Another reason for effecting a reverse stock split is to increase the stock price to a level where the Common Stock may qualify for listing on a Nasdaq market or other exchange. Currently, the minimum bid price requirement for listing on any of the Nasdaq markets ranges from $4.00 per share to $5.00 per share. While the Board does not have any plans at this time to qualify the Company for listing on any of the Nasdaq markets or other exchanges, the Board may determine that such a listing would be in the best interest of the Company.

For all of the above reasons, the Board believes that providing discretionary authority to the Board to implement the reverse stock split is in our best interests and those of our stockholders. There can be no assurance, however, that the reverse stock split will be implemented or, if implemented, will have the desired consequences. Specifically, there can be no assurance that, after the reverse stock split, the market price of the Common Stock will not be less than the market price before the proposed reverse stock split.

The Board believes that stockholder approval of an exchange ratio range (rather than an exact exchange ratio) provides the Board with maximum flexibility to achieve the purposes of the reverse stock split. If the stockholders approve the reverse stock split proposal, the reverse stock split will be effected, if at all, only upon a determination by the Board that the reverse stock split is in our best interests and those of our stockholders at that time. In connection with any determination to effect a reverse stock split, the Board will set the timing for such a split and select the specific ratio within the range. These determinations will be made by the Board with the intent to create the greatest marketability of our Common Stock based on prevailing market conditions at that time. If the proposal is approved, no further action on the part of stockholders will be required to either implement or abandon the reverse stock split. If the Board does not implement a reverse stock split prior to December 31, 2008, the authority granted in this proposal to implement a reverse stock split on these terms will terminate. The Board reserves its right to elect not to proceed with the reverse stock split if it determines, in its sole discretion, that the split is no longer in our best interests and those of our stockholders.

Certain Risks Associated With the Reverse Stock Split

There can be no assurance that the total market capitalization of Common Stock after the proposed reverse stock split will be equal to or greater than the total market capitalization before the proposed reverse stock split or that the per share market price of Common Stock following the reverse stock split will either exceed or remain higher than the current per share market price.

There can be no assurance that the market price per new share of Common Stock (the ‘‘New Shares’’) after the reverse stock split will rise or remain constant in proportion to the reduction in the number of old shares of Common Stock (the ‘‘Old Shares’’) outstanding before the reverse stock split. For example, based on the market price of our Common Stock on July 10, 2007 of $0.47 per share, if the Board decided to implement the reverse stock split and selects a reverse stock split ratio of one-for-three, there can be no assurance that the post-split market price of Common Stock would be $1.41 per share. Alternatively, if the Board decided to implement the reverse stock split and selects a reverse stock split ratio of one-for-ten, there can be no assurance that the post-split market price of Common Stock would be $4.70 per share. Accordingly, the total market capitalization of Common Stock after the proposed reverse stock split may be lower than the total market capitalization before the proposed reverse stock split and, in the future, the market price of Common Stock following the reverse stock split may not exceed or remain higher than the market price prior to the proposed reverse stock split. In many cases, the total market capitalization of a company following a reverse stock split is lower than the total market capitalization before the reverse stock split.

A decline in the market price for Common Stock after the reverse stock split may result in a greater percentage decline than would occur in the absence of a reverse stock split, and the liquidity of Common Stock could be adversely affected following a reverse stock split.

The market price of Common Stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. If the reverse stock split is effected and the market price of Common Stock declines, the percentage decline as an absolute number and as

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a percentage of our overall market capitalization may be greater than would occur in the absence of a reverse stock split. In many cases, both the total market capitalization and the market price of a share of a company’s common stock following a reverse stock split are lower than they were before the reverse stock split. Furthermore, the liquidity of Common Stock could be adversely affected by the reduced number of shares that would be outstanding after the reverse stock split.

Principal Effects of the Reverse Stock Split

Corporate Matters.    If approved and effected, the reverse stock split would have the following effects:

	•	depending on the exact reverse stock split ratio selected by the Board, between three and ten Old Shares owned by a stockholder would be exchanged for one (1) New Share;

	•	the number of shares of Common Stock issued and outstanding will be reduced proportionately based on the reverse stock split ratio selected by the Board;

	•	based on the reverse stock split ratio selected by the Board, proportionate adjustments will be made to the per share exercise price and the number of shares issuable upon the exercise of all outstanding options and warrants entitling the holders thereof to purchase shares of Common Stock, which will result in approximately the same aggregate price being required to be paid for such options or warrants upon exercise of such options or warrants immediately preceding the reverse stock split; and

	•	the number of shares reserved for issuance under our existing stock option plan will be reduced proportionately based on the reverse stock split ratio selected by the Board.

