**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**WASHINGTON,
      DC 20549**





**FORM
      10-QSB**









**x      
Quarterly Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act**


**of 1934 for the quarterly period ended** **September
      30, 2006**





**o      
Transition Report
      Pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934**







Commission
      File Number 0-22848




**U.S.
      Wireless Data, Inc.**


**(Exact
      name of small business issuer as specified in its charter)**




Delaware


(State
      of
      incorporation)







84-1178691


(IRS
      Employer Identification No.)


2121
      Avenue of the Stars, Suite 1650


Los
      Angeles, CA 90067


(Address
      of principal executive offices, including zip code)


(310)
      601-2500


(Registrant’s
      Telephone Number, including area code)







Check
      whether the Registrant (1) has 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 ninety days. Yes x   No o





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





As
      of
      November 17, 2006, there were outstanding 9,499,730 shares of the Registrant’s
      Common Stock ($0.01 par value per share).





Transitional
      Small Business Disclosure Format. Yes o No x







**U.S.
      WIRELESS DATA, INC.**


**SEPTEMBER
      30, 2006 QUARTERLY REPORT ON FORM 10-QSB**


**TABLE
      OF CONTENTS**




**Page**Special
                Note Regarding Forward-Looking Statements
            
            1PART
                I -- FINANCIAL INFORMATION
            
            2ITEM
                1. Financial Statements (Unaudited)
            
            2Condensed
                Consolidated Balance Sheet as of September 30, 2006
            
            2Condensed
                Consolidated Statements of Operations for the Three Months Ended
                September30,
                2006
              and
                2005
            
            3Condensed
                Consolidated Statements of Cash Flows for the Three Months Ended
                September30,
                2006
              and
                2005
            
            4Notes
                to Condensed Consolidated Financial Statements
            
            5ITEM
                2. Management’s Discussion and Plan of Operation
            
            11ITEM
                3. Controls and Procedures
            
            13PART
                II -- OTHER INFORMATIONITEM
                1. Legal Proceedings
            
            13ITEM
                2. Unregistered Sale of Equity Securitiesand
                Use of Proceeds
            
            13ITEM
                3. Defaults Upon Senior Securities
            
            14ITEM
                4. Submission of Matters to a Vote of Security Holders
            
            14ITEM
                5. Other Information
            
            14ITEM
                6. Exhibits
            
            14












**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





In
      this
      section, “Special Note Regarding Forward-Looking Statements,” references to
“we,” “us,” “our,” and “ours” refer to U.S. Wireless Data, Inc.





To
      the
      extent that the information presented in this Quarterly Report on Form 10-QSB
      discusses financial projections, information or expectations about our products
      or markets, or otherwise makes statements about future events, such statements
      are forward-looking. We are making these forward-looking statements in reliance
      on the safe harbor provisions of the Private Securities Litigation Reform Act
      of
      1995. Although we believe that the expectations reflected in these
      forward-looking statements are based on reasonable assumptions, there are a
      number of risks and uncertainties that could cause actual results to differ
      materially from such forward-looking statements. These risks and uncertainties
      are described, among other places in this Quarterly Report, in “Management’s
      Discussion and Plan of Operation”.





In
      addition, we disclaim any obligations to update any forward-looking statements
      to reflect events or circumstances after the date of this Quarterly Report.
      When
      considering such forward-looking statements, you should keep in mind the risks
      referenced above and any other cautionary statement in this Quarterly
      Report.




1


**Part
      I — FINANCIAL INFORMATION**




**ITEM
      1. Financial Statements**




**U.S.
      WIRELESS DATA, INC.**


**CONDENSED
      CONSOLIDATED BALANCE SHEET**


**(UNAUDITED)**




**September
                30,****2006****ASSETS**Cash
                and cash equivalents
            
            $
            954,000Loans
                receivable
            
            
            3,500,000Interest
                receivable
            
            
            110,000Due
                from related parties
            
            
            15,000Prepaid
                and other current assets
            
            
            45,000Total
                Assets
            
            $
            4,624,000**LIABILITIES
                AND STOCKHOLDERS' EQUITY**LIABILITIES:Accounts
                payable
            
            $
            1,000Accrued
                liabilities
            
            
            133,000Total
                Liabilities
            
            
            134,000STOCKHOLDERS'
                EQUITY:Preferred
                Stock, $.01 par value, 1,000,000 shares authorized, none
                issued
            
            
            -Common
                Stock, $.01 par value, 19,000,000 shares authorized,9,499,730
                shares issued and outstanding
            
            
            95,000Additional
                paid-in capital
            
            
            5,739,000Accumulated
                deficit
            
            
            (1,344,000
            )Total
                Stockholders' Equity
            
            
            4,490,000Total
                Liabilities and Stockholders' Equity
            
            $
            4,624,000




See
                notes to condensed consolidated financial
                statements.




