UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D. C. 20549





FORM
      10-KSB


(Mark
      One)





[X]
      ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended September 30, 2007





[  ]
      TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
      OF
      1934




For
      the
      transition period from ________ to ________





Commission
      File Number 001-32882





O2
      SECURE WIRELESS, INC.


(Name
      of
      small business issuer in its charter)





Georgia
            
            45-0526044(State
                or other jurisdiction of incorporation of organization)
            
            (I.R.S.
                Employer Identification
                No.)





4898
      South Old Peachtree Road, NW, Suite 150


Norcross,
      Georgia 30071


(Address
      of principal executive offices) (Zip Code)





Issuer’s
      telephone number: (678) 942-0684





Securities
      registered under Section 12(b) of the Exchange Act: None





Securities
      registered under Section 12(g) of the Exchange Act:


Common
      Stock, at no par value


(Title
      of
      class)





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




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB.




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).
      Yes  ___  No  X




The
      issuer’s revenues for its most recent fiscal year: $437,707.







The
      aggregate market value of the shares of Common Stock held by non-affiliates
      of
      the Registrant, as of January 15,
      2008 was $5,332,431 based upon the closing bid price of $0.19 per share
      as reported by the trading and market services of the OTC Bulletin
      Board.




As
      of
      January 15, 2008, the Registrant had outstanding 28,065,424 shares of its Common
      Stock, no par value.




Transitional
      Small Business Disclosure Format (check one): Yes [__]; No [X]







TABLE
                OF
                CONTENTSPART
                IITEM
                1.
            DESCRIPTION
                OF
                BUSINESS
            1ITEM
                2.
            DESCRIPTION
                OF
                PROPERTY
            6ITEM
                3.
            LEGAL
                PROCEEDINGS
            6ITEM
                4.
            SUBMISSION
                OF MATTERS TO A VOTE OF
                SECURITY HOLDERS
            6PART
                IIITEM
                5.
            MARKET
                FOR COMMON EQUITY AND
                RELATED STOCKHOLDER MATTERS
            7ITEM
                6.
            MANAGEMENT'S
                DISCUSSION, ANALYSIS,
                PLAN AND RESULTS OF OPERATIONS
            8ITEM
                7.
            FINANCIAL
                STATEMENTS
            10ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH
                ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
            10ITEM
                8A.
            CONTROLS
                AND
                PROCEDURES
            11ITEM
                8B.
            OTHER
                INFORMATION
            11PART
                IIIITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS,
                PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
                EXCHANGE ACT
            12ITEM
                10.
            EXECUTIVE
                COMPENSATION
            14ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN
                BENEFICIAL OWNERS AND MANAGEMENT
            14ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED
                TRANSACTIONS
            15ITEM
                13.
            EXHIBITS
                AND REPORTS ON FORM
                8-K
            17ITEM
                14.
            PRINCIPAL
                ACCOUNTANT FEES AND
                SERVICES
            18













Forward
      Looking
      Statements





This
      Annual Report on Form 10-KSB
      includes forward looking statements within the meaning of Section 27A of the
      Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
      Act of 1934, as amended (“Forward Looking Statements”). All statements other
      than statements of historical fact included in this report are Forward Looking
      Statements. In the normal course of its business, the Company, in an effort
      to
      help keep its shareholders and the public informed about the Company’s
      operations, may from time-to-time issue certain statements, either in writing
      or
      orally, that contains or may contain Forward-Looking Statements. Although the
      Company believes that the expectations reflected in such Forward Looking
      Statements are reasonable, it can give no assurance that such expectations
      will
      prove to have been correct. Generally, these statements relate to business
      plans
      or strategies, projected or anticipated benefits or other consequences of such
      plans or strategies, past and possible future, of acquisitions and projected
      or
      anticipated benefits from acquisitions made by or to be made by the Company,
      or
      projections involving anticipated revenues, earnings, levels of capital
      expenditures or other aspects of operating results. All phases of the Company
      operations are subject to a number of uncertainties, risks and other influences,
      many of which are outside the control of the Company and any one of which,
      or a
      combination of which, could materially affect the results of the Company’s
      proposed operations and whether Forward Looking Statements made by the Company
      ultimately prove to be accurate. Such important factors (“Important Factors”)
      and other factors could cause actual results to differ materially from the
      Company’s expectations are disclosed in this report. All prior and subsequent
      written and oral Forward Looking Statements attributable to the Company or
      persons acting on its behalf are expressly qualified in their entirety by the
      Important Factors described below that could cause actual results to differ
      materially from the Company’s expectations as set forth in any Forward Looking
      Statement made by or on behalf of the Company.





In
      addition to historical information, the following discussion of the Company's
      business (as well as the letter to stockholders from the Company's chairman
      and
      chief executive officer sent to stockholders with this Annual Report on Form
      10-KSB) contains forward-looking statements. These forward-looking statements
      involve risks, uncertainties and assumptions. The actual results may differ
      materially from those anticipated in these forward-looking statements as a
      result of many factors, including but not limited to, those discussed in the
      sections in this Annual Report on Form 10-KSB entitled “Risk Factors,” and
“Management’s Discussion and Analysis or Plan of Operations of Financial
      Condition and Results of Operations.” Readers are cautioned not to place undue
      reliance on these forward-looking statements, which reflect management's
      opinions only as of the date hereof. O2 Secure Wireless, Inc. (“O2” or the
“Company”) undertakes no obligation to revise or publicly release the results of
      any revision to these forward-looking statements. Readers should carefully
      review the risk factors described in this document as well as in other documents
      the Company files from time to time with the Securities and Exchange Commission,
      including the Quarterly Reports on Form 10-QSB to be filed by the Company in
      fiscal year 2008.







PART
      I.






ITEM
      1.  DESCRIPTION OF BUSINESS







General


O2
      Secure
      Wireless, Inc. (“O2,” “O2 Secure Wireless,” we, us, our, or the “Company”) was
      established as a Georgia Corporation on October 29, 2003 as an Internet
      communications company providing high-speed wireless broadband products and
      services  to residents within high-density residential communities,
      mobile professionals,  as well as to companies that support these
      customers. Entering our fourth year of business, O2 has established itself
      as
      one of the premier wireless internet service providers within
      its


1


vertical
      of large scale wireless internet services.  O2 designs, engineers,
      deploys and maintains wireless internet products that are offered to its primary
      customers.





Our
      principal place of business is located at 4898 South Old Peachtree Road, NW,
      Suite 150, Norcross, GA 30071. Our telephone number is (678)
      942-0684.








Principal
      Products and
      Services





Wi-Fi
      Services





The
      Company’s primary line of business and service offering is the design,
      deployment and maintenance of fixed-location wireless internet services, which
      can be considered large-scale wireless internet infrastructures that cover
      the
      entirety of an installed “property,” or community.  These
      infrastructures, deployed on high-density residential communities, such as
      apartment and condominium communities and educational institutions, provide
      wireless internet via “Wi-Fi,” based on the industry standard IEEE 802.11b, to
      residents and users who reside within these communities.





Our
      customers are typical “Class A” high-quality residential multiple-dwelling unit
      (MDU) property management companies, Real estate investment trusts (REITs),
      and
      educational institutions.  Most of our customers are geographically
      located in the South-Eastern United States, and they provide the majority of
      the
      Company’s revenues.





Mobile
      Services





To
      compliment the Company’s fixed-location Wi-Fi wireless services, we also offer
“O2 Anywhere” mobile wireless internet services to mobile professionals and
      customers “on-the-go.”





Under
      a
“white-label” agreement with a large, national wireless telecommunications
      corporation that provides cellular and mobile data services, O2 Secure Wireless
      has the ability to re-sell, under its own brand, mobile broadband products
      and
      services.





These
      service offerings are dependent on cellular coverage in the area in which the
      customer may travel.





Utilizing
      adapters for embedded devices or personal computers and laptops, called
“AirCards,” O2 Secure Wireless provides customers with the ability to be online
      in areas without traditional Wi-Fi internet services.  These adapters
      provide broadband, high-speed wireless internet connections to customers while
      traveling and in remote locations.





Our
      REACTOR product extends the capabilities of these AirCards by using them in
      concert with a Wi-Fi bridge, to broadcast wireless internet to the majority
      of
      computers already equipped for traditional Wi-Fi equipment. The REACTOR was
      designed as an all-in-one product and service offering to allow transportation
      providers and remote market customers the ability to provide wireless internet
      to their customers in the absence of traditional wire-line broadband wireless
      services and to replace cost-prohibitive internet alternatives.





Markets
      for these AirCards are individual mobile professionals or companies with a
      mobile workforce. The REACTOR is marketed and sold to providers of
      transportation services such as limousines, motor coaches and commuter bus
      lines.





2








Risk
      Factors





Competition





The
      specific market in which we primarily compete, large scale community wireless
      internet services, is a small niche market with a handful of similar-sized
      companies that generally have small geographic footprints. Many of the companies
      who were competitors in the past have gone out of business and some have been
      acquired by their investment groups or other companies. If one or several of
      these smaller competitors were to grow at a rate substantially higher than
      us,
      we could foreseeably encounter competitive difficulties when selling our
      services to our customers. However, to date, we have encountered few barriers
      to
      competition created by these specific-market competitors, and we continue to
      seek partnerships and other opportunities with these companies to grow our
      business and further enhance our own service offerings.





Within
      the specific market in which we compete, there are a number of companies that
      will have no desire to enter into strategic partnerships with us, and those
      companies can provide substantial difficulty in establishing new customers
      if we
      are confronted directly with them. Our potential customers have in the past
      submitted requests for proposals (RFP’s), where our merits are directly compared
      to those of our competition.  In such instances, we maintain
      competitive advantages with these other companies, but we may not win such
      new
      customers due to our increased costs for implementing our products and services
      in locations not geographically convenient to our operations.





The
      general market, in which our services compete, Wireless and mobile internet
      access services, is comprised generally of large wireless telecommunications
      carriers, such as AT&T Wireless, Sprint and Verizon Wireless, or well-funded
      start-ups such as ClearWire.  Other competitors in this general market
      are providers of small “Hotspot” services to retail and restaurant outlets such
      as Boingo and Wandering Wi-Fi.  Our common competitors in this general
      market offer similar services at competitive prices.  Some of these
      competitors are large national carriers, while others have large geographic
      footprints and lucrative partnerships.  We do not focus our sales
      efforts into these markets where the competition level is high, instead we
      focus
      our resources into the more specific markets where we excel in both service
      offering and pricing.


The
      market to which we offer our services is the internet access service market.
      Our
      major competitors in this market are also our own data service and bandwidth
      providers, such as AT&T and Time Warner.  Although these
      competitors are large, national service providers, their services are limited
      to
      single locations where customers would reside, and do not provide the
      flexibility, simplicity of use, or lower costs that our services guarantee
      in
      the same locations.  The services they provide to residential users,
      for example, is a much lower-caliber service, providing lower speeds and higher
      latency than the higher-class of service, fiber-optic network service, which
      we
      utilize to deliver services to each deployed property.