If approved and effected, the reverse stock split will be effected simultaneously for all Common Stock and the ratio will be the same for all Common Stock. The reverse stock split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in us, except to the extent that the reverse stock split results in any of our stockholders owning a fractional share. As described below, stockholders holding fractional shares will be entitled to cash payments in lieu of such fractional shares. Such cash payments will reduce the number of post-split stockholders to the extent there are stockholders presently holding fewer than up to three shares, depending on the ratio for the reverse stock split selected by the Board. This, however, is not the purpose for which we are effecting the reverse stock split. Common Stock issued pursuant to the reverse stock split will remain fully paid and non-assessable. We will continue to be subject to the periodic reporting requirements of the Exchange Act.

Fractional Shares.    No scrip or fractional certificates will be issued in connection with the reverse stock split, if effected. Stockholders who otherwise would be entitled to receive fractional shares because they hold a number of Old Shares not evenly divisible by the ratio selected by the Board for the reverse stock split will be entitled, upon surrender of certificate(s) representing such shares, to a cash payment in lieu thereof. The cash payment will equal the product obtained by multiplying (a) the fraction to which the stockholder would otherwise be entitled by (b) the per share closing sales price of Common Stock on the day immediately prior to the effective time of the reverse stock split, as reported on the OTCBB. The ownership of a fractional interest will not give the holder thereof any voting, dividend or other rights except to receive payment there for as described herein.

Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, where we are domiciled and where the funds will be deposited, sums due for fractional interests that are not timely claimed after the effective time may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled to receive such funds may have to seek to obtain them directly from the State to which they were paid.

If approved and effected, the reverse stock split will result in some stockholders owning ‘‘odd lots’’ of less than 100 shares of Common Stock. Brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in ‘‘round lots’’ of even multiples of 100 shares.

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Authorized Shares.    As of June 30, 2007, the Company had 90,000,000 shares of Common Stock authorized and upon stockholder approval of the increase proposed herein the number of shares of Common Stock authorized will be 120,000,000. Upon the effectiveness of the reverse stock split, the number of authorized shares of Common Stock will not change.

Accounting Matters.    The reverse stock split will not affect the par value of Common Stock. As a result, as of the effective time of the reverse stock split, the stated capital on our balance sheet attributable to Common Stock will be reduced proportionately based on the reverse stock split ratio selected by the Board, and the additional paid-in capital account will be credited with the amount by which the stated capital is reduced. The per share net income or loss and net book value of Common Stock will be restated because there will be fewer shares of Common Stock outstanding.

Potential Anti-Takeover Effect.    Although the increased proportion of unissued authorized shares to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of our Board or contemplating a tender offer or other transaction for the combination of us with another company), the reverse stock split proposal is not being proposed in response to any effort of which we are aware to accumulate our shares of Common Stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar amendments to our Board and stockholders. Other than the reverse stock split proposal, the Board does not currently contemplate recommending the adoption of any other amendments to our Certificate that could be construed to affect the ability of third parties to take over or change the control of us.

Procedure for Effecting Reverse Stock Split and Exchange of Stock Certificates

If the stockholders approve the proposal to authorize the Board to implement the reverse stock split and the Board decides to implement the reverse stock split on or prior to December 31, 2008, we will file an amendment substantially in the form set forth on Appendix II with the Secretary of State of the State of Delaware. The text of the amendment may be modified to include such changes as may be required by the office of the Secretary of State of the State of Delaware and as the Board deems necessary and advisable to effect the reverse stock split, including the insertion of the effective time and the applicable reverse stock split ratio determined by the Board. The reverse stock split will become effective at the time specified in the amendment. Beginning at the effective time, each certificate representing Old Shares will be deemed for all corporate purposes to evidence ownership of New Shares.

As soon as practicable after the effective time, stockholders will be notified that the reverse stock split has been effected. We expect that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of Old Shares will be asked to surrender to the exchange agent certificates representing Old Shares in exchange for certificates representing New Shares in accordance with the procedures to be set forth in the letter of transmittal we send to our stockholders. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s), together with the properly completed and executed letter of transmittal, to the exchange agent. Any Old Shares submitted for transfer, whether pursuant to a sale, other disposition or otherwise, will automatically be exchanged for New Shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.

No Dissenters’ Rights

Under the DGCL, stockholders are not entitled to dissenters’ rights with respect to the reverse stock split, and we will not independently provide stockholders with any such right.

Federal Income Tax Consequences of the Reverse Stock Split

The following is a summary of certain material federal income tax consequences of the reverse stock split, does not purport to be a complete discussion of all of the possible federal income tax consequences of the reverse stock split and is included for general information only. Further, it does

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not address any state, local or foreign income or other tax consequences. Also, it does not address the tax consequences to holders that are subject to special tax rules, such as banks, insurance companies, regulated investment companies, personal holding companies, foreign entities, nonresident alien individuals, broker-dealers and tax-exempt entities. The discussion is based on the provisions of the United States federal income tax law as of the date hereof, which is subject to change retroactively as well as prospectively. This summary also assumes that the Old Shares were, and the New Shares will be, held as a ‘‘capital asset,’’ as defined in the Internal Revenue Code of 1986, as amended and in effect from time to time, or any superseding federal revenue statute (i.e., generally, property held for investment). The tax treatment of a stockholder may vary depending upon the particular facts and circumstances of such stockholder. Each stockholder is urged to consult with such stockholder’s own tax advisor with respect to the tax consequences of the reverse stock split.

