by (used in) operating activities					(3,074,979	)			(153,849	)
Investing activities
Capital Expenditures					(64,033	)			(2,152	)
Net cash provided by (used in) investing activities					(64,033	)			(2,152	)
Financing activities
Other comprehensive income					(32,837	)			(6,351	)
Convertible note payable net					(85,630	)			106,937
Redeemable preferred stock					(280,000	)			130,000
Proceeds from the sale of Common Stock					887,968				226,029
Proceeds from the issuance of Series A Preferred Stock					1,358,399				—
Proceeds from the issuance of Series B Preferred Stock and Warrants					4,516,801				—
Proceeds from the issuance of Common Stock purchase warrants					498,407				—
Repayment of note payable and other loans					(55,325	)			(281,103	)
Net cash provided by financing activities					6,807,783				175,512
Change in cash during the period					3,668,771				19,511
Cash, beginning of period					113,629				212
Cash, end of period				$	3,782,400			$	19,723

See accompanying notes to consolidated financial statements.

F-4

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Sona Mobile Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)

Note 1.    Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Sona Mobile Holdings Corp., formerly known as PerfectData Corporation (‘‘Company’’), included herein have been prepared by the Company in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The unaudited condensed consolidated financial statements herein include the accounts of the Company and its wholly-owned subsidiary, Sona Mobile, Inc. (‘‘Sona Mobile’’) and Sona Mobile's wholly-owned subsidiary, Sona Innovations, Inc. (‘‘Innovations’’), a Canadian company, and Sona Limited, a wholly-owned subsidiary of the Company formed in the United Kingdom in September 2005. All material inter-company accounts and transactions have been eliminated. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Sona Mobile audited consolidated financial statements for the year ended December 31, 2004 and the notes thereto included in Form 8-K/A filed with the United States Securities and Exchange Commission on July 5, 2005. (See note 2.) Results of consolidated operations for the interim periods are not necessarily indicative of the operating results to be attained for the entire fiscal year.

Note 2.    Company Background and Description of Business

The Company was incorporated in the State of California on June 8, 1976. On November 29, 2004, after obtaining the requisite shareholder approval, the Company reincorporated in the State of Delaware.

Initially the Company's business involved designing and manufacturing a proprietary line of magnetic media maintenance equipment—disk pack cleaners and inspectors. The Company's cleaning and maintenance products were designed to address the needs of the end users of computers and office automation equipment and by maintenance organizations as part of preventative maintenance programs to reduce equipment ‘‘down time’’ and service costs and to increase product life. Beginning in March 2000, the Company began seeking acquisitions that were not related to its historical business. The Company's board of directors (the ‘‘Board’’) determined that profitability on a continuous basis would not be achieved absent an acquisition of a new business or businesses and/or a new product. On November 30, 2004, the Company sold its entire business operations, consisting of inventories of finished goods, raw materials and work in progress; books and records, including customer and supplier lists and other data relating to the operating business; the trade name ‘‘PerfectData Corporation’’ and all other names used in the business; the goodwill relating to the business; certain accounts receivable; machinery and equipment, office furniture, computer equipment and supplies; and intellectual property rights to Spray Products Corporation (‘‘Spray’’). Cash and cash equivalents were not included in the sale.

With the completion of the sale to Spray, the Company increased its efforts to find a new business opportunity. On April 19, 2005 (the ‘‘Effective Date’’), pursuant to an Agreement and Plan of Merger dated as of March 7, 2005 (the ‘‘Merger Agreement’’), Sona Mobile, Inc., a State of Washington corporation, was merged with and into PerfectData Acquisition Corporation, a Delaware corporation (‘‘Merger Sub’’) and a wholly-owned subsidiary of the Company (the ‘‘Merger’’). Merger Sub simultaneously changed its named to Sona Mobile, Inc.

As contemplated by the Merger Agreement, on the Effective Date, four of the Company's five directors resigned, including the Chairman of the Board, and the remaining director appointed three designees of Sona Mobile to fill those vacancies. Also, on the Effective Date the Company's chief executive officer resigned and the reconstituted board appointed designees of Sona Mobile as the Company's new executive officers.

F-5

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Sona Mobile Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)

In the Merger, the Sona Mobile shareholders received an aggregate of 539,733 shares of the Company's Series A Convertible Preferred Stock (the ‘‘Series A Stock’’). The conversion ratio for the Series A Stock is 48.11159 to one—meaning each share of Series A Stock converts into 48.11159 shares of the Company's common stock, par value $.01 per share (the ‘‘Common Stock’’), or a total of 25,967,413 shares of Common Stock. Sona Mobile's financial advisor in connection with the Merger (the ‘‘Advisor’’) received 28,407 shares of the Series A Stock, convertible into 1,366,706 shares of Common Stock. The holders of the Series A Stock vote together with the holders of the Company's Common Stock on all matters submitted for vote to the Company's shareholders on an as converted basis. As a result, the holders of the Series A Stock had 80% voting control of the Company on the Effective Date. An additional 11,389,217 shares of Common Stock (the ‘‘Additional Shares’’) will be issued to the holders of the Series A Stock and the Series B Stock (see note 4 below) if either of the following two conditions are satisfied: (1) if the Company, on a consolidated basis, has revenues of at least $3,000,000 and a gross profit margin of at least 50% for its fiscal year ending December 31, 2005 or (2) if the Company's aggregate revenues for 2005 and 2006 are at least $12,000,000 and the Company's gross profit margin, combined aggregate revenues and aggregate cost of revenues, for 2005 and 2006 are at least 50%. The Additional Shares will be allocated among the holders of the Series A Preferred Stock and the Series B Preferred Stock, other than the Advisor, pro rata based on their relative holdings of Series A and Series B Preferred Stock prior to conversion. On November 17, 2005, all of the issued and outstanding shares of the Series A Preferred Stock and Series B Preferred Stock automatically converted into shares of our Common Stock.