If
      we
      intended to pursue the markets where the competition level is high, we would
      likely need to expend a large amount of resources to compete effectively. Under
      our current operation procedures and strategy, this pursuit will not be engaged
      until we are able to substantially increase our revenues, merge with similar
      companies into a larger conglomeration, or raise additional operating capital
      to
      fund such an endeavor.





Going
      Concern





We
      have experienced a net loss of
      $854,340 for the fiscal year ended September 30, 2007. We do not expect these
      losses to continue but it is uncertain when, if ever, we will become profitable.
      Our


3


Independent
      Auditor has included a
      paragraph as to their substantial doubt of our ability to continue as a going
      concern for the years ended September 30, 2007 and 2006,
      respectively.





Market
      Prices of our Equity Securities
      can Fluctuate Significantly





The
      market price of our shares of common
      stock may change significantly in response to various factors and events beyond
      our control, including the following: the risk factors described in this annual
      report; changing demand for our products and services; our results from
      operations; general conditions in markets we operate in; general conditions
      in
      the securities markets; issuance of a significant number of shares, whether
      pursuant to this offering on behalf of the selling shareholder, for compensation
      under employee stock options, conversion of debt, acquisitions, additional
      financing or otherwise.


Dividends
      Unlikely on our Common
      Stock





We
      do not expect to pay cash dividends
      on our common stock for the foreseeable future. The payment of dividends, if
      any, will be contingent upon our future revenues and earnings, capital
      requirements and general financial condition. The payment of any cash dividends
      will be within the discretion of our board of directors. It is our intention
      to
      retain all earnings for use in the business operations and, accordingly, we
      do
      not anticipate that we will declare any dividends on our common stock in the
      foreseeable future.





Limited
      Trading Market for our Common
      Stock





Our
      common stock is subject to quotation
      on the NASDAQ OTCBB. There has only been limited trading activity in our Common
      Stock. There can be no assurance that a more active trading market will commence
      in our securities as a result of increasing operations. Further, in the event
      that an active trading market commences, there can be no assurance as to the
      level of any market price of our shares of common stock, whether any trading
      market will provide liquidity to investors, or whether any trading market will
      be sustained.




Regulation




Internet-based
      communication services generally are not subject to federal fees or taxes
      imposed to support programs such as universal telephone service. Changes in
      the
      rules or regulations of the U.S. Federal Communications Commission or in
      applicable federal communications laws relating to the imposition of these
      fees
      or taxes could result in new and significant operating expenses for the Company,
      and could negatively impact our business. Any new law or regulation, U.S. or
      foreign, pertaining to internet-based communications services, or changes to
      the
      application or interpretation of existing laws, could decrease the demand for
      our services, increase our cost of doing business or otherwise harm our
      business.





There
      are
      an increasing number of laws and regulations pertaining to the internet. These
      laws or regulations may relate to taxation and the quality of products and
      services. Furthermore, the applicability to the internet of existing laws
      governing intellectual property ownership and infringement, taxation,
      encryption, obscenity, libel, employment, personal privacy, export or import
      matters as well as other issues are uncertain and it is impossible for us to
      know how the application of these laws may affect us. Some of these laws may
      not
      contemplate or address the unique issues of the internet and related
      technologies. Changes in laws or new laws intended to address these issues
      could
      create uncertainty in the internet market, which could reduce demand for our
      services, increase our operating expenses or increase our litigation
      costs.





Intellectual
      Property


4


We
      rely
      on a combination of trademark, copyright, trade secret laws and disclosure
      restrictions to protect our intellectual property rights. We also enter into
      confidentiality and proprietary rights agreements with our employees,
      consultants and other third parties. We also control access to software,
      documentation and other proprietary information.





"O2
      Secure Wireless" is a trade name that we use, and we have filed a federal
      trademark application with respect to that name. Until we receive confirmation
      on the receipt of an official trademark from the United States Patent and
      Trademark Office (USPTO), we rely upon our common law trademark rights with
      respect to that trade name. “Using the Air to Share” is a registered and
      assigned trademark with the USPTO assigned to O2 Secure Wireless,
      Inc.





If
      a
      claim is asserted that we have infringed the intellectual property of a third
      party, we may be required to seek licenses to that technology. In addition,
      we
      license third-party technologies that are incorporated into our services,
      including off-the-shelf software as well as software code to monitor our network
      access components.





Licenses
      from third party technologies may not continue to be available to us at a
      reasonable cost, or at all. Additionally, the steps we have taken to protect
      our
      intellectual property rights may not be adequate. Third parties may infringe
      or
      misappropriate our proprietary rights. Competitors may also independently
      develop technologies that are substantially equivalent or superior to the
      technologies we employ in our services. If we fail to protect our proprietary
      rights adequately, our competitors could offer similar services, potentially
      significantly harming our competitive position and decreasing our
      revenues.





Employees





As
      of September 30, 2007, the Company
      has five full-time employees, and two commissions-only sales
      agents.





The
      future success of O2 Secure
      Wireless, Inc. is substantially dependent on the performance of its senior
      management and key engineering personnel.  These individuals have
      acquired specialized knowledge and skills with respect to O2 and its
      operations.  If any of these individuals were to leave the Company
      unexpectedly, we could face substantial difficulty in hiring qualified
      successors and could experience a loss in productivity while any such successor
      obtains the necessary training and experience.  We anticipate
      difficulty in hiring personnel with the correct training and experience, and
      we
      will be required to train new hires in all areas of the company’s operations,
      which may decrease productivity during these hiring periods.





We
      do not maintain “key person” life
      insurance for any of our personnel.





We
      believe that we have an excellent
      relationship with our employees, and we have not suffered any labor problems
      during the last three years.





Dependence
      on a Few Major Customers





At
      the
      end of fiscal year 2006, over half of our customers were apartment complexes
      owned by one customer. We obtained other customers in fiscal year 2007, however
      this one customer continues to represent a significant amount of our revenues,
      the loss of which would have a material impact on our
      operations.


5


ITEM
      2.DESCRIPTION OF PROPERTY





We
      lease approximately 3,000 square feet
      of office space at4898 S.
      Old Peachtree Rd NW, Suite 150,Norcross,GA,30071.  The
      term of this lease is
      from January 1, 2007 until December 31, 2011, and provides for a monthly base
      rent of $3,750 in the first year, and higher amounts in subsequent
      years.  We have a five year renewal option on this
      space.





During
      the First Quarter of Fiscal Year
      2007, from October 1, 2006 through December 31, 2006, we leased approximately
      2,200 square feet of office space at3300 Holcomb Bridge Rd,
      Suite
      226,Norcross,GA,30092,
      pursuant to an Office Lease Agreement
      dated December 9, 2004.  Base rent for this period was $2,287 per
      month until the lease was cancelled on December 31, 2006.







ITEM
      3.  LEGAL PROCEEDINGS







We
      are not, nor have we been since our
      inception, a party to any legal proceedings, as required to be reported upon
      by
      the Company in response to this Item 3.







ITEM
      4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS







No
      matters were voted upon by the
      stockholders during the fourth quarter of the fiscal year 2007, as required
      to
      be reported upon by the Company in response to this Item
      4.


6




PART
      II.






ITEM
      5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS









Our
      common stock is registered with the
      United States Securities and Exchange Commission under 12(g) of the Securities
      Exchange Act of 1934.  On July 27, 2006, our commons stock began
      trading on the OTC Bulletin Board under the symbol “OTOW.”  The
      following table summarizes the low and high prices for the Company’s common
      stock for each quarter of fiscal year ending 2007, during which our common
      stock
      had been traded.




2007High
            LowFirst
                Quarter
            $1.01
            $0.40Second
                Quarter
            $0.99
            $0.35Third
                Quarter
            $0.35
            $0.10Fourth
                Quarter
            $0.70
            $0.10





The
      abovequotation,
      reflectsinter-dealer
      prices, without retail
      mark-up, mark-down or commission and may not represent actual
      transactions.





There
      were 491 shareholders of record of
      the common stock as of October 8, 2007. This number does not include an
      indeterminate number of shareholders whose shares are held by brokers in "street
      name."





The
      Company has not declared any cash
      dividends on its Common Stock during its fiscal years ended on September 30,
      2007, 2006 or 2005. The board of directors of the Company has made no
      determination to date to declare cash dividends during the foreseeable future,
      and is not likely to do so.  There are no restrictions on the
      Company's ability to pay dividends.





The
      Company's common stock is subject to
      rules adopted by the Securities and Exchange Commission ("Commission")
      regulating broker dealer practices in connection with transactions in "penny
      stocks." Those disclosure rules applicable to "penny stocks" require a broker
      dealer, prior to a transaction in a "penny stock" not otherwise exempt from
      the
      rules, to deliver a standardized disclosure document prepared by the Commission.
      That disclosure document advises an investor that investment in "penny stocks"
      can be very risky and that the investor's salesperson or broker is not an
      impartial advisor, but rather paid to sell the shares. The disclosure contains
      further warnings for the investor to exercise caution in connection with an
      investment in "penny stocks," to independently investigate the security, as
      well
      as the salesperson the investor is working with and to understand the risky
      nature of an investment in this security. The broker dealer must also provide
      the customer with certain other information and must make a special written
      determination that the "penny stock" is a suitable investment for the purchaser,
      and receive the purchaser's written agreement to the transaction. Further,
      the
      rules require that, following the proposed transaction, the broker provide
      the
      customer with monthly account statements containing market information about
      the
      prices of the securities.  These disclosure requirements may have the
      effect of


7


reducing
      the level of trading activity
      in the secondary market for the Company's common stock. Many brokers may be
      unwilling to engage in transactions in our common stock because of the added
      disclosure requirements, thereby making it more difficult for stockholders
      to
      dispose of their shares.





Securities
      Issued in Unregistered Transactions





In
      October 2006, we issued 100,000 restricted common shares to an investor in
      settlement of a $30,000 debt. On August 22, 2007, 350,000 restricted common
      shares were purchased by an individual for $75,000 in cash.





Issuer
      Purchases of Equity
      Securities





During
      the quarter ended September 30,
      2007, the Company did not repurchase any shares of its common
      stock.







ITEM
      6.  MANAGEMENT’S DISCUSSION, ANALYSIS, PLAN AND RESULTS OF OPERATIONS







Plan
      of Operations





The
      Company’s revenues are derived
      principally from the sale of wireless internet service “amenity packages” and
      credit-card subscriptions.  The initial deployment model offered by
      the Company required an initial outlay of capital to deploy, support and
      maintain each wireless property and solicitation of customers from the residents
      of that location.  This initial model was similar to those provided by
“traditional” hotspot providers.  We continue to derive monthly
      recurring service revenues from this model.





In
      early
      fiscal year 2006 the Company determined that although the original model was
      providing exceptional services with high-customer satisfaction, the capital
      requirements to deploy used substantial investment by the Company to install
      hardware on each property to provide services.  The Company felt an
      alternative model should be pursued to determine if a more efficient
      return-on-investment was feasible.  The Company designed its “Amenity
      Plan” model to fulfill this pursuit.  Instead of soliciting individual
      subscribers on each property for monthly credit-card subscriptions, the Company
      would instead sell wholesale internet services directly to the property
      management company at a fixed, per-unit rate per month.