2




**U.S.
      WIRELESS DATA, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(UNAUDITED)**




**For
                the three months ended September 30,****2006**
            
            **2005**INCOME(EXPENSES):Interest
                income
            
            $
            98,000
            
            $
            -General
                and administrative
            
            
            (312,000
            )
            
            (36,000
            )NET
                LOSS
            
            $
            (214,000
            )
            $
            (36,000
            )Basic
                and diluted net loss per share:
            
            $
            (0.02
            )
            $
            (0.01
            )Weighted
                average common shares outstanding,basic
                and diluted
            
            
            9,500,000
            
            
            4,000,000





See
      notes
      to condensed consolidated financial statements.




3


**U.S.
      WIRELESS DATA, INC.**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(UNAUDITED)**




**For
                the three months**
              **ended
                September 30,****2006**
            
            **2005****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (214,000
            )
            $
            (36,000
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Changes
                in assets and liabilities:Interest
                receivable
            
            
            (90,000
            )
            
            -Due
                from related parties
            
            
            5,000
            
            
            -Prepaid
                and other current assets
            
            
            (41,000
            )
            
            -Accounts
                payable
            
            
            1,000
            
            
            21,000Accrued
                liabilities
            
            
            (28,000
            )
            
            -Net
                cash used in operating activities, and net decrease in
                cash
            
            
            (367,000
            )
            
            (15,000
            )CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            1,321,000
            
            
            28,000CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            954,000
            
            $
            13,000





See
      notes
      to condensed consolidated financial statements.




4


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**(Unaudited)**





**NOTE
      1 - THE COMPANY**





U.S.
      Wireless Data, Inc. (“USWD”, the “Company”, “we”, “us”, “our” or similar terms)
      was incorporated in the state of Colorado on July 30, 1991 and was
      reincorporated in the state of Delaware on October 6, 2000. We are currently
      a
“shell” company with no operations and controlled by Trinad Capital, L.P.
      (“Trinad”).





**Management’s
      Plan of Operation**





The
      Company has raised additional capital with a view to making us an attractive
      vehicle with which to acquire a business. On June 14, 2006, the Company entered
      into an Agreement and Plan of Merger (“Merger Agreement”) with StarVox
      Communications, Inc. (“StarVox”). Upon closing, the loans receivable will be
      converted into capital of the newly merged entity, and the shares of StarVox
      common and preferred stock outstanding immediately prior to the effective time
      of the merger shall be converted on a pro rata basis automatically into the
      right to receive 451.004079 shares of fully paid and non-assessable shares
      of
      the Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of preferred stock and common stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of the Company’s preferred stock, with which such
      number of shares of the Company’s preferred stock to be based on the exchange
      ratio used in the merger, to existing warrant holders of StarVox such that
      the
      holder of such warrants upon exercise will receive that number of shares of
      the
      Company’s common stock as such holder would have been entitled to receive
      pursuant to the merger had such holder exercised such warrants immediately
      prior
      to the effective time of the merger, with the same expiration date as currently
      exists and at a per share exercise price proportionately adjusted for the
      exchange ratio.





There
      can
      be no assurance that the merger will be consummated or, if consummated, that
      it
      will be consummated on the terms set forth in the Merger Agreement. We are
      therefore subject to a number of risks, including: this or any other acquisition
      consummated by us may turn out to be unsuccessful; and whether financing that
      could have a dilutive effect on our present stockholders will be required in
      connection therewith. The historical operations of a specific business
      opportunity may not necessarily be indicative of the potential for the future;
      we may acquire a company in the early stage of development, causing us to incur
      further risks; we may be dependent upon the management of an acquired business
      which has not proven its abilities or effectiveness; we will be controlled
      by a
      small number of stockholders and such control could prevent the taking of
      certain actions that may be beneficial to other stockholders; our common stock
      will likely be thinly traded, and the public market may provide little or no
      liquidity for holders of our common stock.