Upon completion of the Merger, the Company's only business was the historical business of Sona Mobile, and the former Sona Mobile shareholders control the Company. The Merger was accounted for as a reverse acquisition into a public shell and a recapitalization of Sona Mobile. No goodwill was recorded in connection with the Merger and the costs were accounted for as a reduction of additional paid-in-capital. The pre-Merger financial statements of Sona Mobile are treated as the historical financial statements of the combined companies. The historical financial statements of the Company prior to the Merger are not presented. Furthermore, because Sona Mobile is deemed the accounting acquirer, the Company's historical stockholders' equity is not carried forward to the merged entity as of September 30, 2005. Immediately prior to the Merger the Company had a net asset value of $1,145,962 consisting of cash and prepaid expenses of $1,232,612 and liabilities of $86,650.

Sona Mobile was organized in November 2003 in the State of Washington for the purpose of acquiring all of the stock of Sona Innovations, Inc., a Canadian company (‘‘Innovations’’). The acquisition was completed in December 2003. Sona Mobile operates as one business segment.

Sona Mobile develops and markets wireless data applications for mobile devices in the rapidly growing wireless data marketplace. Sona Mobile is a Vertical Wireless Software and Service Provider specializing in value-added services to data-intensive vertical market segments. Sona Mobile's revenues consist primarily of licensing and support fees relating to the Sona Wireless Development Platform and related end-user wireless applications to enterprises and cellular operators.

Sona Mobile markets its products and services principally to two large vertical markets and one broad horizontal market.

	•	Financial services. One of Sona Mobile's primary focuses is to develop solutions for the data-intensive investment banking community and client-facing applications for the retail banking industry.

	•	Entertainment and gaming. Sona Mobile delivers content via significant channel partners and content partners, including live streaming television, digital radio, specific theme phones, and gaming applications.

	•	Enterprise solutions. Sona Mobile's products and services extend enterprise applications to the wireless arena, such as CRM, SFA, IT service desk, Business Continuity Protocol, all of which are delivered in compliance with the current regulatory environment.

F-6

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Sona Mobile Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)

Note 3.    Summary of Significant Accounting Policies

These consolidated financial statements are presented in United States dollars and have been prepared in accordance with U.S. generally accepted accounting principles and reflect the following policies:

(a)    Principles of consolidation

The consolidated financial statements include the accounts of the Company and it's wholly-owned subsidiary, Sona Mobile and the accounts of Sona Mobile's wholly-owned subsidiary, Innovations, and the accounts of the Company's recently formed wholly owned subsidiary in the United Kingdom. All intercompany accounts and transactions have been eliminated in consolidation.

(b)    Cash and cash equivalents

Cash and cash equivalents are comprised of cash and term deposits with original maturity dates of less than 90 days. Cash and cash equivalents are stated at cost, which approximates market value, and are concentrated in two major financial institutions.

(c)    Foreign currency translation

In accordance with the provisions of SFAS No. 52 ‘‘Foreign Currency Translation,’’ assets and liabilities denominated in a foreign currency have been translated at the period end rate of exchange. Revenue and expense items have been translated at the transaction date rate. For Sona Innovations, which utilizes its local currency (Canada) as its functional currency, the resulting translation gains and losses are included in other comprehensive income. Gains or losses resulting from foreign exchange transactions are reflected in earnings.

(d)    Property and Equipment

Fixed assets are stated at cost. Depreciation is provided on a straight line basis over the estimated useful lives of three to five years.

(e)    Use of estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. These estimates are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

(f)    Software rights

Software rights were recorded at the excess of the purchase price for Innovations, purchased in 2003, over the fair value of that company's identifiable net tangible assets. As at June 30, 2005 the software rights were written off.

(g)    Income taxes

The Company accounts for income taxes in accordance with SFAS No. 109 ‘‘Accounting for Income Taxes,’’ which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed periodically for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or

F-7

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Sona Mobile Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)

deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

(h)    Revenue recognition

The Company derives revenue from license and service fees related to customization and implementation of the software being licensed. License fees are recognized in accordance with Statement of Position (SOP) 97-2, ‘‘Software Revenue Recognition,’’ as amended by SOP 98-4 and SOP 98-9, and in certain instances in accordance with SOP 81-1, ‘‘Accounting for Performance of Construction-Type and Certain Production-Type Contracts.’’ Service fees are recorded on a percentage of completion or completed-contract basis depending on whether or not reliable estimates of the costs to complete the work can be obtained. License fees are recognized over the service period when there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the receivable is probable. The deferred revenues are amounts received prior to completion of service.

(i)	Research and development costs

The Company incurs costs on activities that related to research and the development of new products. Research costs are expensed as they are incurred. Costs are reduced by tax credits where applicable. Development costs for the three month and the nine month periods ended September 30, 2005 were $217,878 and $489,435, respectively. As of September 30, 2005 there were no capitalized research and development costs on the balance sheet.

Development costs to establish the technological feasibility of software applications developed by the Company are charged to expense as incurred. In accordance with FAS 86, certain costs incurred subsequent to achieving technological feasibility are capitalized. Accordingly, a portion of the internal labor costs and external consulting costs associated with essential wireless software development and enhancement activities are capitalized. Costs associated with conceptual design and feasibility assessments as well as maintenance and routine changes are expensed as incurred. Capitalized costs are amortized based on current or future revenue for each product with an annual minimum equal to the straight-line basis over the estimated economic lives of the applications, not to exceed 5 years.