The
“Amenity
      Model” would therefore
      provide a more consistent cash-flow for the Company, due to the fixed nature
      of
      each property’s unit count, with no financial detriment due to subscriber or
      resident turnover.








A
      further
      modification to the deployment model came in fiscal year 2007. The Company
      was
      initially hesitant to require that customers pay for the deployment costs of
      the
      wireless infrastructures required on their properties to offer
      service.  Few, if any, companies had successfully provided wireless
      internet services to residential communities in the past, and the Company’s
      management felt that its customers would be less inclined to cover a large
      up
      front installation cost.  In fiscal year 2007, Sales and Marketing
      created a strategy that demonstrated financial benefit to customers who paid
      the
      up-front installation costs for their properties.  Relieving the
      Company of this financial obligation to complete a wireless infrastructure
      deployment continues to shorten the time for
      return-on-investment.


8


Mid-way
      through fiscal year 2007, additional expense models were being researched by
      Management to determine additional operational efficiencies.  Each new
      property being installed by the Company was becoming more and more efficient
      on
      a cost-per-unit basis.  The Company was able to streamline and create
      a turn-key process for implementing, deploying and maintaining its community
      wireless deployments.  However, it was recognized that the Company’s
      expense structure did not allow for sustainable operations at its then-current
      level, in spite of continued success in reducing installation
      costs.





Results
      of Operations





During
      the years ended September 30, 2007 and 2006, we generated $437,707 and $211,695
      of revenues, respectively, and incurred net losses of ($854,340) and ($846,661),
      respectively. During the year ended September 30, 2007, we were receiving
      revenues from seventeen operational networks versus six during the prior year.
      Our net loss for our 2007 fiscal year did not decrease in line with our revenue
      increase due to increased operational and administrative costs that we incurred
      to support the significant increase in business activity between
      years.





Significant
      expenses during the years ended September 30, 2007 and 2006 were as
      follows:





Professional
      fees represent expenses necessary for outside accounting, audit, legal and
      transfer agent fees, a majority of which relates to regulatory compliance.
      The
      increase in these expenses for the year ended September 30, 2007 reflect both
      the increase in operational tempo during that year in addition to regulatory
      reporting costs incurred from the Company’s SEC registration
      process.




Capitalized
      material and labor costs for network installations were $119,810 and $157,447
      during the years ended September 30, 2007 and 2006, respectively. During the
      year ended September 30, 2007, we completed nine installation projects in
      Chattanooga, Tennessee, Austin, Texas, and Atlanta, GA. During the year ended
      September 30, 2006, we completed three installation projects in Tampa, Florida
      and Atlanta, Georgia.





As
      described in the Company’s 10Q-SB filing for Q3 2007, from August 13, 2007, the
      Company needed to alter its expense structure to continue operations without
      reducing staff levels or degrading its level of service to its
      customers.  Examples of modifications of the Company’s expense
      structure included partial or full deferral of officer compensation, elimination
      of non-essential services, liquidation of non-essential component stock
      hardware, the removal of the “Subscription Model” for new deployments, as well
      as a general reduction in Company-provided capital outlay for new
      installations.


Liquidity
      and Capital
      Resources





To
      date, we have financed our operations
      from the sale of common stock to a foreign investor under Regulation
      S.  Our agreement to sell shares of common stock to the foreign
      investor has expired, and we currently do not have any agreement to obtain
      additional capital from any entity.For the fiscal year endedSeptember
      30, 2006, we raised $995,790
      net of offering
      costs from the sale of 3,413,448shares of common stock
      to the foreign
      investor.For the fiscal
      year ended September 30, 2007, we raised $75,000 from the sale of 350,000 shares
      of common stock.





At
      September 30, 2007, we had working
      capital deficit of $304,863. Our working capital is currently insufficient
      for
      us to fully implement our business plan and our commitment to breakeven as
      outlined in our most recent Regulation S offering.  Our principal
      business plan involves the installation of wireless Internet systems in
      multifamily properties at our expense, including all parts and labor associated
      with the systems, and we also sell network components.  On the first
      systems we installed, our revenues came from the sale of Internet service to
      residents who subscribed to our service.  On the latest systems
      we


9


installed,
      and most future systems we
      install, our revenues will come from a flat fee charged the owner of the
      property.  The present level of gross profit on subscriptions and
      component sales are insufficient to enable us to cover our recurring operating
      expenses unless such levels are dramatically increased.





Therefore,
      we must install many more
      systems and sell substantially more network components in order for us to
      achieve a breakeven level of operations.  We will be unable to achieve
      this goal in the near term, and beyond that, we will need substantial additional
      capital as our installations generate negative cash flows until such time as
      they individually reach breakeven level of subscriptions or guaranteed revenues
      from the owner, as applicable.





We
      believe our current working capital
      is insufficient to both sustain our current operations and planned growth only
      through March 2008.  We
      are currently using
      capital at an average monthly rate of $63,000 for operating expenses per month,
      although the actual monthly cash outlay varies.  In addition, we must
      incur additional capital expenditures with each system that we
      install.  This rate will accelerate significantly over the following
      twelve months if we reach agreements to install systems in the number of
      properties that we have projected in our business plan. Beginning in April
      2006,
      we took measures to decrease our use of capital for operating expenses. These
      measures also included deferring officer salaries in excess of $6,600 per
      month.





We
      project additional working capital
      needs of $300,000, exclusive of funds currently on hand, to fund our planned
      operations for the following twelve month period. To satisfy our future working
      capital needs, we are actively working with our existing investors to continue
      their support. We will continue to try to raise sufficient capital to meet
      our
      liquidity needs until we achieve profitable operations, because there is no
      contractually committed capital from these investors upon which we can rely.
      To
      date, we have relied upon investment proceeds to satisfy our working capital
      requirements.  In the event we experience delays in raising additional
      capital, we plan to continue reducing our recurring cash outlay by deferring
      officer salaries, as well as reducing the rate of our planned installations
      as
      necessary in order to maintain adequate cash funds.





Off-Balance
      Sheet
      Arrangements





The
      Company does not have any
      off-balance sheet arrangements that are reasonably likely to have a current
      or
      future effect on our financial condition, changes in financial condition,
      revenues or expenses, results of operations, liquidity, capital expenditures
      or
      capital resources that are material to investors.







ITEM
      7.  FINANCIAL STATEMENTS




The
      financial statements required by
      item 310 of Regulation S-B are attached hereto asExhibit
      A.







ITEM
      8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE







Incorporated
      by reference from the
      information under the captions “Changes in Registrant’s Certifying Accountant”
and “Letter from Braverman International, P.C.” in the Registrant’s Current
      Report Form 8-K dated November 16, 2007.











10




ITEM
      8A.
      CONTROLS AND PROCEDURES


The
      Company’s chief executive officer  has evaluated the Company’s
      disclosure controls and procedures as defined in Rule 13a-15(e) of the
      Securities Exchange Act of 1934 as of September 30, 2007, and within the 90
      day
      period prior to the filing of the report and has concluded that these controls
      were ineffective to ensure that information required to be disclosed by the
      Company in the reports that it files or submits under the Securities Exchange
      Act is recorded, processed, summarized and reported within the time periods
      specified in the SEC’s rules and forms. This conclusion is based upon the number
      and magnitude of the year end adjusting entries and additional financial
      reporting disclosures identified by our independent accountants.





There
      have been no changes in internal
      control over financial reporting that occurred during the last fiscal year
      or
      subsequent to our chief executive’sevaluation
      that have
      materially affected, or are reasonably likely to materially affect our internal
      controls over financial reporting.










ITEM
      8B. OTHER INFORMATION







None.


11




PART
      III.






ITEM
      9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH
      SECTION 16(a) OF THE EXCHANGE ACT









The
      following are our executive officers
      and directors and their respective ages and positions as of January 15,
      2008:




Name
                and
                Address
            Age
            PositionCraig
                C.
                Sellars
            30
            Chief
                Executive Officer, President
                and DirectorKeith
                A.
                Greaves
            65
            Secretary
                and
                DirectorIndiaCreery
            45
            External
                Acting Chief Financial
                Officer







Below
      are biographies of our executive
      officers as of January 15, 2008:




Craig
      C.
      Sellars.  Mr.
      Sellars was elected by the Company’s Board of Directors as our Chairman,
      President and Chief Executive Officer in July 2007 replacing T. Scott Conley,
      former Chairman and CEO.  Prior to this, Mr. Sellars served as the
      Company’s Chief Information Officer from January 2005 to July 2007 and was
      appointed to the Board of Directors in April of 2006. Mr. Sellars' has over
      twelve years experiencein
      business development, internet application development,
      wireless application, andWi-Fiplanning, development
      and
      implementation. Mr. Sellars holds a Bachelor of Science degree in Computer
      Science from Georgia Institute of Technology, and is currently pursuing a
      Masters of Business Administration degree fromGeorgiaStateUniversity.  From
      June 1998 to January
      2001, Mr. Sellars was an engineer at VerticalOne Corporation, where he
      contributed to VerticalOne's development of Internet technology for its online
      account management services used by Yahoo!, MSN, AOL, Bank of America and Wells
      Fargo, among others.  Starting in 1999, he spearheaded the planning,
      development and deployment of VerticalOne's wireless data services to PDAs
      and
      cell phones.  In 2001, he participated in the formation of Netconx
      D&C Wireless, LLC, which was formed to sell and install wireless networking
      technology to the hospitality, residential and municipal markets, and he served
      as their Executive Vice President until joining O2 Secure Wireless,
      Inc.




Keith
      A. Greaves,
      CFA.Mr. Greaves is one of
      our founders, and has served as a director since inception (October 29,
      2003).  Mr. Greaves holds a Bachelors Degree in industrial engineering
      fromNew YorkUniversity,
      and an MBA in Finance and Accounting
      fromIndianaUniversity.
      He is a Chartered Financial Analyst
      (CFA), and is a former president of the Atlanta Society of Financial
      Analysts.  Mr. Greaves has over 35 years of experience in finance and
      business development.  From June 1985 to September 1995, Mr. Greaves
      founded and served as president of Greaves Capital Management Inc., an asset
      management company for institutional investors.  From 1995 to October
      2003, Mr. Greaves served as securities analyst for various brokerage firms,
      including Thomas Securities and The Malachi Group, Inc. Mr. Greaves has prior
      educational and work experience in the area of financial accounting but not
      in
      the area of public company reporting.  From October 2003 to September
      2006, Mr. Greaves served as our Chief Financial Officer.  Mr. Greaves
      is currently employed by Anchor Partners.




12


IndiaCreery.Ms.
      Creery has served as our controller
      since February 2006, and our External Acting Chief Financial Officer since
      July
      2006.  Ms. Creery has over 20 years of finance, accounting, and
      operations / administration experience in diverse industries, including real
      estate, retail, wholesale distribution, financial services and manufacturing.
      From October 2002 to January 2006, Ms. Creery was controller for New South
      Commercial Properties and related entities.  Ms. Creery has been
      involved with various start -up companies as an accounting
      consultant, as well as business consultant in all areas of operations. Ms.
      Creery currently serves on many boards and is active with local charities within
      her community.  Ms. Creery holds a degree in Business Administration
      fromTennesseeTempleUniversity.