Other than the cash payments for fractional shares discussed below, no gain or loss should be recognized by a stockholder upon such stockholder’s exchange of Old Shares for New Shares pursuant to the reverse stock split. The aggregate tax basis of the New Shares received in the reverse stock split (including any fraction of a New Share deemed to have been received) will be the same as the stockholder’s aggregate tax basis in the Old Shares exchanged there for. In general, stockholders who receive cash in exchange for their fractional share interests in the New Shares as a result of the reverse stock split will recognize gain or loss based on their adjusted basis in the fractional share interests redeemed. The stockholder’s holding period for the New Shares will include the period during which the stockholder held the Old Shares surrendered in the reverse stock split.

Our view regarding the tax consequences of the reverse stock split is not binding on the Internal Revenue Service or the courts. ACCORDINGLY, EACH STOCKHOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR WITH RESPECT TO ALL OF THE POTENTIAL TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE STOCK SPLIT.

The Board Unanimously Recommends a Vote FOR Granting our Board Discretionary Authority to Amend our Certificate to Effect a Reverse Stock Split of our Common Stock at a Ratio Within the Range from One-For-Three To One-For-Ten at any Time Prior to December 31, 2008.

*    *    *    *    *

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EXECUTIVE OFFICERS

The following table sets forth the names, ages and principal position of our executive officers as of August 1, 2007:

Name			Age						Position
Shawn Kreloff					44				Chairman, Chief Executive Officer and President
Stephen Fellows					41				Vice President and Chief Financial Officer and Corporate Secretary
Lance Yu					37				Senior Vice President – Chief Technology Officer

The principal occupation and business experience of Mr. Kreloff is discussed above.

Stephen Fellows was appointed Chief Financial Officer on May 16, 2006. Mr. Fellows joined the Company in August 2005 as Vice President-Finance & Corporate Controller. Mr. Fellows joined the Company from 3Com Corporation where he was Director of Finance of the corporate accounting group in Marlborough, MA. Prior to that, Mr. Fellows spent five years as the Director of Finance & Operations of 3Com’s Canadian subsidiary. Mr. Fellows joined 3Com from Pennzoil Corporation where he spent time in the international mergers and acquisitions group in Houston, Texas, as well as four years as controller for Pennzoil Canada. Mr. Fellows holds a Bachelor of Business Administration degree from Wilfrid Laurier University in Waterloo, ON, Canada and earned his Chartered Accountants’ designation while articling with Arthur Andersen & Company in Toronto.

Lance Yu has been our Senior Vice President and Chief Technology Officer since our inception in November 2003. From January 2002 through November 2003, he was the Vice President — Technology of Sona Innovations, Inc. which was purchased by the Company from Baldhead Systems, a professional services, web design and business consulting organization based in Toronto, Canada. Prior to joining Sona Innovations Inc., Mr. Yu had various roles at Baldhead Systems including Vice President – Technology and previous to that as Senior Project Manager.

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 fiscal years indicated by the persons who served as our Chief Executive Officers, Chief Financial Officer and our Senior Vice President-Chief Technology Officer during the fiscal years ended December 31, 2006 and December 31, 2005. No other executive officer earned salary and bonus in excess of $100,000 during the fiscal years ended December 31, 2006 and December 31, 2005. See ‘‘Certain Related Party Transactions’’ for information as to consulting fees and other amounts paid to our former Chief Executive Officer in the fiscal year ended December 31, 2006.

Summary Compensation Table

Name and Principal Position			Year						Salary ($)						Bonus ($)						Stock Awards(9) ($)						Options Awards(10) ($)						All Other Compensation ($)						Total ($)
Shawn Kreloff					2006						159,769						—						—						872,500						—						1,032,269
President and Chief Executive Officer(1),(2)					2005						9,808						—						—						185,250						140,808	(6)					335,866
Lance Yu					2006						176,420						—						—						—						8,997	(7)					185,417
Senior Vice President – Chief Technology Officer(3)					2005						137,946						—						—						111,150						5,453	(7)					254,549
John Bush					2006						210,348						—						—						—						136,351	(8)					346,698
Former Chief Executive Officer(4)					2005						190,479						—						—						64,960						106,666	(8)					362,105
Stephen Fellows					2006						138,948						—						37,333						78,350						—						254,631
Chief Financial Officer(5)					2005						38,691						—						—						37,050						—						75,741