Note 4.    Schedule of Shareholders' Equity

The schedule of shareholders' equity reflects the Merger, which was treated as a reverse acquisition with Sona Mobile as the accounting acquirer. The beginning equity is that of Sona Mobile as of December 31, 2004 and the schedule reflects the exchange of Sona Mobile's capital stock for shares of the Company's Series A Stock. The schedule also reflects the Series B Financing described below.

Series B Financing

In June 2005, the Company sold or received subscriptions for 3,848.7 shares of its Series B Convertible Preferred Stock, $.01 per share (the ‘‘Series B Preferred Stock’’) and warrants to purchase 962,175 shares of Common Stock (the ‘‘Warrants’’). The gross proceeds from the sale of the Series B Preferred Stock and the Warrants were approximately $5.05 million. The Series B Stock ranks pari passu with the Series A Preferred Stock and is identical in all material respects to the Series A Preferred Stock except that each share of Series B Preferred Stock converts into 1,000 shares of Common Stock, or 3,848,700 in the aggregate. All of the shares of Series B Preferred Stock were converted on November 17, 2005.

F-8

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				Common Stock								Series A redeemable preferred stock (old series A)								Warrants on Common Stock								Series A & Series B Convertible Preferred Stock								Additional paid-in Capital				Accumulated Comprehensive Income Amount				Accumulated Deficit				Total Shareholder's Equity
				Shares				Amount				Shares				Amount				Shares				Amount				Shares				Amount
Balance at December 31, 2004					1,558,177			$	450,459																											$	205,555			$	(25,652	)		$	(740,980	)		$	(110,617	)
Sona Series A redeemable preferred stock carried as a liability													2,327,779			$	280,000																																280,000
Sona common stock issued prior to reverse merger					2,014,849				683,707																																								683,707
Convertible note Conversion					158,730				70,420																																								70,420
Common stock acquired in the reverse merger					6,584,530				65,845																												1,213,996												1,279,841
Exchange of stock pursuant to merger					(3,715,256	)			(1,204,586	)			(2,327,779	)			(280,000	)																			1,478,905												(5,681	)
Issuance of Series A Convertible Preferred Stock																													568,140			$	5,681																5,681
Redemption/ Cancellation of shares					(16,500	)
Cost of financing reverse merger																																					(67,563	)											(67,563	)
Issuance of Series B Convertible Preferred Stock																													3,849				38				4,551,021												4,551,059
Common stock purchase warrants issued pursuant to Series B Financing																					962,175			$	498,407																								498,407
Costs of Series B Financing																																					(34,295	)											(34,295	)
Other comprehensive income																																									(32,837	)							(32,837	)
Net loss																																													(3,614,714	)			(3,614,714	)
Balance at September 30, 2005					6,584,530			$	65,845				0				0				962,175			$	498,407				571,989			$	5,719			$	7,347,619			$	(58,489	)		$	(4,355,693	)		$	3,503,408

F-9

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Sona Mobile Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)

Note 5.    Earnings per Share

Basic earnings per share are computed by dividing income available to holders Common Stock by the common shares outstanding for the period. Diluted earnings per share considers the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that shared in the earnings of the entity.

The calculation of diluted earnings per share did not include 27,334,119 shares of common stock issuable weighted-average number of upon the conversion of the series A preferred stock, 3,848,700 shares of common stock issuable upon the conversion of the series B preferred stock, or 249,000 shares of common stock issuable upon the exercise of options, as their inclusion would be antidilutive.

Note 6.    Lease Commitments

The Company leases office space in Toronto, Ontario, New York, New York, Boulder, Colorado, and London, United Kingdom. The Company also leases certain office equipment. Lease commitments by year are as follows.

Future Lease Commitments by Year
(US$)

				2005				2006				2007				2008				2009				2010				2011
Office Space Leases:
United States				$	99,195			$	445,723			$	449,534			$	67,938			$	74,732			$	62,059				—
Canada					20,442				182,727				207,295				207,295				207,295				207,295				138,196
United Kingdom					8,417				5,612
Total Office Space					128,054				634,062				656,829				275,233				282,027				269,354				138,196
Office Equipment					887				3,549				3,549				3,549				3,549				592				—
Total Lease Commitments				$	128,941			$	637,611			$	660,378			$	278,782			$	285,576			$	269,946			$	138,196

Note 7.    Share Capital

On the Effective Date, the Company issued 568,140 shares of its Series A Stock in connection with the Merger.

In June 2005 the Company sold or had received subscriptions for 3,849 shares of its Series B Stock and 962,175 common stock purchase warrants (the ‘‘Warrants’’). The total proceeds from this financing were $5,049,466. The Warrants were valued at $498,407 using the Black-Scholes option pricing formula and the closing stock price on June 20, 2005, the date of the Series B Financing. All subscription amounts were received by September 30, 2005.

The Company had 6,359,530 shares of its Common Stock outstanding as of December 31, 2004. Between January 1, 2005 and the Effective Date, the Company issued an additional 225,000 shares of Common Stock – 150,000 shares in payment of legal fees and 75,000 upon exercise of stock options.

Note 8.    Financial Instruments

The Company's financial instruments consist of cash, accounts receivable, accounts payable, and notes payable. The Company is subject to credit risk with respect to its accounts receivable to the extent that debtors do not meet their obligations. The Company monitors the age of its accounts receivable and may delay development or terminate information fees if debtors do not meet payment terms. The fair values of all financial instruments approximates book values.