There
      are no family relationships among
      any of the officers or directors of the Company.




None
      of the above directors and
      executive officers have been involved in any legal proceedings as listed in
      Regulation S-B, Section 228.401(d).




Board
      of Directors




Our
      board currently consists of two
      directors. The current directors are Keith A. Greaves and Craig C. Sellars.Our directors hold office
      until the next annual meeting of the shareholders and until their successor(s)
      have been duly elected or qualified.




Board
      Committees




We
      have a
      compensation committee as required by the Employee Equity Compensation Plan
      adopted by the Board and Shareholders. We do not currently have an audit
      committee, or any other committee, except as noted above. We plan to form an
      audit committee when we have at least two independent directors. We are in
      the
      process of interviewing potential candidates, including those who could serve
      in
      the role of financial expert.





Compensation
      of
      Directors




We
      do not currently pay any compensation
      to our directors other than reasonable expenses incurred in connection with
      providing services as a director.




Section
      16(a)
      Compliance




Based
      on the Company’s review of filings
      received by it, the Company believes that certain persons may not have filed
      certain forms required by Section 16 of the Securities Exchange Act of 1934,
      as
      follows: Craig C. Sellars, T. Scott Conley and India Creery have not filed
      a
      current Form 5 for the current year.  Mr. Keith A. Greaves has not
      filed a Form 3 Initial Statement of Beneficial Ownership, even though he is
      required to do so.




Code
      of Ethics




The
      Board of Directors has not formally
      adopted a Code of Business Conduct and Ethics.




13




ITEM
      10.  EXECUTIVE COMPENSATION









Name
                and Principal Position
            Year
            Salary
                $Craig
                C. Sellars, President, CEO Director (1)
            2007
            $80,0002006
            $80,0002005
            $109,4492004
            $29,516Keith
                A. Greaves, Director (2)
            2007
            $02006
            $60,0002005
            $109,4492004
            $9,750India
                C. Creery, External Acting CFO (3)
            2007
            $54,9292006
            $6,667





(1)
      Mr. Sellars’ compensation for 2007
      consists of his salary as defined in his employment agreement under which he
      is
      entitled to an annual salary of $80,000 per year.  Mr. Sellars has
      voluntarily deferred payment of his salary since April 1,
      2007.





(2)
      Mr. Greaves’ compensation for 2006
      consists of his salary from October 1, 2005 to June 30, 2006, when he took
      a
      leave of absence, under an employment agreement under which he was entitled
      to
      an annual salary of $80,000 per year.





(3)
      Ms. Creery received compensation as
      a non officer from February 2006 through September 2006. Ms. Creerys’
compensation as an officer consists of salary from October 2006 to June 2007,
      when six months after accepting the position as interim CFO for the Company
      replacing then CFO, Keith Greaves. Ms. Creery became an independent consultant
      with O2 Secure Wireless in June 2007.





The
      Company did not grant any options or
      stock appreciation rights,or
      make an award under any long-term
      incentive plan to any of its named executive officers during the last fiscal
      year.  The Company did not reprice any options or stock appreciation
      rights during the last fiscal year. None of the Company's named executive
      officers exercised any options or stock appreciation rights during the last
      fiscal year.






ITEM
      11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT







The
      following table contains information about the beneficial ownership of our
      common stock as of October 8, 2007, for:





(i)Each
person
      who beneficially owns more than
      five percent of our common stock;




(ii)Eachof our directors;




(iii)Thenamed executive officers;
      and




14


(iv)Alldirectors and executive officers as a
      group.




As
      used in the table below and elsewhere
      in this report, the termbeneficial
      ownershipwith respect to a security
      consists of sole or shared voting power, including the power to vote or direct
      the vote and/or sole or shared investment power, including the power to dispose
      or direct the disposition, with respect to the security through any contract,
      arrangement, understanding, relationship, or otherwise, including a right to
      acquire such power(s) during the next 60 days following the date of this report.
      Except as otherwise indicated, the shareholders listed in the table have sole
      voting and investment powers with respect to the shares
      indicated.





Name
                  and Address of Beneficial
                  owner
              Common
                  Stock
              Percentage
                  of Class
                  (1)Scott
                  Conley
              5,477,900
              20.85%740
                  Moores Mill
                  RoadAtlanta,
                  GA
                  30327Keith
                  A.
                  Greaves
              4,600,000
              17.34%3915
                  Cascade Road SW, Suite
                  110Atlanta,
                  GA
                  30331Dominic
                  Richardson
              1,612,687
              6.08%Garcia
                  Marino. 13,
                  AtticoBarcelona,
                  Spain,
                  8027Craig
                  C. Sellars
                  (2)
              750,228
              2.83%4898
                  S. Old Peachtree Road NW,
                  Suite 150Norcross,
                  GA
                  30071


(1)
      Based
      upon 26,526,552 shares issued and outstanding as of October 8,
      2007.





(2)Mr.
      Sellars' ownership consists of
      250,228 shares owned outright, and shares issuable under a warrant to purchase
      500,000 shares of common stock at $1.00 per share until December 31,
      2007.









ITEM
      12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.









On
      July 20, 2006, Dominic Richardson
      loaned the company $20,000 at no interest.  The loan was unsecured and
      due on demand.  In October 2006, Transfer Management International,
      Ltd., Mr. Richardson and we agreed that the loan would be repaid by Transfer
      Management International, Ltd., and that we would compensate Transfer Management
      International, Ltd. for repayment of the loan by issuing it 66,667 shares of
      common stock at $0.30 per share under a Regulation S Securities Purchase
      Agreement dated September 11, 2006.  In October 2006, we issued
      Transfer Management 100,000 common shares to both repay this loan and to repay
      Transfer Management for an additional $10,000 that Transfer Management had
      paid
      on our behalf for investor relations services.




On
      August
      4, 2006, the Company borrowed $60,000 under a Convertible Promissory Note dated
      August 1, 2006 that bears interest at 8% per annum, and provides that all
      principal and accrued interest is due and payable on the one year anniversary
      of
      the Convertible Promissory Note, provided that the note will become due and
      payable automatically upon the termination of employment of Craig C. Sellars
      or
      T.




15


Scott
      Conley.  The lender is the father of Mr. Sellars. The Convertible
      Promissory Note provides that it is convertible into shares of unrestricted
      registered common stock at the lesser of $2.50 per share or the conversion
      price
      in effect at the time of conversion.  The conversion price is subject
      to adjustment based on certain corporate events, such as dividends, mergers,
      stock splits, etc.  On September 29, 2006, the Company repaid $30,000
      of the Convertible Promissory Note. During the year ended September 30, 2007,
      we
      repaid $2,200 of the principal relating to these notes, resulting in a total
      of
      $64,800 in principal and $4,354 in accrued interest due on the notes at
      September 30, 2007.   On January 13, 2008, the Company received
      an amendment extending the maturity date of this note to June 30, 2008. On April 9, 2007,  we received
      an additional $37,000 from this individual. On January 14, 2008, the company
      also received an amendment extending the maturity date of this note to June
      30,
      2008.




16




ITEM
      13.  EXHIBITS AND REPORTS ON FORM 8-K.









(a)Exhibits.





Exhibit
                Number
            Description
                and Incorporation by
                Reference3.1
            Articles
                of Incorporation
                (1)3.2
            Amendment
                to Articles of
                Incorporation (1)3.3
            By-Laws
                of the Company
                (1)4.1
            Form
                of Common Stock Certificate
                of the Company (1)4.2
            Form
                of Warrant Agreement
                (1)10.1
            Employment
                Agreement with T. Scott
                Conley (1)10.2
            Employment
                Agreement with Keith A.
                Greaves (1)10.3
            Employment
                Agreement with Craig C.
                Sellars (1)10.4
            Regulation
                S Securities Purchase
                Agreement dated April 24, 2004 (1)10.5
            First
                Amendment to Employment
                Agreement with Craig C. Sellars (2)10.6
            Second
                Amendment to Employment
                Agreement with Craig C. Sellars (2)10.7
            Third
                Amendment to Employment
                Agreement with Craig C. Sellars (3)10.8
            Regulation
                S Securities Purchase
                Agreement dated September 11, 2006 (4)10.9
            Commercial
                Office Lease Agreement dated January 1, 200710.10
            Employment
                Agreement for Officers11
            Statement
                regarding computation of
                earnings per share (5)21*
            List
                of
                Subsidiaries23*
            Consent
                of Braverman
                International, P.C.


17







31.1*
            Rule
                13a-14(a)/15d-14(a) Certification by the Chief Executive
                Officer31.2*
            Rule
                13a-14(a)/15d-14(a) Certification by the External Acting Financial
                Officer32.1*
            Certification
                by the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
                as
                adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                200232.2*
            Certification
                by the External Acting Financial Officer pursuant to 18 U.S.C. Section
                1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
                of
                2002







*
      Filed herewith.




(1)
      Incorporated by reference from Form
      SB-2 filed on or about May 13, 2005.




(2)
      Incorporated by reference from Form
      SB-2 filed on or about August 3, 2005.




(3)
      Incorporated by reference to Form
      SB-2 dated March 24, 2006.




(4)
      Incorporated by reference to Report
      on Form 8-K dated September 11, 2006.




(5)
      Included within financial statements
      filed pursuant to Part II, Item 7.




(b)
      Reports on Form 8-K. The
      Company filed the following reports on Form 8-K in the fourth quarter of
      2006:




We
      filed
      a Report on Form 8-K dated September 11, 2006 reporting in Item 3.02 of our
      entry into an agreement to sell up to 2,333,333 shares of common stock at $0.30
      per share under Regulation S under the Securities Act of 1933.





We
      filed
      a Report on Form 8-K dated September 29, 2006 reporting in Item 5.02 of the
      resignation of Keith A. Greaves as our Chief Financial Officer.







ITEM
      14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.







During
      the fiscal year ended September 30, 2006, Braverman International, P.C. served
      as the Company’s principal accountant.  On  October 3, 2007,
      Braverman International, P.C. resigned as our principal
      accountant.  On October 10, 2007, the Company engaged the accounting
      firm of McElravy, Kitchen & Associates, P.C., to serve as the Company’s
      principal independent accountant for the fiscal year ended September 30,
      2007.  We understand the need for our principal accountants to
      maintain objectivity and independence in their audit of our financial
      statements. To minimize relationships that could appear to impair the
      objectivity of our principal accountants, our board has restricted the non-audit
      services that our principal accountants may provide to the Company primarily
      to
      tax services and audit related services. The Company is only to obtain non-audit
      services from our principal accountants when the services offered by our
      principal accountants are more effective or economical than services available
      from other service providers, and, to the extent possible, only after
      competitive bidding. The board has adopted policies and procedures for
      pre-approving work performed by our principal accountants.





After
      careful consideration, the board has determined that payment of the audit fees
      is in conformance with the independent status of the Company's principal
      independent accountants.