As
      of
      September 30, 2006, the Company had approximately $954,000 of cash, which
      management believes is sufficient to satisfy our monetary needs for the next
      fiscal year.





We
      do not
      currently have an operating business and therefore have no ability to generate
      cash flow from operations in order to fund our ongoing financial needs past
      the
      next fiscal year.





5


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**(Unaudited)**





**NOTE
      2 - BASIS OF PRESENTATION**





**Principles
      of Consolidation**





The
      consolidated financial statements include the accounts of U.S. Wireless Data,
      Inc. and its wholly owned subsidiary, StarVox Acquisition, a California
      corporation, which was formed as a shell company on June 6, 2006 to merge with
      StarVox Communications, Inc. (collectively, the "Company"). All significant
      inter-company accounts and transactions have been eliminated in consolidation.
      The Company had no subsidiaries as of September 30, 2005.





**Basis
      of Presentation and Use of Estimates**





The
      accompanying interim financial statements included herein have been prepared
      in
      accordance with accounting principles generally accepted in the United States
      of
      America and have been prepared by us, without an audit pursuant to the rules
      and
      regulations of the Security and Exchange Commission. In the opinion of
      management, all adjustments have been made, which include normal recurring
      adjustments necessary to present fairly the financial statements. Operating
      results for the periods presented are not necessarily indicative of the
      operating results for the full year. Certain information and footnote
      disclosures normally included in financial statements prepared in accordance
      with accounting principles generally accepted in the United States of America
      have been condensed or omitted. We believe that the disclosures provided are
      adequate to make the information presented not misleading. These unaudited
      financial statements should be read in conjunction with the audited consolidated
      financial statements and related notes included in our Annual Report for the
      year ended June 30, 2006 on Form 10-KSB.





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 and disclosure of contingent assets and liabilities at the dates
      of
      the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those estimates.





The
      Company is subject to a number of risks including dependence on key individuals,
      dependence on outside sources of capital, completion of an asset acquisition,
      merger, and exchange of capital stock or other business combination with a
      domestic or foreign business. There are no assurances, however, that the Company
      will be able to obtain additional financing or achieve the completion of an
      asset acquisition, merger or other business combination on favorable
      terms.





**Cash
      and Cash Equivalents**





Investments
      in money market funds and highly liquid investments purchased with an original
      maturity of three months or less are classified as cash equivalents. Cash
      equivalents are carried at cost, which approximates fair value. We maintain
      all
      of our cash balances with major financial institutions, which, at times, may
      exceed the Federal Deposit Insurance Corporation limit of up to $100,000. The
      Company has not experienced any losses as a result of this policy, and
      management believes there is little risk of loss.




**Income
      Taxes**




We
      follow
      Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for
      Income Taxes”, issued by the Financial Accounting Standards Board (“FASB”).
      Under the asset and liability method of SFAS No. 109, deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences between the financial statement carrying amounts of existing assets
      and liabilities and their respective tax bases. Since the Company has no prior
      history of profits, management has recorded a full valuation allowance as it
      is
      more likely than not that the deferred tax assets will not be
      realized.




6


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**




**(Unaudited)**




**NOTE
      2 - BASIS OF PRESENTATION (continued)**




**Stock-based
      Compensation**




On
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”),
      which requires the measurement and recognition of compensation expense for
      all
      share-based payment awards made to employees and directors based on estimated
      fair values. SFAS 123(R) supersedes the Company’s previous accounting under
      Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees” (“APB 25”) for periods beginning in fiscal 2006. In March 2005, the
      Securities and Exchange Commission issued Staff Accounting Bulletin No. 107
      (“SAB 107”) relating to SFAS 123(R). The Company has applied the provisions of
      SAB 107 in its adoption of SFAS 123(R).