The Company is subject to foreign currency risk with respect to financial instruments denominated in a foreign currency.

F-10

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Sona Mobile Holdings Corp. and Subsidiaries
Notes to Consolidated Financial Statements (unaudited)

Note 9.    Income Taxes

Deferred tax benefits arising from net operating loss and scientific research and experimental development expenditure carryforwards were determined using the applicable statutory rates. The net operating loss carry forward balances vary from the applicable percentages of net loss due to expenses, primarily amortization of software rights, recognized under generally accepted accounting principles, but not deductible for tax purposes.

At September 30, 2005 the Company had net deferred tax assets of approximately $1,735,000 arising from the net operating loss carryforwards. These deferred tax assets are fully offset by valuation allowances. Due to the change in control provisions under U.S. tax laws, which may apply to the Company as a result of the Merger, the utilization of net operating losses to offset future taxable income may be limited under U.S. tax laws.

Note 10.    Commitments

On December 29, 2004, Innovations signed a letter of intent to acquire the assets and employee contracts of Smart Video Canada Inc. for $83,195 ($100,000 Canadian). An initial deposit of $4,160 ($5,000 Canadian) was paid as at December 31, 2004, a second payment of $42,500 was paid in the third quarter of 2005. The initial deposit and second payment are carried as a prepaid expense on the Company's September 30, 2005 balance sheet.

Note 11.    Amounts due to Affiliated Parties

Accrued liabilities include an amount of approximately $83,000 due to an officer of the Company and an amount of approximately $22,000 owed to a former employee of the Company.

Note 12.    Subsequent Event

The Company’s Board of Directors approved option grants to the Company's employees, executives and certain consultants to purchase 1,700,000 shares of the Company's common stock with a grant date of October 13, 2005, at the market price on that date.

Note 13.    Segmented Information

The Company operates in Canada, the United States and the United Kingdom. All revenues are currently from the Canadian subsidiary. The Company has commenced sales and marketing efforts in the United States and the United Kingdom.

F-11

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Sona Mobile, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheets of Sona Mobile, Inc. and Subsidiary (the ‘‘Company’’) as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive loss, shareholders' deficiency, and cash flows for the year ended December 31, 2004 and for the period from November 12, 2003 (date of inception) to December 31, 2003. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sona Mobile, Inc. and its Subsidiary as at December 31, 2004 and 2003, and the results of their operations and their cash flows for the year ended December 31, 2004 and for the period from November 12, 2003 (date of inception) to December 31, 2003, in conformity with accounting principals generally accepted in the United States of America.

Toronto, Canada
March 18, 2005

/s/ Horwath Orenstein LLP        

Chartered Accountants

F-12

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Sona Mobile, Inc. and Subsidiary
Consolidated Balance Sheets (audited)

				As at December 31,
				2004				2003
Assets
Current
Cash				$	113,629			$	213
Accounts receivable					131,630				9,059
Scientific development tax credits receivable					90,433				159,617
Prepaid expenses					17,852				6,193
Total current assets					353,544				175,082
Software rights, net (notes 2 and 3)					415,936				554,583
Equipment, net (note 4)					11,294				13,079
Total assets				$	780,774			$	742,744
Liabilities and Shareholders' Deficiency
Current
Accounts payable				$	207,163			$	200,104
Accrued liabilities					52,190				18,546
Deferred revenue					1,432				—
Note payable and other short term loans (note 5)					55,325				377,599
Redeemable preference shares (note 8)					280,000				150,000
Due to shareholder (note 6)					209,651				74,018
Total current liabilities					805,761				820,267
Convertible note payable (note 7)					85,630				—
Total liabilities					891,391				820,267
Shareholders' deficiency
Share capital (note 8) Authorized – 7,000,000 preference shares, no par value; 3,000,000 Series A preference shares; 10,000,000 common shares, no par value
Issued and outstanding 1,558,177 and 930,001 common shares					450,459				35,000
Other paid-in capital (notes 7 and 8)					205,555				—
Accumulated other comprehensive income (loss)					(25,651	)			2,301
Accumulated deficit					(740,980	)			(114,824	)
Total shareholders' deficiency					(110,617	)			(77,523	)
Total liabilities and shareholders' deficiency				$	780,774			$	742,744

See accompanying notes to consolidated financial statments.

F-13

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Sona Mobile, Inc. and Subsidiary
Consolidated Statements of Operations and Comprehensive Loss (audited)

				Year ended December 31, 2004				Period beginning November 12, 2003 (inception) and ending December 31, 2003
Revenue
Application licenses				$	401,536			$	—
Operating expense
Depreciation – equipment					3,941				—
Amortization – software rights					138,647				—
Bad debt expense					15,568				—
Consulting (note 6)					248,580				48,000
Insurance					3,235				—
Scientific development tax credits					(7,683	)			—
Office					48,214				—
Professional fees					93,859				64,137
Rent (note 6)					29,083				—
Telephone and telecommunications					75,718				—
Travel					44,600				2,687
Wages and benefits					260,290				—
Stock based compensation (note 8)					46,463				—
Total operating expense					1,000,515				114,824
Operating loss					(598,979	)			(114,824	)
Other income (expense)
Interest expense (note 7)					(27,177	)			—
Net Loss					(626,156	)			(114,824	)
Other comprehensive income (loss) – Translation adjustment					(27,952	)			2,301
Comprehensive loss				$	(654,108	)		$	(112,523	)

See accompanying notes to consolidated financial statments.