18


Audit
      Fees: The aggregate
      fees billed for the fiscal year ended September 30, 2007 for professional
      services rendered by the principal accountants for the audit of our annual
      financial statements and the review of financial statements included in our
      filed Form 10-QSB's is $30,250. The aggregate fees billed for the fiscal year
      ended September 30, 2006 for professional services rendered by the principal
      accountant for the audit of our annual financial statements was
      $19,500.





Audit-Related
      Fees: The
      aggregate fees billed for the fiscal years ended September 30, 2007 and 2006
      for
      assurance and related services by the principal accountants that are reasonably
      related to the performance of the audit or review for the audit or review of
      our
      annual financial statements and the review of financial statements and are
      not
      reported under the previous item, Audit Fees, was $0 and $0
      respectively.


Tax
      Fees:
      The aggregate fees billed for the fiscal years ended September 30, 2007 and
      2006
      for professional services rendered by the principal accountant for tax
      compliance and tax planning was $0 and $0, respectively.





All
      Other Fees: The aggregate fees
      billed for the fiscal years ended September 30, 2007 and 2006 for products
      and
      services provided by the principal accountants other than the services reported
      above was $0 and $0, respectively.




19


SIGNATURES




In
      accordance with Section 13 or 15(d)
      of the Exchange Act, the registrant caused this report to be signed on its
      behalf by the undersigned, hereunto duly authorized.




O2Secure
                Wireless
                IncorporatedDated:
                January 15, 2008
            /s/
                Craig C.
                SellarsCraig
                C. Sellars, Chief Executive
                Officer







In
      accordance with the requirements of
      the Securities Act of 1933, this Registration Statement has been signed by
      the
      following persons in the capacities and on the dates stated.




O2Secure
                Wireless
                IncorporatedDated:
                January 15, 2008
            /s/
                Craig C.
                SellarsCraig
                C. Sellars, President and
                Chief Executive OfficerDated:
                January 15, 2008
            /s/
                India C.
                CreeryIndiaC.
                Creery,  External
                Acting Chief FinancialOfficer















20


EXHIBIT
      A










O2
      SECURE WIRELESS, INC. AND
      SUBSIDIARY





CONSOLIDATED
      FINANCIAL
      STATEMENTS





FOR
      THE YEARS ENDED SEPTEMBER 30, 2007
      AND 2006





WITH
      AUDIT REPORT OF REGISTERED PUBLIC
      ACCOUNTING FIRM












F-1








21


REPORT
      OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM




To
      the
      Board of Directors and Stockholders






O2
      SECURE
      WIRELESS, Inc.






Atlanta,
      Georgia






We
      have
      audited the accompanying consolidated balance sheet of O2 SECURE WIRLESS, INC.
      as of September 30, 2007 and the related consolidated statements of operations,
      stockholders' equity (deficit) and cash flows for the year then ended. 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. The financial statements for the period August 1, 2005 through
      September 30, 2006, were audited by other auditors whose reports expressed
      unqualified opinions on those statements.






We
      conducted our audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audits to obtain reasonable assurance about 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 financial statements referred to above present fairly, in all
      material respects, the financial position of O2 SECURE WIRELESS, INC as of
      September 30, 2007 and the results of its operations and cash flows for the
      periods described above in conformity with accounting principles generally
      accepted in the United States of America.






The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As discussed in Note 2 to the financial
      statements, the Company has suffered recurring losses from operations which
      raises substantial doubt about its ability to continue as a going concern.
      Management's plans regarding those matters also are described in Note 2. The
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.






/s/
      McElravy, Kinchen & Associates, P.C.


www.McElravy.com


Houston,
      Texas




Date:
      January 14 , 2008


















22




REPORT
      OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM









To
      the Board of Directors and Stockholders




O2
      SECURE WIRELESS, INC.


Atlanta,
      Georgia







We
      have
      audited the accompanying consolidated balance sheet of O2 SECURE WIRELESS,
      INC.
      (a Georgia corporation) and subsidiary as of September 30, 2006, and the related
      consolidated statements of operations, stockholders’ equity, and cash flows for
      year then ended These consolidated financial statements are the responsibility
      of the Company’s management.  Our responsibility is to express an
      opinion on these consolidated financial statements based on our
      audit.






We
      conducted our audit in accordance with the standards of the Public Company
      Accounting Oversight Board (United States).  Those standards require
      that we plan and perform the audit to obtain reasonable assurance about whether
      the consolidated financial statements are free of material
      misstatement.  The Company has determined that it is not required to
      have, nor were we engaged to perform, an audit of its internal control over
      financial reporting. Our audit included consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the consolidated financial statements, 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 O2 SECURE WIRELESS, INC.
      as
      of September 30, 2006, and the results of its operations and its cash flows
      for
      the year then ended in conformity with accounting principles generally accepted
      in the United States of America.






The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 2 to the
      financial statements, the Company has incurred significant losses since
      inception and has a limited source of external financing, which raises
      substantial doubt about its ability to continue as a going concern. Management’s
      plans in regard to these matters are also described in Note 2. The accompanying
      consolidated financial statements do not include any adjustments that might
      result from the outcome of this uncertainty.




/s/Braverman
      International, P.C.


Prescott,
      Arizona




Date:
      November 10, 2006











23











O2
                SECURE WIRELESS, INC. AND SUBSIDIARYCONSOLIDATED
                BALANCE SHEETSASSETS
            
            September
                30,2007
            
            
            2006CURRENT
                ASSETS:Cash
                and cash equivalents
            
            $
            6,172
            
            
            $
            522,351Trade
                accounts receivable
            
            
            25,883
            
            
            
            1,589Other
                current assets
            
            
            13,704
            
            
            
            1,810TOTAL
                CURRENT ASSETS
            
            
            45,759
            
            
            
            525,750EQUIPMENT,
                net of accumulated depreciation
            
            
            427,107
            
            
            
            491,061RESTRICTED
                INVESTMENT, at fair value
            
            
            30,651
            
            
            
            -OTHER
                NON-CURRENT ASSETS
            
            
            11,250
            
            
            
            4,799$
            514,767
            
            
            $
            1,021,610LIABILITIES
                AND STOCKHOLDERS'
                EQUITYCURRENT
                LIABILITIES:Unsecured
                loans payable:Unrelated
                party
            
            $
            13,873
            
            
            $
            13,873Related
                party
            
            
            19,425
            
            
            
            20,000Notes
                payable - related party
            
            
            64,800
            
            
            
            30,000Accounts
                payable
            
            
            160,608
            
            
            
            29,390Accrued
                liabilities
            
            
            60,414
            
            
            
            6,255Deferred
                revenue
            
            
            31,502
            
            
            
            8,607TOTAL
                CURRENT LIABILITIES
            
            
            350,622
            
            
            
            108,125COMMITMENTS
                AND CONTINGENCIESSTOCKHOLDERS'
                EQUITYPreferred
                stock, no par value, 10,000,000 shares authorized,-0-
                shares issued and outstanding
            
            
            -
            
            
            
            -Common
                stock, no par value, 50,000,000 shares authorized,26,526,552
                and 26,076,552 shares issued and outstanding
            
            
            2,898,352
            
            
            
            2,793,352Other
                capital
            
            
            78,800
            
            
            
            78,800Accumulated
                (deficit)
            
            
            (2,813,007
            )
            
            
            (1,958,667
            )Total
                Stockholders' Equity
            
            
            164,145
            
            
            
            913,485$
            514,767
            
            
            $
            1,021,610SEE
                ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.





24





O2
                SECURE WIRELESS, INC. AND SUBSIDIARYCONSOLIDATED
                STATEMENTS OF OPERATIONSYear
                Ended September 30,2007
            
            
            2006REVENUES:Network
                service revenues
            
            $
            329,898
            
            
            $
            121,784Network
                component sales
            
            
            105,163
            
            
            
            89,442Other
            
            
            2,646
            
            
            
            469Total
                revenues
            
            
            437,707
            
            
            
            211,695COSTS
                AND EXPENSES:Cost
                of network service revenues
            
            
            73,423
            
            
            
            81,356Cost
                of network component sales
            
            
            96,281
            
            
            
            37,842Selling
                general and administrative:Compensation
            
            
            344,301
            
            
            
            399,885Professional
                fees
            
            
            257,700
            
            
            
            178,987Communications
            
            
            158,077
            
            
            
            78,283Travel
                and entertainment
            
            
            6,861
            
            
            
            26,773Other
            
            
            178,021
            
            
            
            146,059Loss
                on disposal of equipment
            
            
            46,616
            
            
            
            5,359Depreciation
                expense
            
            
            134,102
            
            
            
            108,422Total  costs
                and expenses
            
            
            1,295,382
            
            
            
            1,062,966OTHER
                INCOME (EXPENSE):Interest
                incomeTotal  other
                income (expense)
            
            
            3,335
            
            
            
            4,610NET
                (LOSS)
            
            $
            (854,340
            )
            
            $
            (846,661
            )BASIC
                AND DILUTED NET (LOSS) PER SHARE
            
            $
            (0.03
            )
            
            $
            (0.04
            )WEIGHTED
                AVERAGE NUMBER OF COMMONSHARES
                OUTSTANDING
            
            
            26,211,894
            
            
            
            23,919,157SEE
                ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.





25





O2
                SECURE WIRELESS, INC. AND SUBSIDIARYCONSOLIDATED
                STATEMENTS OF STOCKHOLDERS' EQUITYCommon
                Stock
            
            
            Other
            
            
            AccumulatedShares
            
            
            Amount
            
            
            Capital
            
            
            (Deficit)
            
            
            TotalBalance,
                September 30, 2005
            
            
            23,412,876
            
            
            $
            1,797,562
            
            
            $
            78,800
            
            
            $
            (1,112,006
            )
            
            $
            764,356Cancellation
                of stock issued for distribution contract
            
            
            (749,772
            )
            
            
            (224,877
            )
            
            
            
            
            
            
            
            
            
            
            (224,877
            )Cancellation
                of stock subscription receivable, net ofamortization
            
            
            
            
            
            
            224,877
            
            
            
            
            
            
            
            
            
            
            
            224,877Stock
                issued at $.30 per share
            
            
            3,413,448
            
            
            
            1,024,034
            
            
            
            
            
            
            
            
            
            
            
            1,024,034Stock
                offering costs
            
            
            
            
            
            
            (28,244
            )
            
            
            
            
            
            
            
            
            
            
            (28,244
            )Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (846,661
            )
            
            
            (846,661
            )Balance,
                September 30, 2006
            
            
            26,076,552
            
            
            
            2,793,352
            
            
            
            78,800
            
            
            
            (1,958,667
            )
            
            
            913,485Stock
                issued for settlement of debt to related party
            
            
            100,000
            
            
            
            30,000
            
            
            
            
            
            
            
            
            
            
            
            30,000Stock
                issued at $.21 per share
            
            
            350,000
            
            
            
            75,000
            
            
            
            
            
            
            
            
            
            
            
            75,000Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (854,340
            )
            
            
            (854,340
            )Balance,
                September 30, 2007
            
            
            26,526,552
            
            
            $
            2,898,352
            
            
            $
            78,800
            
            
            $
            (2,813,007
            )
            
            $
            164,145SEE
                ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.