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(1)

On August 28, 2006, the Company entered into an Employment Agreement with Shawn Kreloff for his services as President and Chief Executive Officer of the Company, which agreement expires on December 31, 2009. The Employment Agreement provides for an annual salary of $170,000, or such higher amount as the Board may determine, and an annual bonus based upon the achievement of targets established by the Board. Pursuant to the Employment Agreement, following the Company’s 2006 Annual Meeting of Stockholders, Mr. Kreloff was granted an option to purchase 3,000,000 shares of Common Stock. In the event his employment terminates involuntarily without Cause (as defined in the Employment Agreement), Mr. Kreloff will receive a severance payment equal to one year’s salary and benefits. In addition, the Employment Agreement includes a one-year post-employment, non-competition provision.

(2)	Mr. Kreloff was appointed Chairman in September 2004 and President and Chief Executive Officer in May 2006 when Mr. Bush resigned. Mr. Kreloff was not paid any fees in his capacity as a director in either 2005 or 2006.

(3)	Mr. Yu has served as our Senior Vice President and Chief Technology Officer since our inception in November 2003.

(4)

Mr. Bush served as our President and Chief Executive Officer from November 12, 2003 (inception) to May 5, 2006. On July 17, 2006, we entered into a Mutual Separation Agreement and a Consulting Agreement with Mr. Bush. See ‘‘Certain Related Party Transactions’’ for information regarding the aforementioned agreements.

(5)	Mr. Fellows served as our Vice President-Finance & Corporate Controller from August 2005 until May 2006 when he was appointed as our Chief Financial Officer.

(6)

Represents payment of consulting fees earned and paid in 2005. From April 19, 2005 to October 31, 2005 consulting fees were incurred at $20,000 per month and decreased to $12,500 for the month of November 2005. As of December 1, 2005, the Consulting Agreement ended and Mr. Kreloff was hired as a full-time employee at an annual salary of $150,000.

(7)	Represents payment of a vehicle expense allowance.

(8)	For 2006, represents payment of $83,851 for consulting fees earned in 2004 and paid in 2006, as well as consulting fees of $52,500 earned and paid in 2006 under his post-separation Consulting Agreement. For 2005, represents consulting fees earned in 2004, but paid in 2005.

(9)	The amount of the restricted stock awards is calculated based on the closing market price on the date the restricted stock was granted.

(10)	The option awards amount is based on the total dollar value of the option grants calculated using the Black-Scholes valuation method and the variables which were used to determine the gross option value for financial statement reporting purposes pursuant to FAS 123(R).

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Outstanding Equity Awards at 2006 Fiscal Year-End

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options (#) Exercisable

Number of Securities Underlying Unexercised Options (#) Unexercisable

Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)

Option Exercise Price ($)

Option Expiration Date

Number of Shares or Units of Stock That Have Not Vested (#)

Market Value of Shares or Units of Stock That Have Not Vested ($)

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)

Equity Incentive Plan Awards: Market or Payout value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

Shawn Kreloff

166,666

(1)

83,334

(1)

n/a

1.60

10/12/2010

n/a

n/a

n/a

n/a

Stephen Fellows

33,334

(1)

16,666

(1)

n/a

1.60

10/12/2010

n/a

n/a

n/a

n/a

Lance Yu

100,000

(1)

50,000

(1)

n/a

1.60

10/12/2010

n/a

n/a

n/a

n/a

Shawn Kreloff

—

500,000

(2)

n/a

0.70

7/13/2016

n/a

n/a

n/a

n/a

Shawn Kreloff

—

3,000,000

(3)

n/a

0.63

10/2/2016

n/a

n/a

n/a

n/a

Stephen Fellows

83,333

(4)

166,667

(4)

n/a

0.70

7/13/2016

17,777

6,666

n/a

n/a

(1)	Options granted on October 13, 2005. One-third of these options vested immediately on the date of grant, one-third vested on September 30, 2006 and the remaining one-third of these options will vest on September 30, 2007.

(2)	Options granted on July 13, 2006. These options will vest in three equal annual installments over a three-year period on each anniversary date of the grant with vesting commencing July 13, 2007 and ending on July 13, 2009.

(3)	Options granted on October 2, 2006. These options will vest in three equal annual installments over a three-year period on each anniversary date of the grant with vesting commencing on July 13, 2007 and ending on July 13, 2010.

(4)	Options granted on July 13, 2006. One-third of these options vested on the date of grant. Two-thirds of these options will vest in two equal annual installments over a two-year period on the anniversary date commencing July 13, 2007 and ending July 13, 2008.

Adverse Proceedings

We are not aware of any legal proceedings in which any director, officer or affiliate of ours, any beneficial owner of record of more than five percent of any class of voting securities of ours, or any associate of any such director, officer, affiliate, or security holder is a party adverse to us or has a material interest adverse to us.