F-14

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Sona Mobile, Inc. and Subsidiary
Consolidated Statements of Cash Flows (audited)

				Year ended December 31, 2004				Period beginning November 12, 2003 (inception) and ending December 31, 2003
Cash provided by (used in):
Operating activities
Net loss				$	(626,156	)		$	(114,824	)
Adjustments for:
Amortization of equipment					3,941				—
Amortization of software rights					138,647				—
Amortization of deferred interest					16,185				—
Changes in non-cash working capital assets and liabilities net of acquired assets and liabilities due to acquisitions:
Accounts receivable					(122,571	)			—
Scientific development tax credits receivable					69,184				—
Prepaid expenses					(11,659	)			—
Accounts payable					7,058				114,824
Accrued liabilities					33,644				—
Deferred revenue					1,432				—
Net cash provided by (used in) operating activities					(490,295	)			—
Investing
Furniture and equipment					(2,156	)			—
Cash balance from acquisition of subsidiary					—				208
Net cash provided by (used in) investing activities					(2,156	)			208
Financing
Proceeds from deposits on share subscriptions					175,000				—
Proceeds from the sale of preference shares					130,000				—
Proceeds from the sale of common shares					368,997				—
Net proceeds from (repayment of) note payable and other loans					(275,811	)			—
Proceeds from shareholder (note 6)					135,633				5
Proceeds from convertible note payable					100,000				—
Net cash provided by financing activities					633,819				5
Effect of exchange rate changes on cash					(27,952	)			—
Change in cash during the year					113,416				213
Cash, beginning of year					213				—
Cash, end of year				$	113,629			$	213
Supplemental schedule of non-cash investing and financing activities:
Redeemable preference shares issued in exchange for payment of deposit for acquisition of subsidiary				$	—			$	150,000
Common shares issued in exchange for payment of deposit for acquisition of subsidiary				$	—			$	35,000

See accompanying notes to consolidated financial statments.

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Sona Mobile, Inc. and Subsidiary
Consolidated Statements of Shareholders' Deficiency (audited)
For the year ended December 31, 2004 and the period from November 12, 2003,
the date of incorporation, to December 31, 2003

				Common Stock								Additional Paid-in Capital				Accumulated Other Comprehensive Income				Accumulated Deficit				Shareholder's Equity (Deficiency)
Balance, November 12, 2003 (inception)				$	—			$	—			$	—			$	—			$	—			$	—
Issuance of shares on incorporation					496,667				—				—				—				—				—
Issuance of shares in exchange for payment of deposit for acquisition of subsidiary					183,334				35,000				—				—				—				35,000
Issuance of shares as compensation for delays in the acquisition of subsidiary					250,000				—				—				—				—				—
Foreign exchange translation					—				—				—				2,301				—				2,301
Net loss					—				—				—				—				(114,824	)			(114,824	)
Balance, December 31, 2003					930,001				35,000				—				2,301				(114,824	)			(77,523	)
Issuance of shares for cash					628,176				368,996				—				—				—				368,996
Common stock committed for repayment of note payable (note 7)					—				—				30,555				—				—				30,555
Common stock committed for cash (note 8)					—				—				175,000				—				—				175,000
Stock based compensation					—				371,700				—				—				—				371,700
Deferred stock based compensation (note 8)					—				(325,237	)			—				—				—				(325,237	)
Foreign exchange translation					—				—				—				(27,952	)			—				(27,952	)
Net loss					—				—				—				—				(626,156	)			(626,156	)
Balance, December 31, 2004				$	1,558,177			$	450,459			$	205,555			$	(25,651	)		$	(740,980	)		$	(110,617	)

See accompanying notes to consolidated financial statments.

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1.	Company background

Sona Mobile, Inc. (the Company) was incorporated on November 12, 2003 in the state of Washington. The Company is a provider of wireless solutions that bring mobility to businesses in the wireless data marketplace. The Company has customers in the banking, manufacturing, entertainment, and utilities/energy industries.

2.	Summary of significant accounting policies

These consolidated financial statements are presented in United States dollars and have been prepared in accordance with U.S. generally accepted accounting principles and reflect the following policies:

	(a)	Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Sona Innovations Inc. The subsidiary was acquired December 23, 2003 and the assets and liabilities are included in the 2003 and 2004 consolidated balance sheet. The results of the subsidiary's operations are recorded from the date of acquisition. All intercompany accounts and transactions have been eliminated in consolidation.

	(b)	Cash and cash equivalents

Cash and cash equivalents are comprised of cash and term deposits with original maturity dates of less than 90 days. Cash and cash equivalents are stated at cost which approximates market value, and are concentrated in two major financial institutions.

	(c)	Foreign currency translation

In accordance with the provisions of SFAS No. 52 ‘‘Foreign Currency Translation’’, assets and liabilities denominated in a foreign currency have been translated at the year end rate of exchange. Revenue and expense items have been translated at the transaction date rate. For the foreign subsidiary which utilizes its local currency as its functional currency, the resulting translation gains and losses are included in other comprehensive income. Gains or losses resulting from foreign exchange transactions are reflected in earnings.

	(d)	Long term investments

Equipment is stated at cost. Depreciation is provided on a straight line basis over the estimated useful lives of three to five years.

	(e)	Measurement uncertainty

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

	(f)	Software rights

Software rights are recorded at the excess of the purchase price of the subsidiary over the fair value of the subsidiary's identifiable net tangible assets. The carrying value of the rights is being amortized over the program application's estimated useful life of four years.