The
      Company adopted SFAS 123(R) using the modified prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of the Company’s third quarter in fiscal year 2006. The
      Company’s consolidated financial statements as of and for the year ended
      June 30, 2006 reflect the impact of SFAS 123(R). In accordance with the
      modified prospective transition method, the Company’s consolidated financial
      statements for prior periods have not been restated to reflect, and do not
      include, the impact of SFAS 123(R). Stock-based compensation expense recognized
      under SFAS 123(R) for the year ended June 30, 2006 was approximately $381,000,
      which consisted of warrants granted to Board Members and an Officer  (See
      Note
      5). There was no stock-based compensation expense related to employee equity
      awards for the year ended June 30, 2005 under APB 25.





SFAS
      123(R) requires companies to estimate the fair value of share-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service period in the Company’s consolidated
      statement of operations. SFAS 123(R) requires forfeitures to be estimated at
      the
      time of grant and revised, if necessary, in subsequent periods if actual
      forfeitures differ from those estimates. Prior to the adoption of SFAS 123(R),
      the Company accounted for employee equity awards and employee stock purchases
      using the intrinsic value method in accordance with APB 25 as allowed under
      Statement of Financial Accounting Standards No. 123, “Accounting for
      Stock-Based Compensation”  (“SFAS 123”). Under the intrinsic value
      method, no stock-based compensation expense had been recognized in the Company’s
      consolidated statement of operations, other than as related to acquisitions,
      because the exercise price of the Company’s stock options granted to employees
      and directors equaled the fair market value of the underlying stock at the
      date
      of grant.





The
      fair
      value of share-based payment awards is estimated at the grant date using the
      Black-Scholes option valuation model. The Company’s determination of fair value
      of share-based payment awards on the date of grant using an option-pricing
      model
      is affected by the Company’s stock price as well as assumptions regarding a
      number of highly complex and subjective variables. These variables include,
      but
      are not limited to, the Company’s expected stock price volatility over the term
      of the awards, and actual and projected employee stock option exercise
      behaviors.





On
      November 10, 2005, the FASB issued FASB Staff Position No. 123(R)-3,
“Transition Election Related to Accounting for Tax Effects of Share-Based
      Payment Awards.” The Company has elected to adopt the modified prospective
      transition method provided in the FASB Staff Position for calculating the tax
      effects of stock-based compensation pursuant to SFAS 123(R). The alternative
      transition method includes simplified methods to establish the beginning balance
      of the additional paid-in capital pool (“APIC pool”) related to the tax effects
      of employee stock-based compensation, and to determine the subsequent impact
      on
      the APIC pool and consolidated statements of cash flows of the tax effects
      of
      employee stock-based compensation awards that are outstanding upon adoption
      of
      SFAS 123(R).


7


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**(Unaudited)**





**NOTE
      2 - BASIS OF PRESENTATION (continued)**




**Fair
      Value of Financial Instruments**




The
      carrying value of the Company’s financial instruments, including loans
      receivable, interest receivable and accrued liabilities, approximates their
      fair
      values due to their relatively short-term nature.




**NOTE
      3 - LOANS RECEIVABLE AND MERGER AGREEMENT**





On
      April
      20, 2006, the Company provided a bridge loan of $300,000 to StarVox. The loan
      is
      due on demand 120 days after April 20, 2006. The loan provides for an interest
      rate of 10% per annum and is secured by a lien on all of the assets of
      StarVox.





On
      June
      14, 2006, the Company provided a senior secured loan in the amount of $3,200,000
      to StarVox. The loan is due on demand after September 30, 2006. The loan
      provides for an interest rate of 10% per annum and is secured by all the assets
      of StarVox.





On
      June
      14, 2006, the Company entered into an Agreement and Plan of Merger (“Merger
      Agreement”) with StarVox. Upon closing, the loans receivable will be converted
      into capital of the newly merged entity, and the shares of StarVox common and
      preferred stock outstanding immediately prior to the effective time of the
      merger shall be converted on a pro rata basis automatically into the right
      to
      receive 451.004079 shares of fully paid and non-assessable shares of the
      Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of preferred stock and common stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of the Company’s preferred stock, with which such
      number of shares of the Company’s preferred stock to be based on the exchange
      ratio used in the merger, to existing warrant holders of StarVox such that
      the
      holder of such warrants upon exercise will receive that number of shares of
      the
      Company’s common stock as such holder would have been entitled to receive
      pursuant to the merger had such holder exercised such warrants immediately
      prior
      to the effective time of the merger, with the same expiration date as currently
      exists and at a per share exercise price proportionately adjusted for the
      exchange ratio.