26





O2
                SECURE WIRELESS, INC. AND SUBSIDIARYCONSOLIDATED
                STATEMENTS OF CASH FLOWSYear
                ended September 30,2007
            
            
            2006OPERATING
                ACTIVITIES:Net
                loss from operations
            
            $
            (854,340
            )
            
            $
            (846,661
            )Adjustments
                to reconcile net (loss) to net cash (used by)  operating
                activities:operating
                activities:Expenses
                paid by investor
            
            
            -
            
            
            
            11,177Accrued
                interest income on investment
            
            
            (651
            )
            
            
            -Depreciation
                expense
            
            
            134,102
            
            
            
            108,422Loss
                on disposal of equipment
            
            
            46,616
            
            
            
            5,359Change
                in:Trade
                accounts receivable
            
            
            (24,294
            )
            
            
            4,411Other
                current assets
            
            
            (11,894
            )
            
            
            1,953Other
                non-current assets
            
            
            (6,451
            )
            
            
            10,110Accounts
                payable
            
            
            141,218
            
            
            
            26,785Accrued
                liabilities
            
            
            54,159
            
            
            
            667Deferred
                revenue
            
            
            22,895
            
            
            
            6,927NET
                CASH (USED) BY OPERATING ACTIVITIES
            
            
            (498,640
            )
            
            
            (670,850
            )INVESTING
                ACTIVITIES:Purchase
                of equipment and capitalized installation costs
            
            
            (116,764
            )
            
            
            (256,102
            )Purchase
                of restricted investment
            
            
            (30,000
            )
            
            
            -Proceeds
                from sale of equipment
            
            
            -
            
            
            
            3,200NET
                CASH (USED) BY INVESTING ACTIVITIES
            
            
            (146,764
            )
            
            
            (252,902
            )FINANCING
                ACTIVITIES:Unsecured
                loans payable - related party
            
            
            19,425
            
            
            
            20,000Note
                payable - related party:Proceeds
            
            
            37,000
            
            
            
            60,000Repayments
            
            
            (2,200
            )
            
            
            (30,000
            )Proceeds
                from sale of common stock
            
            
            75,000
            
            
            
            996,534Cash
                paid for common stock offering costs
            
            
            -
            
            
            
            (15,510
            )NET
                CASH PROVIDED BY FINANCING ACTIVITIES
            
            
            129,225
            
            
            
            1,031,024NET
                CHANGE IN CASH AND CASH EQUIVALENTS
            
            
            (516,179
            )
            
            
            107,272CASH
                AND CASH EQUIVALENTS, beginning of year
            
            
            522,351
            
            
            
            415,079CASH
                AND CASH EQUIVALENTS, end of year
            
            $
            6,172
            
            
            $
            522,351SEE
                ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


27


O2
      SECURE WIRELESS, INC. AND SUBSIDIARY


NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS








NOTE
      1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Description
      of Business. O2 Secure Wireless, Inc. (“O2”,we, it, our, us, or the “Company”)
      is a Georgia corporation formed on October 29, 2003. The business of the Company
      is to install and manage local wireless internet connection networks for
      multi-domestic unit (“MDU”) environments in the southeastern U.S, such as
      multi-family residence developments, apartment/condominium complexes, and
      educational institutions. The Company also resells wireless components that
      it
      purchases on a wholesale basis from a manufacturer under a distribution
      agreement. The Company was a development stage enterprise as defined in
      Statement on Financial Accounting Standards (“SFAS”) No. 7 until July 1, 2006,
      when the Company began generating significant revenues and exited the
      developmental stage.





Effective
      July 10, 2005, O2 acquired 100% of the interests in Epiphony Voice Solutions,
      LLC (“Epiphony”). Epiphony is a Georgia limited liability company formed on June
      27, 2005 and has no stated termination date. It is currently a non-operational
      company. When operational, Epiphony will provide internet voice services to
      both
      the customers of O2 and other wireless internet connection service
      providers.





Principles
      of Consolidation.
      The accompanying consolidated financial statements include the accounts of
      O2
      Secure Wireless, Inc. and its wholly-owned subsidiary, Epiphony Voice Solutions,
      LLC. All material intercompany accounts and transactions have been eliminated
      in
      consolidation. In the opinion of management, all adjustments, consisting of
      normal recurring adjustments, necessary for a fair presentation of financial
      position and the results of operations for the interim periods presented have
      been reflected herein.





Revenue
      Recognition. Revenues
      are generated from wireless internet connection service provided to end-users
      and sale of network component hardware. For wireless connection service, the
      Company obtains its revenues either by subscription of services directly with
      the residents of the MDU who seek such service, or under a non-subscription,
      multi-year agreement with the property manager of the MDU in which case the
      service is provided to all residents at a flat monthly rate.





For
      subscriber-based services, each individual subscriber is under a month-to-month
      service agreement and a fixed fee for service to be received for a particular
      month. Service revenues are recognized over the month service is provided.
      At
      the end of a financial reporting period, we record the portion of fees received
      for which the related subscription period has not been completed as deferred
      revenue. Under the terms of the agreement, billing is made by a pre-authorized
      charge to a subscriber’s credit card and is not refundable, thus assuring
      collection of the fee.





Under
      non-subscription agreements, we receive a minimum monthly fixed fee from the
      MDU, plus an additional per user fee if the number of network users exceeds
      a
      level as defined in the agreement. The MDU is billed monthly in arrears for
      services rendered, and service revenue is recognized in the month the service
      was provided.





Revenue
      from network component sales is recognized at the time the goods are shipped.
      Sales are made at fixed prices based on orders received by customers and are
      normally prepaid. All sales of hardware components are final. We generally
      do
      not provide refunds, nor do we provide product warrantees or any other post-sale
      obligations to the customer.


28





Network
      Installation Cost
      Recognition. For new networks, we obtain an installation agreement with
      an MDU and incur costs to install components and activate a wireless network
      that will service the MDU. Installation costs, which include hardware
      components, direct labor and related travel and per diem costs, are capitalized
      as incurred, and depreciated on a straight-line basis five years (three years
      for older installations), beginning at the time the network is placed in service
      in order to match installation costs against related service revenues.
      Capitalized installation costs are included (net of depreciation) in equipment
      in the accompanying consolidated balance sheets. Because network hardware
      components are primarily intended to support network installation and
      maintenance, the cost value of components on-hand is included in non-current
      equipment assets (i.e. fixed assets) in the accompanying consolidated balance
      sheets rather than as a current inventory asset.





Costs
      of Service and Sales.
      Direct costs related to providing network services, other than those
      specifically identifiable to the initial MDU installation costs described above,
      are expensed as incurred and classified as cost of network service in the
      Company’s financial statements. These include such costs as system testing and
      maintenance, bulk bandwidth costs, and contracted labor or allocated employee
      costs for general system and customer service support. Cost of network component
      sales is based upon our historic cost for the components sold, at the lower
      of
      cost (on a first-in, first-out basis) or market.





Cash
      Equivalents. We consider
      all highly liquid investments with the original maturities of three months
      or
      less to be cash equivalents.  We had no cash equivalents at September
      30, 2007 and 2006, respectively.





Allowance
      for Doubtful
      Accounts. We estimate the collectivity of our trade accounts receivable.
      In order to assess the collectivity of these receivables, we monitor the current
      creditworthiness of each customer and analyze the balances aged beyond the
      customer’s credit terms. These evaluations may indicate a situation in which a
      certain customer cannot meet its financial obligations due to deterioration
      of
      its financial viability, credit ratings or bankruptcy. The allowance
      requirements are based on currents facts and are reevaluated and adjusted as
      additional information is received. Trade accounts receivable are subject to
      an
      allowance for collection when it is probable that the balance will not be
      collected. As of September 30, 2007 and 2006, no allowance for collectivity
      was
      determined to be needed.





Equipment.
      Equipment is
      recorded at cost. Except for capitalized network installation costs described
      above, depreciation for other equipment purchases is provided on a straight-line
      basis over the estimated useful lives of the related assets, which range from
      5
      - 7 years. Network hardware components, which are not included in capitalized
      network installation costs, are not depreciated until installed.





Income
      Taxes. The Company
      uses the liability method of accounting for income taxes pursuant to SFAS No.
      109.  Under this method, deferred income taxes are recorded to reflect
      the tax consequences in future periods of temporary differences between the
      tax
      bases of assets and liabilities and their financial amounts at year-end. As
      a
      single-member LLC, Epiphony is not recognized as a reporting entity for income
      tax purposes and therefore does not file its own income tax returns since its
      operations are included in the income tax returns with that of its parent
      company. All costs incurred by Epiphony are considered start up costs which
      have
      been expensed for both tax and financial accounting purposes in the accompanying
      financial statements as of September 30, 2007 and 2006.





Loss
      per Common Share. Basic
      loss per common share is calculated based upon the weighted average number
      of
      common shares outstanding during the periods presented, in accordance with
      the
      SFAS No. 128. In determining the weighted average number of common shares
      outstanding, all shares issued at nominal value, net of subsequent share
      cancellations, is considered as outstanding as of the inception date. No
      potential diluted common shares have been used in the calculation of loss per
      share, as their inclusion would have an anti-dilutive effect on loss per
      share.


29





Fair
      Value of Financial
      Instruments. SFAS No. 107 disclosures about fair value of financial
      instruments define the fair value of a financial instrument as the amount at
      which the instrument could be exchanged in a current transaction between willing
      parties. The carrying values of the Company’s financial instruments, which
      include cash, accounts receivable, and accrued expenses, approximate fair values
      due to the short-term maturities of such instruments.





Impairment
      of Long Lived
      Assets. Long-lived assets are reviewed for impairment in accordance with
      SFAS No. 144, "Accounting for the Impairment or Disposal of Long- lived Assets".
      Under SFAS No. 144, long-lived assets are tested for recoverability whenever
      events or changes in circumstances indicate that their carrying amounts may
      not
      be recoverable. An impairment charge is recognized or the amount, if any, which
      the carrying value of the asset exceeds the fair value.





Stock-based
      Compensation. The
      Company accounts for stock-based employee compensation arrangements using the
      fair value method in accordance with the provisions of Statement of Financial
      Accounting Standards no.123(R) or SFAS No. 123(R), Share-Based Payments, and
      Staff Accounting Bulletin No. 107, or SAB 107, Share-Based Payments. The company
      accounts for the stock options issued to non-employees in accordance with the
      provisions of Statement of Financial Accounting Standards no. 123, or SFAS
      No.
      123, Accounting for Stock-Based Compensation, and Emerging Issues Task Force
      No.
      96-18, Accounting for Equity Instruments with Variable Terms That Are Issued
      for
      Consideration other Than Employee Services Under FASB Statement no. 123. The
      fair value of stock options and warrants granted to employees and non-employees
      is determined using the Black-Scholes option pricing model. The Company has
      adopted SFAS 123(R) and applied it in the period presented. Through September
      30, 2007 no options to employees have been granted.





Use
      of Estimates in the Preparation
      of Financial Statements. The preparation of financial statements in
      conformity with accounting principles generally accepted in the United States
      of
      America requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities, the 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 those estimates and assumptions.