The Company tests for recoverability of software rights when events or changes in circumstance indicate that their carrying amount may not be recoverable. Circumstances

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which could trigger a review include, but are not limited to significant decreases in the market price of the assets; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.

Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

As at December 31, 2004 and 2003 there were no circumstances or events which had occurred which might indicate that the carrying value of the rights may not be recoverable and therefore no test of the recoverability has been made.

	(g)	Income taxes

The Company accounts for income taxes in accordance with SFAS No. 109 ‘‘Accounting for Income Taxes’’ which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed periodically for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The income tax provision is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

	(h)	Revenue recognition

The Company derives revenue from license and service fees related to customization and implementation of the software being licensed. Service fees are recorded on a percentage of completion or completed-contract basis depending on whether or not reliable estimates of the costs to complete the work can be obtained. License fees are recognized over the service period when there is persuasive evidence of an arrangement, the fee is fixed or determinable and collection of the receivable is probable. The deferred revenues are amounts received prior to completion of service.

	(i)	Research and development

The Company annually incurs costs on activities that related to research and the development of new products. Research costs are expenses as they are incurred. Costs are reduced by investment tax credits where applicable.

	(j)	Use of estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amount of revenues and expenses during the reported period. Actual results could differ from those estimates. These estimates are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the period in which they become known.

3.	Business acquisition

On December 23, 2003 the Company acquired 100% of the outstanding voting shares of Sona Innovations Inc., a Canadian company that developed the wireless platform upon which the

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Company's products are based. Prior to the acquisition the two companies were at arm's length. The consideration for the shares was $132,175 ($175,000 Canadian) in cash and short term notes as well as assumption of $377,644 ($500,000 Canadian) of current debt owed to the majority shareholder of the investee prior to the acquisition (note 5).

The allocation of the purchase price is as follows:

Cash				$	208
Accounts receivable					9,059
Scientific tax credits receivable					159,616
Prepaid expenses					6,193
Equipment					13,078
Software rights					554,583
					742,737
Accounts payable					(85,279	)
Accrued liabilities					(18,546	)
Short term loans					(55,079	)
Due to shareholder					(74,013	)
Total purchase price				$	509,820

4.	Long term investments

				2004				2003
Furniture and office equipment				$	5,293			$	2,915
Computer and telephone equipment					9,942				10,164
					15,235				13,079
Accumulated amortization					(3,941	)			—
				$	11,294			$	13,079

5.	Note payable and other short term loans

				2004				2003
Amounts owed to former shareholders of Sona Innovations Inc. – non
interest bearing with no specific terms of repayment (note 3)				$	55,325			$	55,079
Debt assumed on acquisition of subsidiary bearing interest at 3.5%
per annum, payable June 23, 2004 (note 3)					—				322,520
				$	55,325			$	377,599

6.	Related party transactions

During the year, the Company paid consulting fees to shareholders and directors of the company in the amount of $215,000 and $48,000 in 2004 and 2003, respectively. The balance due to shareholder of $209,651 is non-interest bearing, unsecured with no specific terms of repayment.

The Company's subsidiary shares premises with the former majority shareholder of the subsidiary who also owns 250,000 common shares of Sona Mobile, Inc. During 2004, the Company paid rent to the former majority shareholder in the amount of $22,590 on a month to month basis with no commitment.

7.	Convertible note payable

In July 2004 the Company issued a note for proceeds for $100,000, its face value. The note is due January 2006 and bears interest at 12% per annum, payable upon maturity. On the note's due date, 48,500 common shares are to be issued to the note holder. The note is convertible to 158,730 common shares or $.63 per share, at any time before the due date.

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In accordance with EITF 98-5 the fair value of the conversion option on the date of issuance was nil as the conversion price was equal to the current issue price for the shares. The obligation to issue common shares has been valued at the market price at the time of issue in the amount of $30,555 and is reflected as part of ‘‘Other paid-in capital’’ in shareholder's equity and the related note discount, netted against the note payable. Interest and amortization of the discount are charged to income over the term of the note.

On March 2, 2005 the holder of the note exercised the conversion. The other paid-in capital and the carrying value of the note payable including accrued interest and unamortized discount of $21,580 have been recorded as proceeds for the issue of the 158,730 shares.

8.	Share capital

	Redeemable Preference shares

The board of directors has designated 3 million of the 10 million preference shares authorized as Series A preference shares. The shares are voting, have a non-cumulative dividend rate of 6% and are convertible to common shares on a one to one basis, subject to certain anti-dilutive provisions. The shares are redeemable at the option of the holder, if the Company is not sold, merged or subject to a public offering within 5 years of issue. The redemption amount is equal to their paid up amount plus an additional 6% compounded annually. Should the Company be subject to a public offering where the offering price is 33 times the issue price and in aggregate greater than $10 million or a majority of the Series A preferred shareholders provide consent, the shares are subject to a mandatory conversion to common shares. The holders of the Series A preferred shares have the right to purchase shares offered for sale by the Company in a number of shares necessary to maintain the holder's pro rata ownership on the basis of common share equivalents outstanding. Due to the redeemable feature of these shares they have been classified as a liability in the balance sheet.

In December, 2003 1,686,667 Series A preference shares were issued to the Company's founders for nominal consideration and 500,000 Series A preference shares were issued at $150,000 in repayment of deposits made on the acquisition of Sona Innovations Inc. as described in note 3. In January and May, 2004 141,112 Series A preference shares were issued for $130,000 to finance the remainder of the acquisition.