Certain Related Party Transactions

In January 2006, we entered into a Strategic Alliance Licensing and Distribution Agreement with Shuffle Master, Inc. (‘‘Shuffle Master’’), under which we agreed to develop certain wireless gaming technology for Shuffle Master. Pursuant to this agreement, Shuffle Master’s game content was to be offered exclusively for mobile gaming on the Company’s Wireless Gaming System. We were entitled to receive 40% of the gross revenue received by Shuffle Master from worldwide sales of wireless ‘‘casino’’ gaming applications to customers of, or sourced by, Shuffle Master and 45% of the gross revenues received by Shuffle Master from worldwide sales of wireless ‘‘casino’’ gaming applications to customers sourced by us. In addition, all capital outlay for infrastructure and support, including the installation, integration, mobilization and servicing of the Wireless Gaming System was to be incurred by the Company. Shuffle Master beneficially owns 8.2% of our Common Stock and Paul Meyer, the president of Shuffle Master, served on the Board from March 28, 2006 until June 12, 2007.

The Licensing Agreement was amended and restated in its entirety, as was a Master Services Agreement, effective February 28, 2007. Under the terms of the amended agreements both the Company and Shuffle Master are permitted to distribute, market and sell the Casino On Demand Wireless Gaming System to gaming venues worldwide. Additionally, the Company has been granted a non-exclusive worldwide license to offer Shuffle Master’s proprietary table game content on the platform, and the Company has granted Shuffle Master a non-exclusive worldwide license to certain Company-developed wireless platform software and enhancements that support the integration and

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mobilization of casino gaming applications into in-casino wireless gaming delivery systems. Under the amended agreements, revenue is split on a net revenue basis and shared at a 70%-30% split, with the larger percentage going to the party having received the revenues. Also, in connection with certain transactions with non-casino third parties, the Company and Shuffle Master will share initial up-front payments 60%-40%, and future consideration received 40%-60%.

On July 17, 2006, the Company entered into a Mutual Separation Agreement and a Consulting Agreement with John Bush in connection with his resignation as Chief Executive Officer of the Company. Pursuant to the terms of the Mutual Separation Agreement, Mr. Bush was entitled to receive $150,000 as severance pay and CAN$65,057.87 subject to all applicable withholding taxes, representing previously earned but unpaid compensation. Mr. Bush was also entitled to reimbursement for accrued but unused vacation days with respect to calendar year 2005 and would receive medical insurance through May 31, 2007. The Mutual Separation Agreement contained a non-competition and non-solicitation provision for the term of the agreement. In consideration for the foregoing, Mr. Bush provided the Company with a general release of claims. The Mutual Separation Agreement contained certain termination rights for both the Company and Mr. Bush, and further provided that any termination under the Mutual Separation Agreement would automatically terminate the Consulting Agreement.

Pursuant to the terms of the Consulting Agreement, Mr. Bush, among other things, has been engaged to develop and service the financial services and corporate enterprise solutions markets for the Company’s products and services. The term of the agreement was for a period of one year commencing on June 1, 2006, subject to extension. The Consulting Agreement contained representations and warranties and a non-competition and non-solicitation provision during the term of the agreement. In consideration for the services provided by Mr. Bush, he was entitled to receive a consulting fee equal to $7,500 per month. In addition to the monthly consulting fee, Mr. Bush was entitled to commissions on the sales of the Company’s products and services to customers. The Consulting Agreement contained certain termination rights for both the Company and Mr. Bush, and further provided that any termination under the Consulting Agreement would automatically terminate the Mutual Separation Agreement. The Consulting Agreement was terminated effective December 31, 2006. Under the Consulting Agreement, a total of $52,500 was paid to Mr. Bush for the period from June 1, 2006 through December 31, 2006.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, requires our executive officers and directors and persons who beneficially own more than 10% of our Common Stock to file initial reports of ownership and changes in ownership of our Common Stock with the Securities and Exchange Commission (‘‘SEC’’). Such executive officers, directors and greater than 10% stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) reports they file. Based solely upon our review of copies of such forms we have received, and other information available to us, to the best of our knowledge:

Shawn Kreloff, an officer and director, failed to file in a timely manner a Form 4 reporting one transaction.

M. Jeffrey Branman, a director, failed to file in a timely manner a Form 3 and Form 4s reporting two transactions.

Michael Fields, a director, failed to file in a timely manner a Form 3 and Form 4s reporting two transactions.