Recent
      Accounting
      Pronouncements. The Company does not expect the adoption of recently
      issued accounting pronouncements to have a significant impact on its results
      of
      operations, financial position or cash flow.





Reclassifications.
      Certain
      amounts in the accompanying 2006 consolidated financial statements have been
      reclassified in order to conform to the 2007 financial statement
      presentation.








NOTE
      2 – GOING CONCERN





Our
      financial statements have been presented on the basis that it is a going
      concern, which contemplates the realization of assets and the satisfaction
      of
      liabilities in the normal course of business.  We have sustained
      operating losses since inception, and we have been dependent upon private
      placements of stock to provide sufficient working capital in order to finance
      our development activities. Two Securities Purchase Agreements with an investor
      have represented the Company’s sole source of private stock placements to date,
      the first of which expired on November 30, 2005 and the second on September
      30,
      2006 (see Note 9 - Equity Financing). The Company completed a registration
      of
      its common stock in 2006 through a Form SB-2 filing with the Securities and
      Exchange Commission (“SEC”); however this registration did not result in
      additional working capital.


30





The
      Company’s ability to continue in existence is dependent upon developing
      additional sources of capital and/or achieving profitable operations.
      Management’s plan is to raise capital through additional private offerings,
      while actively seeking installation agreements with new customers and generating
      profitable revenue-producing connectivity subscriptions with network end-users,
      in addition to profitable sales of certain products for which it is an
      authorized distributor. The accompanying financial statements do not include
      any
      adjustments that might result from the outcome of these
      uncertainties.








NOTE
      3 – ADVANCES TO RELATED PARTY





During
      the effective periods of the Securities Purchase Agreements as described in
      Note
      9 (Equity Financing), from time to time Pilot Corporate Services, Inc.
      (“Pilot”), a management services company owned by a non-officer/director
      shareholder of the Company, received funds from the Company via an escrow,
      which
      funds were to be held and disbursed on behalf of the Company for payment of
      professional fees associated with the preparation of a Form SB-2 registration
      statement filed with the SEC. During the year ended September 30, 2005, Pilot
      received $90,000 for payment of professional fees to other professionals. Pilot
      disbursed $94,008 of the funds held by them for payment of stock offering costs,
      and was holding a balance of $5,992 as of September 30, 2005. During the year
      ended September 30, 2006, Pilot received $20,000 via the escrow account and
      paid
      out $25,992 to professionals relating to the Form SB-2 registration, resulting
      in no advances to related party in the accompanying 2006 consolidated balance
      sheet.





NOTE
      4 – EQUIPMENT





The
      following is a summary of this category:


September
                30,2007
            
            
            2006Equipment
            
            $
            94,341
            
            
            $
            94,341Furniture
                and fixtures
            
            
            18,930
            
            
            
            15,197Network
                hardware components
            
            
            95,559
            
            
            
            149,014Capitalized
                network installation costs
            
            
            499,269
            
            
            
            379,459708,099
            
            
            
            638,011Less:
                accumulated depreciation
            
            
            280,992
            
            
            
            146,950Equipment,
                net of accumulated depreciation
            
            $
            427,107
            
            
            $
            491,061





During
      the year ended September 30, 2007 and 2006, the Company capitalized $119,810
      and
      $152,447 in equipment and labor costs for new wireless network installations.
      As
      discussed below, management believes the net carrying value of the capitalized
      installation costs of $257,326 is recoverable over the remaining lives of the
      networks as of September 30, 2007.





Network
      hardware components are not depreciated unless utilized for new network
      installations. During the year ended September 30, 2007, certain sales of
      components were made at below cost to reduce excess stocks and generate working
      capital. Total losses on these disposal sales were $46,616, and are presented
      as
      loss on disposal of equipment in the accompanying 2007 consolidated statement
      of
      operations.





Installation
      costs for wireless networks are capitalized with the assumption that sufficient
      cash flows from subscription services, net of recurring service costs, will
      be
      generated in order for these costs to be


31


recovered
      over their depreciable lives (see Note 1- Network Installation Cost
      Recognition). Where estimated future net cash flows are determined to be less
      than the carrying amount of long-lived assets, this difference is considered
      to
      be an impairment of the asset carrying value under generally
      accepted


32


accounting
      principles and is required to be recognized as a loss. Management performed
      a
      review of the capitalized installation costs as of September 30, 2007 and
      determined that no impairment was necessary.








NOTE
      5 – RESTRICTED INVESTMENT





During
      the year ended September 30, 2007, the Company purchased a $30,000 certificate
      of deposit. The certificate of deposit accrues interest at 3.65% and matures
      in
      August 2009.  This certificate of deposit was required to be purchased
      under terms relating to a supplier agreement with a wireless service provider
      and is not available for use by the Company as long as this agreement is in
      effect.








NOTE
      6 – UNSECURED LOANS PAYABLE





Unrelated
      Party





The
      unsecured loan payable represents amounts received from an unrelated party,
      who
      became a non-officer employee, on a non-interest bearing and unsecured basis.
      There were no repayment terms for this loan. This loan was repaid on December
      13, 2007 by the issuance of 138,832 common shares.





Related
      Party





On
      July
      20, 2006, we received a $20,000 loan from the foreign company investor with
      who
      we had executed Securities Purchase Agreements. The loan was non-interest
      bearing and unsecured. In October 2006, the loan was repaid to the investor
      by
      the issuance of 66,667 shares of restricted common stock at $0.30 per share.
      This same investor paid $10,000 on our behalf for our investor relations
      services for the year ended September 30, 2006, which was repaid in October
      2006
      by the issuance of 33,333 shares of restricted common stock valued at $.30
      per
      share based upon the closing price of our common stock at the measurement
      date.





During
      the year ended September 30, 2007, both our former CEO and current CEO advanced
      funds to the Company to pay employee payroll costs on a non-interest bearing
      and
      unsecured basis. There are no repayment terms for these loans, the outstanding
      amounts of which total $19,425 at September 30, 2007.








NOTE
      7 – NOTES PAYABLE – RELATED PARTY





On
      August
      1, 2006, we received $60,000 from the father of the Chief Information
      Officer (currently our CEO) for working capital purposes. Principal and 8%
      simple interest were due July 31, 2007. The note holder may elect to convert
      the
      note into unregistered common shares of the Company. In the event the note
      is
      converted, the initial conversion price in determining shares to be issued
      is
      $2.50, which may be subject to certain adjustments as defined in the promissory
      note.  On September 29, 2006, $30,000 of the principal was repaid,
      leaving a balance of $30,000 as of September 30, 2006. The Company evaluated
      the
      conversion feature related to this note and determined no benefit related to
      the
      conversion feature. Repayment of outstanding principal and interest for this
      note has been extended by the note holder to December 31, 2007.  On
      January 13, 2008, the Company received an amendment extending the maturity
      date
      of this note to June 30, 2008.





On
      April
      9, 2007, we received an additional $37,000 from this individual. Principal
      and
      interest at 8% are due December 31, 2007, unless our CEO terminates his
      employment for any reason, at which time all outstanding principal and accrued
      interest for both loans will be due and payable. During the year
      ended


33


September
      30, 2007, we repaid $2,200 of the principal relating to these notes, resulting
      in a total of $64,800 in principal and $4,354 in accrued interest due on the
      notes at September 30, 2007.   On January 13, 2008, the Company
      received an amendment extending the maturity date of this note to June 30,
      2008.








NOTE
      8 – COMMITMENTS AND CONTINGENCIES





Operating
      Leases. On December 9, 2004, we entered into an 18-month, non-cancelable
      operating lease for office space for our former headquarter operations in
      Norcross, Georgia beginning January 1, 2005. Minimum base lease rental was
      $1,864 per month for the first 12 months and $2,202 per month thereafter. In
      addition to the monthly base lease payment, the Company was charged a pro rata
      share of building operating costs by the lessor. The lease was personally
      guaranteed by Mr. Conley, the Company’s CEO at that time and Mr. Greaves, the
      Company’s CFO at that time. This lease term was extended through December 31,
      2006 at $2,287 per month beginning July 1, 2006. On December 19, 2005, the
      Company also entered into a one year lease for additional adjacent office space
      beginning January 1, 2006 at $887 per month.





On
      November 28, 2006, we executed a five-year, non-cancelable lease for office
      space commencing January 1, 2007 for our present headquarters operations in
      Norcross, Georgia. Monthly minimum lease payments during the first year were
      $3,750, with annual escalations over the lease term to $4,387 per month. The
      lease has a five year option to renew. In addition to monthly lease payments,
      we
      are subject to a pro rata share of the lessor’s increases in property taxes and
      insurance in future years above the level paid by the lessor during calendar
      year 2006. We paid a deposit of $11,250 upon execution of the lease. On January
      1, 2007, both leases associated with our former headquarters office
      terminated.





Minimum
      lease payments due under non-cancelable leases over the next five years and
      thereafter are as follows as of September 30, 2007:





Year
                EndingSeptember
                30,2008
            
            $
            43,1002009
            
            
            44,9542010
            
            
            46,8802011
            
            
            52,137Thereafter
            
            
            13,161Total
            
            $
            200,232





Total
      rent expense was $47,600 and $32,421 for the years ended September 30, 2007
      and
      2006.





Distribution
      Agreements.
      Effective January 1, 2005, the Company entered into a Sole Distributor Agreement
      with Netconx D&C Wireless, LLC (“NCX”), under which the Company had the
      right to purchase wireless cards for access points at a fixed price for three
      years, subject to adjustments based on changes in NCX’s cost for the cards. The
      Company could use the cards for internal use or resell the wireless cards to
      third-party users. In the event the Company resold the cards to third parties,
      the Company was obligated to pay additional amounts based on the gross profit
      realized from the sale. In addition, the Company was obligated to pay an
      additional $100 royalty on each outdoor access point that was manufactured
      from
      a card. The Company was obligated to make the cards and access points available
      for sale to third parties at a reasonable price, and NCX was barred from
      reselling the cards or access points to third parties. Pursuant to the Sole
      Distributor Agreement, the Company issued NCX 2,000,000


34


shares
      of
      common stock, which was subject to cancellation on a pro rata basis in the
      event
      the Sole Distributor Agreement was terminated for any reason within three years
      of its date. In addition, 1,000,000


35


of
      the
      shares were subject to cancellation in the event the Chief Information Officer’s
      employment with the Company was terminated for any reason within three years
      of
      the date of the Sole Distributor Agreement. Another 1,000,000 of the shares
      were
      subject to cancellation in the event the Chief Technical Officer’s employment
      with the Company was terminated for any reason within three years of the date
      of
      the Sole Distributor Agreement.





The
      shares issued to NCX were assigned an initial value of $600,000 based on the
      value of shares being sold to the foreign investor during that time, which
      was
      believed by management to be the best indicator of the contract’s value. The
      transaction was recorded as an issuance of common stock for $600,000, and an
      off-setting stock subscription receivable. The subscription receivable was
      being
      amortized on a straight-line basis over the three-year term of the Sole
      Distributor Agreement. Due to the resignation of the Chief Technical Officer
      effective July 1, 2005, 833,790 common shares of the Company held by NCX were
      canceled under the terms of the Sole Distributor Agreement in fiscal year
      2005.