	Common shares

In December, 2003 496,667 common shares were issued to the Company's founders for nominal consideration, 183,334 shares were issued for $35,000 in repayment of deposits made on the acquisition of Sona Innovations Inc. as described in note 3 and 250,000 shares were issued for nominal consideration to the former majority shareholder of the subsidiary as compensation for delays in closing the acquisition. In January and June, 2004 and during August to October, 2004 an aggregate of 628,176 shares were issued for $368,997. The proceeds of these issues were used to pay the remaining notes payable and debt assumed in the acquisition of the subsidiary as described in note 3, as well as to finance current operations.

In December 2004 the Company received $175,000 for 101,157 shares issued January 3, 2005. This amount is reflected as ‘‘Other paid-in capital’’ in the balance sheet.

On November 18, 2004 the board authorized 590,000 shares to be issued to various employees and a consultant for no consideration. These shares were issued January 3, 2005. The value of these shares is $371,700, of which $46,463 has been recorded as expense in the current period and $325,237 has been recorded as deferred stock based compensation in the statement of shareholders' deficiency.

9.	Financial instruments

The Company's financial instruments consist of cash, accounts receivable, accounts payable, deposits on share subscriptions, notes payable, other short term loans and amount due to shareholder.

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The Company is subject to credit risk with respect to its accounts receivable to the extent that debtors do not meet their obligations. The Company monitors the age of its accounts receivables and may delay development or terminate information fees if debtors do not meet payment terms.

The Company is subject to foreign currency risk with respect to financial instruments denominated in a foreign currency.

A reasonable estimate of fair value of the amount due to shareholder and other short term loans could not be made as the timing of payments, if any, is not known.

Due to the short period to maturity, the book value of the remaining financial instruments approximates their fair value.

10.	Income taxes

Deferred tax benefits arising from net operating loss and scientific research and experimental development expenditure carryforwards were determined using the applicable statutory rates. The net operating loss carry forward balances vary from the applicable percentages of net loss due to expenses, primarily amortization of software rights, recognized under generally accepted accounting principles, but not deductible for tax purposes.

The Company has Canadian scientific research and experimental development expenditures of approximately $815,000 that may be carried forward indefinitely and applied to reduce taxable income in future years. In addition, the Company has losses carried forward for Canadian tax purposes which may be applied to reduce taxable income in the amount of approximately $240,000. Losses in the amount of $52,000 expire in 2009 and the remaining $188,000 expire in 2014.

Net operating loss carryforwards available for U.S. federal and state tax purposes of approximately $287,000. Of these losses $115,000 expires in 2023 and 2013 for federal and state purposes, respectively, and $172,000 expires in 2024 and 2014 for federal and state purposes, respectively.

The utilization of the net operating losses to offset future taxable income may be limited under U.S. tax laws.

At December 31, 2004 and 2003 the Company had net deferred tax assets of approximately $447,000 and $336,000 arising from the net operating loss and scientific research and experimental development expenditure carryforwards. These deferred tax assets are fully offset by deferred tax liability arising from the software rights, the amortization of which is not deductible for tax purposes and the remainder by valuation allowances.

The deferred tax liability related to the software is $145,000 and $194,000 at December 31, 2004 and 2003. The Company has established a valuation allowance of 100% to the extent of the deferred net tax assets since it is more likely than not that the benefit will not be realized. During 2004 and 2003 the valuation allowance increased by $160,000 and $142,000.

11.	Commitment

On December 29, 2004, Sona Innovations Inc. signed a letter of intent to acquire the assets and employees contracts of Smart Video Canada Inc. for $83,195 ($100,000 Canadian). An initial deposit of $4,160 ($5,000 Canadian) was paid as at December 31, 2004 and remainder to be paid throughout 2005.

12.	Subsequent events

On January 12, 2005 Sona Mobile, Inc. signed a non-binding Letter of Intent to merge with Perfectdata Corporation. Under the terms of the letter of intent, the shareholders of Sona Mobile, Inc. initially will own 80% of the merged entity and could own an additional 5% pursuant to a formula to be set forth in the merger agreement. The transaction is subject to completion of

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due diligence, execution of a definitive merger agreement, and satisfying other material conditions. On March 10, 2005, the parties executed a definitive agreement.

In addition, on March 7, 2005 the Company issued 250,000 common shares to accredited investors for proceeds of $475,000 to finance current operations.

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You may rely on the information contained in this prospectus. We have not authorized anyone to provide information different from that contained in this prospectus. Neither the delivery of this prospectus nor sale of common shares means that information contained in this prospectus is correct after the date of this prospectus. This prospectus is not an offer to sell or solicitation of an offer to buy our common shares in any circumstances under which the offer or solicitation is unlawful.

Table of Contents

				Page
Forward Looking Statements				2
Prospectus Summary				3
Risk Factors				7
Use of Proceeds				14
Dividend Policy				14
Capitalization				14
Price Ranges of Our Common Stock				15
Recent Developments				16
Selected Consolidated Financial Data				18
Management's Discussion and Analysis of Financial Condition and Results of Operations				19
Business				30
Management				38
Certain Relationships and Related Party Transactions				44
Security Ownership of Certain Beneficial Owners and Management				45
Description of Securities				48
Selling Stockholders				50
Plan of Distribution				51
Legal Matters				52
Experts				52
Where You Can Find More Information				52
Index to Financial Statements				F-1

    

    

4,810,875 SHARES
OF
COMMON STOCK

SONA MOBILE HOLDINGS CORP.

PROSPECTUS

                    , 2006

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law grants us the power to indemnify our directors and officers against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement in connection with specified actions, suits or proceedings, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation – a ‘‘derivative action’’), if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses (including attorneys' fees) incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification in which the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's charter, bylaws, disinterested director vote, stockholder vote, agreement or otherwise.