StarVox
      is a facilities-based next generation Infrastructure and Applications service
      provider, that offers wholesale and retail traditional voice services and
      enhanced Voice-Over-Internet Protocol (“VoIP”) services over its domestic VoIP
      network and its international wholesale network. StarVox’s domestic VoIP network
      provides over 300 Points of Presence (POPs) which allows access from about
      80%
      of business sites. StarVox also provides local services to about 65% of business
      sites. A full suite of traditional and enhanced products is available to
      wholesale and retail customers. The international wholesale network offers
      reliable cost-effective worldwide connectivity to both established and emerging
      carriers. StarVox owns both its application technologies and domestic and
      international VoIP networks, which gives it a competitive advantage. StarVox
      works with a variety of channels (such as, ISPs, CLECs, Telecom Agents,
      Carriers, Affinity Groups, Property Management Groups, etc.) that are interested
      in migrating customers from traditional separate voice and data communications
      connections to a converged voice/data connection. StarVox offers a complete
      “turnkey” package of services to its channels with individual branding. StarVox
      services target small, medium and larger sized businesses (both single site
      and
      multi-site) that are interested in lowering their communications monthly costs
      by 20% to 40% by migrating to a converged service. In June 2006, StarVox
      acquired all of the outstanding stock of Capital Telecommunications Inc. (“CTI”)
      for $12,000,000 in cash and assumption of all outstanding liabilities. CTI
      is a
      registered competitive local exchange carrier with the Federal Communications
      Commission and is headquartered in York, Pennsylvania.


8


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**(Unaudited)**





**NOTE
      3 - LOANS RECEIVABLE AND MERGER AGREEMENT (continued)**





The
      closing of the transaction is subject to certain conditions, including execution
      of a definitive merger agreement and the completion of due diligence. There
      can
      be no assurance that the merger will be consummated or, if consummated, that
      it
      will be consummated on the terms set forth in the Merger Agreement.





**NOTE
      4 - NET LOSS PER SHARE**





Net
      loss
      per common share is computed in accordance with the provisions of SFAS No.
      128,
“Earnings per Share”. SFAS No. 128 establishes standards for the computation,
      presentation, and disclosure of earnings per share. Basic per share amounts
      are
      computed by dividing the net loss available to common stockholders by the
      weighted average number of common shares outstanding during the year. Diluted
      per share amounts incorporate the incremental shares issuable upon the assumed
      exercise of the Company’s stock options and warrants and assumed conversion of
      convertible securities. During the periods presented in the condensed
      consolidated statements of operations, 5,750,000 warrants to purchase common
      stock have been excluded from the calculation since their effect would be
      anti-dilutive.





**NOTE
      5 - EXECUTIVE COMPENSATION**





On
      January 18, 2006, upon the appointment of Mr. David Chazen as President and
      a
      member of the Board of Directors, the Company agreed to compensate Mr. Chazen
      for his services as President at a rate of $10,000 per month. This compensation
      arrangement can be terminated by either the Company or Mr. Chazen upon written
      notice to the other party. In addition, for agreeing to serve as a member of
      the
      Company’s Board of Directors, Mr. Chazen was granted a warrant to purchase
      150,000 shares of the Company’s common stock, having an exercise price of $1.00
      and an expiration date of January 18, 2008. Furthermore, on January 18, 2006,
      Mr. Barry Regenstein, a member of the Company’s Board of Directors, was granted,
      for his services as a member, a warrant to purchase 50,000 shares of the
      Company’s common stock, having an exercise price of $1.00 and an expiration date
      of January 18, 2008. The warrants granted to Messrs. Chazen and Regenstein
      contain standard piggyback registration rights, provided, however, the shares
      of
      common stock issued upon exercise will be subject to restrictions on resale
      for
      a period of one year from the date of exercise. The Company recognized
      approximately $300,000 of stock-based compensation expense related to the
      issuance of the warrants.