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PROPOSAL 4:    APPOINTMENT OF INDEPENDENT AUDITORS
(Item 4 on the Proxy Card)

Horwath audited Sona Mobile Inc.’s financial statements for its years ended December 31, 2003 and 2004. As a result of the merger (which transaction was consummated on April 19, 2005) between Sona Mobile, Inc. (our predecessor) and PerfectData Acquisition Corporation, a wholly-owned merger subsidiary of PerfectData Corporation, Horwath became our auditor of record. Their audit reports for the fiscal year ended December 31, 2006 appears in our annual report filed on Form 10-KSB with the SEC on March 29, 2007. A representative of Horwath will be at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate questions.

Although selection of the independent accountants is not required to be submitted to a vote of our stockholders for ratification, the Board does believe that as a matter of good corporate practice, it is preferable to have stockholders ratify the appointment of our auditors. At the same time, the Board believes that the Audit Committee, made up solely of independent directors, should be directly responsible for the appointment, compensation and oversight of the audit work of the independent auditors. Accordingly, whether or not the stockholders ratify the appointment, the Audit Committee may retain Horwath as its independent auditors or may change independent auditors as it deems appropriate.

Principal Accountant Fees and Services

For the Fiscal Year Ended December 31, 2006

Audit Fees:    The aggregate fees, including expenses, billed by the Company’s principal accountants in connection with the audit of our consolidated financial statements for the most recent fiscal year and for the review of our financial information included in our Annual Report on Form 10-KSB and quarterly reports on Form 10-QSB during the fiscal year ended December 31, 2006 were $78,003.

Audit-Related Fees:    The aggregate fees, including expenses, billed by the Company’s principal accountants for services reasonably related to the audit for the fiscal year ended December 31, 2006 were $28,442.

Tax Fees:    The aggregate fees, including expenses, billed by the Company’s principal accountants for services reasonably related to tax services during the year fiscal ended December 31, 2006 were $16,733.

All Other Fees:    The aggregate fees, including expenses, billed for all other services rendered to the Company by its principal accountants during year fiscal ended December 31, 2006 was $0.

For the Fiscal Year Ended December 31, 2005

Audit Fees:    The aggregate fees, including expenses, billed by the Company’s principal accountants in connection with the audit of our consolidated financial statements for the fiscal year ended December 31, 2005 and for the review of our financial information included in our Annual Report on Form 10-KSB and quarterly reports on Form 10-QSB during the fiscal year ended December 31, 2005 were $52,037.

Audit-Related Fees:    The aggregate fees, including expenses, billed by the Company’s principal accountants for services reasonably related to the audit for the fiscal year ended December 31, 2005 were $15,013.

Tax Fees:    The aggregate fees, including expenses, billed by the Company’s principal accountants for services reasonably related to tax services during the fiscal year ended December 31, 2005 were $17,817.

All Other Fees:    The aggregate fees, including expenses, billed for all other services rendered to the Company by its principal accountants during the fiscal year ended December 31, 2005 was $0.

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The Board of Directors has considered whether the provisions of the services covered above under the captions ‘‘All Other Fees’’ is compatible with maintaining the auditors’ independence.

Audit Committee Approval.

Pursuant to the Audit Committee Charter, only the Audit Committee may select annually the Independent Registered Public Accounting Firm for the Company, subject to stockholder ratification. Only the Audit Committee may replace the Independent Registered Public Accounting Firm. The Audit Committee Charter also requires the Audit Committee to approve the retention of the independent auditors for any non-audit service and the fee for such service. The Audit Committee also approves the scope of the annual audit and the intended fee for such service and the fees for the quarterly reviews of the financial statements in the Forms 10-QSB. The Audit Committee Charter does not permit any delegation of the Audit Committee’s authority to management and sets forth procedures for annual reviews by the Audit Committee of the Independent Registered Public Accounting Firm to determine their qualifications and independence.

With respect to all of the services described under the captions ‘‘Audit-Related Fees,’’ ‘‘Tax Fees’’ and ‘‘All Other Fees,’’ the Audit Committee reviewed in advance the scope of the services to be rendered and determined that the services were compatible with maintaining the independence of Horwath. The Audit Committee approves, by way of a signed engagement letter on an annual basis, all services to be provided by the auditor. These services include the annual audit, the quarterly reviews of Form 10-QSB, other services and advice related to regular SEC filings (including registration statements) and the filing of tax returns. All services provided to the Company in 2006 and 2005 under the captions ‘‘Audit Fees’’, Audit Related Fees’’, ‘‘Tax Fees’’ and ‘‘All Other Fees’’ were approved by the Audit Committee in signed engagement letters for the respective fiscal years.

MISCELLANEOUS

Other Matters

As of the date of this Proxy Statement, we know of no other business that will be presented for consideration at the 2007 Annual Meeting other than the items referred to above. If any other matter is properly brought before the 2007 Annual Meeting for action by stockholders, the persons designated as proxies will vote all shares in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with their best judgment.