Our Certificate of Incorporation also provides that a director will not be personally liable to us or to our stockholders for monetary damages for breach of the fiduciary duty of care as a director. This provision does not eliminate or limit the liability of a director:

	•	for breach of his or her duty of loyalty to us or to our stockholders;

	•	for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;

	•	under Section 174 of the Delaware General Corporation Law (relating to unlawful payments or dividends or unlawful stock repurchases or redemptions); or

	•	for any improper benefit.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons pursuant to our Certificate of Incorporation, Bylaws and the Delaware General Corporation Law, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy and is, therefore, unenforceable.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following are the fees and expenses we incurred in connection with the offering are payable by us. Other than the SEC registration fee all of such fees expenses are estimated.

Registration fee				$	875.10
Printing expenses					5,000.00
Accounting fees and expenses					5,000.00
Legal fees and expenses					50,000.00
Miscellaneous					3,000.00
Total				$	63,875.10

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.

In connection with the Merger, we issued a total of 568,140 shares of our Series A Convertible Preferred Stock, par value $.01 per share (the ‘‘Series A Stock’’); 539,733 shares were issued to the former shareholders of Sona Mobile and 28,407 were issued to Sona Mobile’s financial advisor in connection with the Merger (the ‘‘Advisor’’). These shares are convertible into 27,334,120 shares of our Common Stock. In issuing the shares of the Series A Stock, we relied on Section 4(2) of the Securities Act. We believe that Section 4(2) was available because the issuance did not involve a public offering and there was not general solicitation or general advertising involved in the offer or sale.

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In April 2005, we agreed to issue 150,000 shares of Common Stock to Wachtel & Masyr LLP, our former counsel, in full payment for legal services. The shares were actually issued in June 2005. In issuing these shares of the Series A Stock, we relied on Section 4(2) of the Securities Act. We believe that Section 4(2) was available because the issuance did not involve a public offering and there was not general solicitation or general advertising involved in the offer or sale.

Between June 21, 2005 and July 8, 2005, we sold $5.05 million worth of our Series B Preferred Stock and the Warrants to 10 accredited investors (each an ‘‘Investor’’). The Investors purchased an aggregate of 3,848.7 shares of the Series B Preferred Stock, convertible into 3,848,700 shares of our Common Stock, and Warrants to purchase an aggregate of 962,175 shares of our Common Stock at an exercise price of $1.968 per share at any time up until June 20, 2009. The sale of the Series B Preferred Stock and the Warrants were made pursuant to an exemption from securities registration afforded by the provisions of Section 4(2) and Rule 506 of Regulation D as promulgated by the Commission under the Securities Act of 1933, as amended.

ITEM 27. EXHIBITS.

Exhibit Number				Description
3.1				Agreement and Plan of Merger dated as of March 7, 2005 among Registrant, Perfect Data Acquisition Corporation and Sona Mobile, Inc.(1)
3.1				Certificate of Incorporation, as amended**
3.3				By-laws of the Company(2)
4.1				Form of Common Stock Certificate.**
5.1				Opinion of Morse, Zelnick, Rose & Lander, LLP*
10.1				Form of Subscription Agreement dated June 21, 2005(3)
10.2				Form of Common Stock Purchase Warrant dated June 21, 2005(4)
10.3				Amended and Restated Stock Option Plan of 2000(5)
21.1				Subsidiaries*
23.1				Consent of Horwath Orenstein, LLP*
23.2				Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit 5.1)*
24.1				Power of Attorney (included in signature page)*

*Included herewith

**To be filed by amendment.

(1) Previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on March 11, 2005 and incorporated herein by reference.

(2) Previously filed with the Registrant's definitive Consent Solicitation Statement dated October 26, 2004 as filed with the Commission on November 1, 2004 and incorporated herein by reference.

(3) Previously filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with Commission on June 22, 2005 and incorporated herein by reference.

(4) Previously filed as Exhibit 4.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 22, 2005 and incorporated herein by reference.

(5) Previously filed as Appendix III to the Registrant's definitive Proxy Statement dated October 27, 2005 and filed with the Commission on the same date and incorporated herein by reference.

ITEM 28. UNDERTAKINGS.

A. The undersigned Registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to:

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(i) include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; and

(iii) include any additional or changed material information with respect to the plan of distribution disclosed in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of a registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective.

(5) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

B. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and authorized this Registration Statement to be signed on its behalf by the undersigned, in New York, New York on December 19, 2005.

SONA MOBILE HOLDINGS CORP.

	By:	/s/    John Bush                                     John Bush, President and Chief Executive Officer

ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John Bush, individually, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all pre- or post-effective amendments to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any one of them, or their or his substitutes, may lawfully do or cause to be done by virtue hereof.

In accordance with the requirements of the Securities Act of 1933, as amended, the following persons have signed this Registration Statement in the capacities indicated on the date set forth above.

Signature		Title
/s/ John Bush		President and Chief Executive Officer, and Director (principal executive officer)
John Bush
/s/ Shawn Kreloff		Chairman of the Board of Directors
Shawn Kreloff
/s/ John Rudy		Chief Financial and Accounting Officer (principal financial officer)
John Rudy
/s/ Nicholas Glinsman		Director
Nicholas Glinsman
		Director
Bryan Maizlish
/s/ Frank Fanzilli		Director
Frank Fanzilli
		Director
Paul McAleese
/s/ Michael Castellano		Director
Michael Castellano
/s/ Joseph Vittoria		Director
Joseph Vittoria

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