The
      Company and NCX were considered related parties by virtue of the fact that
      Company's Chief Information Officer and Chief Technical Officer (until his
      resignation on July 1, 2005) were both officers, and significant shareholders,
      of NCX. However, NCX was not considered a competitor.





Effective
      October 1, 2005, the Company and NCX voluntarily terminated the Sole Distributor
      Agreement after NCX's agreement with its supplier was terminated.  In
      connection with the termination of the Sole Distributor Agreement, 749,772
      shares of common stock held by NCX were terminated, and each party executed
      mutual releases of liability under the Sole Distributor Agreement.





Effective
      October 10, 2005, we entered into a new distribution agreement with a foreign
      manufacturer. The agreement extends through October 10, 2010 and is cancelable
      by either party. Our sole obligation under the agreement is to make our best
      effort to sell the manufacturer’s products at a specified volume within the
      territory defined in the agreement.





Employment
      Agreements. During
      the years ended September 30, 2007 and 2006, the Company had written employment
      agreements with its executive officers, as follows:





The
      (former) CEO, for three years ending December 31, 2007 at an annual salary
      of
      $80,000 per year. His employment terminated on July 15, 2007. At this date,
      our
      obligation for his salary under his Employment Agreement ceased except for
      earned but unpaid salary of $13,333, of which $9,505 remained unpaid at
      September 30, 2007.





The
      CFO,
      for three years ending December 31, 2007 at an annual salary of $80,000 per
      year. His employment status changed to an extended unpaid leave of absence
      effective July 1, 2006. His employment with the Company terminated effective
      September 29, 2006. At this date, our obligation for his salary under his
      Employment Agreement ceased. There was no unpaid compensation owed at the time
      of his termination.





The
      Chief
      Information Officer for three years ending December 31,
      2007.  Effective October 1, 2005, this officer’s existing employee
      employment agreement was amended to increase his officers’ salary to $80,000 per
      year. On February 23, 2007, the Company executed a new employment agreement
      with
      this officer ending February 23, 2012. Under this agreement, annual base salary
      is $80,000 with a minimum increase of $2,000 per year for each year of the
      employment period. The officer is also entitled to an annual performance bonus
      based on criteria to be set by the Board of Directors at the beginning of each
      year. On July 15, 2007, this officer assumed the duties of CEO.


36


The
                employment agreements with the Company’s officers each contain provisions
                that bar each officer from competing with the Company, from soliciting
                Company employees or customers, or from disclosing Company confidential
                information or trade secrets during employment and for a period of
                time
                thereafter. In addition, the employment agreements contain provisions
                that
                prevent the employee from selling any of the Company’s common stock,
                except in amounts less than are permitted under Rule 144.





Registration
      Rights
      Agreement. Pursuant to the 2006 Regulation S Securities Purchase
      Agreement (Note 9 – Equity Financing), the Company entered into a Registration
      Rights Agreement, under which the Company agreed to file a registration
      statement to register all shares sold under the Purchase Agreement for resale
      under the Securities Act within 10 days after the filing of the Company’s 2006
      Annual Report on Form 10-KSB with the SEC. Under the Registration Rights
      Agreement, the Company agreed to pay all costs associated with filing and
      maintaining the registration statement, and agreed to continue the registration
      in effect until all shares have been sold or the shares are eligible for sale
      under Rule 144(k) under the Securities Act. The Company has not filed a
      registration statement for these shares in accordance with the Registration
      Rights Agreement.





NOTE
      9 – STOCKHOLDERS’ EQUITY





Equity
      Financing. On April
      24, 2004, the Company executed a Regulation S Securities Purchase Agreement
      (the
“Purchase Agreement”) with a foreign company investor to provide capital for the
      Company’s development activities. Under the Purchase Agreement, the Company
      agreed to sell the investor up to 4,000,000 common shares for $.30 per share
      until December 31, 2004. Effective January 1, 2005, the Company extended the
      term of the Purchase Agreement with the investor to September 30, 2005. In
      consideration for the extension, the Company issued the investor a warrant
      to
      purchase 500,000 shares of common stock for $0.30 per share until June 30,
      2008,
      valued at $30,000. Effective September 1, 2005, the term of the Purchase
      Agreement was further extended until November 30, 2005, with nominal
      consideration paid to the investor. The Purchase Agreement expired on November
      30, 2005 without further extension.





During
      the year ended September 30, 2006, the investor further subscribed and paid
      for
      a total of 1,265,803 common shares at $0.30 per share under the Purchase
      Agreement in a series of purchases from October 1, 2005 through November 29,
      2005. Of the total $379,741 in stock sale proceeds, the investor paid $352,241to
      the Company, $20,000 to Pilot to disburse for professional fees and $7,500
      to an
      unrelated service provider. The Stock Purchase Agreement under which these
      and
      all prior shares had been sold terminated on November 30, 2005.





On
      September 11, 2006, the Company entered into a new Regulation S Securities
      Purchase Agreement with the same foreign company investor.  Under this
      Purchase Agreement, the Company agreed to sell the investor up to 2,333,333
      shares of its common stock for $0.30 per share. This Purchase Agreement
      expired on September 30, 2006 without extension. The Company also agreed to
      follow certain guidelines regarding the use of stock sale proceeds received.
      On
      September 15, 2006, the investor subscribed and paid for 2,147,644 common shares
      at $0.30 per share, for which the Company received $644,293 in cash
      proceeds.





On
      August
      22, 2007, 350,000 common shares were purchased by an individual for $75,000
      in
      cash.





Common
      Stock Warrants. Common stock warrants outstanding as of September 30, 2007
      were
      as follows:


37





Per
                ShareShares
            
            
            Exercise
                Price
            
            Expiration
                Date1,000,000
            
            
            $
            1.00
            
            December
                31, 2007500,000
            
            
            $
            0.30
            
            June
                30, 2008








No
      common
      stock warrants were issued during the years ended September 30, 2007 and 2006.
      During the year ended September 30, 2007, warrants for two million common shares
      expired without exercise by the warrant holders. On December 31, 2007, a warrant
      for one million common shares expired without exercise by the warrant
      holder.





NOTE
      10 – INCOME TAXES





There
      was
      no recorded income tax provision or benefit recorded since inception, nor were
      there any recorded deferred income tax assets, as such amounts were completely
      offset by valuation allowances. The Company has a net operating loss carryover
      for income tax purposes of $2.7 million as of September 30, 2007, expiring
      over
      the years 2019 through 2022. The following is an analysis of deferred tax assets
      as of September 30, 2007:


Deferred
            
            ValuationTax
                Assets
            
            Allowance
            
            BalanceDeferred
                tax assets at September 30, 2006
            $      733,000
            
            $    (733,000)
            
            $                -Additions
                for the year
            325,000
            
            (325,000)
            
            -Deferred
                tax assets at September 30, 2007
            $   1,058,000
            
            $  (1,058,000)
            
            $                -





The
      deferred tax assets, comprised of only the net operating loss carry forwards,
      were computed at an effective combined federal and state income tax rate of
      38
      percent. In accordance with SFAS No. 109, the valuation allowances were based
      on
      the results of operations as of each year end, and foreseeable operating
      results. Because it is uncertain as to whether the Company will have taxable
      income in future periods to realize any deferred tax benefits arising from
      this
      loss carryover, no income tax benefit were recorded. The following reconciles
      the expected statutory combined federal/state income tax rate to the Company’s
      actual income tax rate for the years ended September 30, 2007 and
      2006:





Year
                Ended September 30,2007
            
            
            2006Expected
                income tax (benefit) at combinedfederal/state
                statutory tax rate
            
            $
            (327,000
            )
            
            $
            (322,000
            )Permanent
                differences
            
            
            2,000
            
            
            
            5,000Valuation
                allowance
            
            
            325,000
            
            
            
            317,000Actual
                income tax (benefit)
            
            $
            -
            
            
            $
            -Year
                Ended September 30,2007
            
            
            2006Net
                operating loss carryforwards
            
            $
            1,058,000
            
            
            $
            725,000Valuation
                Allowance
            
            
            (1,058,000
            )
            
            
            (725,000
            )Net
                deferred tax assets
            
            $
            -
            
            
            $
            -





38








NOTE
      11 – SUPPLEMENTAL CASH FLOW INFORMATION





Non-Cash
      Financing Transactions


39





As
      disclosed in Note 9 (Equity Financing), during the years ended September 30,
      2006, $20,000 was paid directly by the investor to Pilot to hold for future
      payment of third-party professional fees. During the year ended September 30,
      2006, Pilot paid $25,992 for professional fees on behalf of the Company, which
      were recorded as stock offering costs.





During
      the year ended September 30, 2007, 100,000 common shares valued at $30,000
      were
      issued to the investor as repayment for a total of $30,000 unsecured loans
      received from the investor in 2006.








NOTE
      12 – RISK CONCENTRATION





Suppliers.
      The Company relies
      on a sole supplier for a key component contained in its wireless network systems
      hardware under a distribution agreement. This component also represents a
      substantial amount of its network component sales revenue. Cancellation of
      the
      current agreement would result in the inability of the Company to install new
      network systems, maintain current systems for its customers, and continue most
      of its product sales activity unless a distribution agreement could be obtained
      with another supplier of this component.








NOTE
      13 – SUBSEQUENT EVENTS:





On
      October 29, 2007, the Board of Directors adopted an Employee Equity Incentive
      Plan (the “Plan”) as approved by the shareholders on October 22, 2007. The Plan
      provides for the Company to grant qualified and nonqualified stock options,
      restricted stock, stock grants, and other equity-based awards (“Awards”) as
      defined in the Plan document to employees, directors and consultants of the
      Company. Awards may be subject to certain vesting requirements and other
      restrictions as defined in the Plan document. The maximum number of common
      shares which may be issued under the Plan is 10 million. On October 29, 2007,
      750,000 restricted common shares were awarded under the Plan to a consultant
      who
      also functions as the Company’s External Acting Chief Financial Officer. Also on
      October 29, 2007, non-qualified common stock options for 6.2 million shares
      were
      awarded under the Plan to various employees and a consultant, 4.5 million of
      which were awarded to the CEO. The Company also issued 150,000 restricted common
      shares to an employee on November 27, 2007.





The
      Company issued 138,872 common shares to a former employee as repayment for
      an
      unsecured loan payable of $13,873 on December 13, 2007 (see Note 6 – Unrelated
      Party).





Outstanding
      warrants to purchase a total of two million common shares expired on December
      31, 2007 without exercise by the warrant holders (see Note 9 – Common Stock
      Warrants).





On
      January 13, 2008, the two notes payable due December 31, 2007 were amended
      by
      the note holder to extend the maturity date of the notes to June 30, 2008 (see
      Note 7).








The
      Company issued 500,000 restricted common shares to a financial services company
      on November 27, 2007 pursuant to the execution of an agreement for that company
      to provide capital raising and other corporate services.


40