ADDITIONAL INFORMATION

Householding

The SEC’s rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement and annual report addressed to those stockholders. This process, which is commonly referred to as ‘‘householding,’’ potentially provides extra convenience for stockholders and cost savings for companies. Some brokers household proxy materials and annual reports, delivering a single proxy statement and annual report to multiple stockholders sharing an address, although each stockholder will receive a separate proxy card. Once you have received notice from your broker that they will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If at any time you no longer wish to participate in householding and would prefer to receive a separate Proxy Statement and annual report, please notify your broker. If you would like to receive a separate copy of this year’s Proxy Statement or Annual Report, please address your request for delivery of this Proxy Statement and/or annual report to Sona Mobile Holdings Corp., 245 Park Avenue, New York, New York 10167, Attention: Corporate Secretary.

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Submission of Proxy Proposals, Nomination of Directors and Other Business of Stockholders

Stockholders interested in presenting a proposal for consideration at the Company’s annual meeting of stockholders in 2007 must follow the procedures found in Rule 14a-8 under the Exchange Act and our Bylaws. To be eligible for inclusion in our 2008 proxy materials, all qualified proposals must be received by our Corporate Secretary no later than 120 days before August 31, 2008. Such proposals should be addressed to Sona Mobile Holdings Corp., 245 Park Avenue, New York, New York 10167, Attention: Corporate Secretary.

Available Information

We file annual, quarterly and periodic reports, proxy statements and other information with the SEC. These filings are available to the public on the Internet at the SEC’s web site, http://www.sec.gov. The SEC’s web site contains reports, proxy statements and other information regarding issuers, like us, that file these reports, statements and other documents electronically with the SEC. You can also read and copy any document we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the SEC’s Public Reference Section at that address. Please call the SEC at 1-800-SEC-0330 for further information regarding the operation of the Public Reference Room.

Incorporation by Reference

The information appearing under Items 6, 7 and 8 of the Company’s Annual Report on Form 10-KSB for the fiscal year ended December 31, 2006 is incorporated herein by reference and deemed part of this soliciting material. Notwithstanding the foregoing, other portions of the Annual Report to stockholders are not part of the Company’s proxy solicitation materials. You should rely only on the information contained in this Proxy Statement. No one has been authorized to provide you with different information.

EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE ANNUAL MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED BUSINESS REPLY ENVELOPE.

BY ORDER OF THE BOARD OF DIRECTORS

Stephen Fellows, Corporate Secretary

Dated:	New York, New York August [    ], 2007

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APPENDIX I (CERTIFICATE AMENDMENT)
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
SONA MOBILE HOLDINGS CORP.
(Pursuant to Section 242 of
the Delaware General Corporation Law)

Sona Mobile Holdings Corp. (the ‘‘Corporation’’), a corporation organized and existing under and by virtue of the Delaware General Corporation Law (the ‘‘DGCL’’), does hereby certify that:

	1.	The Board of Directors of the Corporation unanimously duly adopted resolutions setting forth one (1) proposed amendment (the ‘‘Amendment’’) to the Certificate of Incorporation of the Corporation, as amended (the ‘‘Certificate of Incorporation’’), declaring the Amendment advisability to its stockholders, and directing that the Amendment be considered at the 2007 annual meeting of the stockholders of the Corporation followed by a majority vote in favor of the Amendment by the stockholders at such annual meeting. The Amendment adopted provide as follows:

	•	That the first sentence of Article Fourth of the Certificate of Incorporation would be amended in its entirety to read as follows:

‘‘FOURTH:    The total number of shares of all classes of stock which the Corporation shall have authority to issue is 122,000,000 shares, consisting of 120,000,000 shares of common stock, $.01 par value per share (the ‘‘Common Stock’’), and 2,000,000 shares of preferred stock, $.01 par value per share (the ‘‘Preferred Stock’’).’’

	2.	That the Amendment herein certified has been duly adopted in accordance with the provisions of Section 242 of the DGCL.

	3.	This Certificate of Amendment shall become effective upon the filing hereof in the Office of the Secretary of State of the State of Delaware.

Executed on this     day of     , 2007.

Sona Mobile Holdings Corp.

By:

Shawn Kreloff President and Chief Executive Officer

I-1

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APPENDIX II (REVERSE SPLIT CERTIFICATE AMENDMENT)
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION OF
SONA MOBILE HOLDINGS CORP.
(Pursuant to Section 242 of
the Delaware General Corporation Law)

Sona Mobile Holdings Corp. (the ‘‘Corporation’’), a corporation organized and existing under and by virtue of the Delaware General Corporation Law (the ‘‘DGCL’’), does hereby certify that:

	1.	The name of the Corporation is Sona Mobile Holdings Corp.

	2.	The Board of Directors of the Corporation, by [unanimous written consent pursuant to Section 141(f) of the DGCL] [majority vote at a duly called meeting], duly adopted resolutions setting forth an amendment to the Corporation’s Certificate of Incorporation, as amended (the ‘‘Certificate of Incorporation’’), declaring such amendment to be advisable, that the issued shares of the Corporation’s Common Stock on the date hereof shall be immediately, upon the filing of this Certificate of Amendment, combined into a smaller number of shares of Common Stock in the ratio of              new shares for one old share.

	3.	To accomplish the foregoing, Article Fourth of the Certificate of Incorporation is hereby amended by inserting the following paragraph at the end of Section A thereof:

‘‘5.    Reverse Split.    Each share of the Corporation’s Common Stock issued prior to the date hereof (the ‘‘Old Common Stock’’), will be automatically reclassified as and converted into          new shares of Common Stock (the ‘‘New Common Stock’’). No fractional shares of New Common Stock shall be issued to the holders of record of Old Common Stock in connection with the foregoing reclassification of shares of Old Common Stock. In lieu thereof, the aggregate of all fractional shares otherwise issuable to the holders of record of Old Common Stock shall be issued to the Corporation’s transfer agent, as agent for the accounts of all holders of record of Old Common Stock otherwise entitled to have a fraction of a share issued to them. The sale of all of the fractional interests will be effected by the transfer agent as soon as practicable after the date hereof on the basis of prevailing market prices of the New Common Stock at the time of sale. After such sale and upon the surrender of the stockholders’ stock certificates, the transfer agent will pay to such holders of record their pro rata share of the net proceeds derived from the sale of the fractional interests. Each stock certificate that, immediately prior to the date hereof, represented shares of Old Common Stock shall, from and after the date hereof, automatically and without the necessity of presenting the same for exchange, represent that number of whole shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified (as well as the right to receive cash in lieu of any fractional shares of New Common Stock as set forth above); provided, however, that each holder of record of a certificate that represented shares of Old Common Stock shall receive, upon surrender of such certificate, a new certificate representing the number of whole shares of New Common Stock into which the shares of Old Common Stock represented by such certificate shall have been reclassified, as well as any cash in lieu of fractional shares of New Common Stock to which such holder may be entitled as set forth above.’’

	4.	That this Certificate of Amendment was duly adopted in accordance with the provisions of Section 242 of the DGCL.

	5.	This Certificate of Amendment shall become effective upon the filing hereof in the Office of the Secretary of State of the State of Delaware.

Executed on this        day of            , 200    .

Sona Mobile Holdings Corp.

By:

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SONA MOBILE HOLDINGS CORP.
P R O X Y
FOR ANNUAL MEETING OF THE STOCKHOLDERS
THURSDAY, SEPTEMBER 27, 2007
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Shawn Kreloff and Stephen Fellows, and each of them, with full power of substitution, as proxies to vote the shares which the undersigned is entitled to vote at the Annual Meeting of the Stockholders of Sona Mobile Holdings Corp. to be held in the Valencia Room of the San Carlos Hotel, 150 East 50^th Street, 2^nd floor, New York, NY, on Thursday, September 27, 2007 at 10:00 A.M., Eastern Time and at any adjournments thereof, hereby revoking any proxies heretofore given, to vote all shares of common stock of Sona Mobile Holdings Corp. held or owned by the undersigned as indicated on the proposals as more fully set forth in this Proxy Statement, and in their discretion upon such other matters as may come before the meeting.

Please mark ‘‘X’’ your votes as indicated:

1.

ELECTION OF DIRECTORS: Shawn Kreloff, Robert P. Levy, M. Jeffrey Branman,

FOR election of all nominees

WITHHOLD vote from all nominees

FOR all nominees,

EXCEPT for nominee(s) listed below from whom vote is withheld.

2.

To approve an amendment to our Certificate of Incorporation that would increase the number of shares of our authorized shares of common stock to 120,000,000.

FOR

AGAINST

ABSTAIN

3.

To grant to our board of directors discretionary authority to amend our Certificate of Incorporation to effect a reverse stock split of our common stock at a ratio within the range from one-for-three to one-for-ten at any time prior to December 31, 2008.

FOR

AGAINST

ABSTAIN

4.

Approval of the appointment of Horwath Orenstein LLP as our auditors for 2007.

FOR

AGAINST

ABSTAIN

(Continued, and to be signed, on the Reverse Side)

FOLD HERE

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THIS PROXY WHEN PROPERLY SIGNED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 THROUGH 4.

The undersigned hereby acknowledges receipt of the Notice of, and Proxy Statement for, the aforesaid Annual Meeting.

			Dated:						, 2007
			Signature of Stockholder
			Signature of Stockholder
			NOTE:  When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by an authorized person.
			IMPORTANT – PLEASE FILL IN, SIGN AND RETURN PROMPTLY USING THE ENCLOSED ENVELOPE.

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