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following assumptions:





Expected
                Life (years)
            
            
            2Interest
                Rate
            
            
            4.35
            %Volatility
            
            
            446
            %Dividend
                Yield
            
            
            0





On
      February 13, 2006, upon the appointment of Mr. David Goddard as a member of
      the
      Board of Directors, he was granted a warrant to purchase 50,000 shares of the
      Company’s common stock, having an exercise price of $1.00 and an expiration date
      of February 13, 2008. The warrant contains standard piggyback registration
      rights, provided, however, the shares of common stock issued upon exercise
      will
      be subject to restrictions on resale for a period of one year from the date
      of
      exercise. The Company recognized approximately $81,000 of stock-based
      compensation expense related to the issuance of the warrants.


9





**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**





**(Unaudited)**





**NOTE
      5 - EXECUTIVE COMPENSATION**  **(continued)**





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following assumptions:





Expected
                Life (years)
            
            
            2Interest
                Rate
            
            
            4.68
            %Volatility
            
            
            321
            %Dividend
                Yield
            
            
            0





**NOTE
      6 - RELATED PARTY TRANSACTIONS**





On
      March
      10, 2006, a Management Agreement between Trinad Management, LLC ("Trinad")
      and
      the Company, pursuant to which Trinad agrees to provide the Company with certain
      management services (the "Management Services"), including, without limitation,
      the sourcing, structuring and negotiation of a potential business combination
      involving the Company, became effective. As compensation for such Management
      Services the Company will pay Trinad a monthly management fee of $30,000 for
      a
      period of five years. The Company may terminate the agreement by paying a
      termination fee of $1,000,000. As of September 30, 2006, Trinad and its
      affiliates collectively own approximately 40% of the Company's issued and
      outstanding common stock. The Company incurred $90,000 in management fees to
      Trinad during the three months ended September 30, 2006.





During
      the year ended June 30, 2006, certain officers of the Company incurred expenses
      on behalf of affiliated entities that were paid by the Company and charged
      to
      the affiliates. At September 30, 2006, the amount of reimbursements receivable
      from related parties totaled $15,000.




**NOTE
      7** **-** **ACCRUED
      LIABILITIES**




Accrued
                liabilities consist of:Accrued
                professional fees
            
            $
            116,000Accrued
                payroll expenses
            
            
            11,000Accrued
                travel and
              entertainment
                expenses
            
            
            6,000$
            133,000





**NOTE
      8** - **COMMITMENTS
      AND CONTINGENCIES**




We
      are
      not currently subject to any material legal proceedings. However, we may from
      time to time become a party to legal proceedings arising in the ordinary course
      of our business.




10





**ITEM
      2. MANAGEMENT’S DISCUSSION AND PLAN OF OPERATION**





**Special
      Note Regarding Forward-Looking Statements**





We
      may,
      in discussions of our future plans, objectives and expected performance in
      periodic reports filed by us with the Securities and Exchange Commission (“SEC”)
      (or documents incorporated by reference therein) and in written and oral
      presentations made by us, include projections or other forward-looking
      statements within the meaning of Section 27A of the Securities Exchange Act
      of
      1933 or Section 21E of the Securities Act of 1934, as amended. Such projections
      and forward-looking statements are based on assumptions, which we believe are
      reasonable but are, by their nature, inherently uncertain. You are cautioned
      that any such forward-looking statements are not guarantees of future
      performance and involve risks and uncertainties, and that actual results may
      differ materially from those projected in the forward-looking statements as
      a
      result of various factors. The factors that might cause such differences
      include, among others, the following: (i) our inability to obtain sufficient
      cash to fund ongoing obligations and continue as a going concern; (ii) our
      ability to carry out our operating strategy; and (iii) other factors including
      those discussed below. We undertake no obligation to publicly update or revise
      forward-looking statements to reflect events or circumstances after the date
      of
      this Quarterly Report on Form 10-QSB or to reflect the occurrence of
      unanticipated events.





**Overview**





U.S.
      Wireless Data, Inc. (“USWD”, the “Company”, “we”, “us”, “our” or similar terms)
      was incorporated in the state of Colorado on July 30, 1991 and was
      reincorporated in the state of Delaware on October 6, 2000. We are currently
      a
“shell” company with no operations and controlled by Trinad Capital, L.P.
      (“Trinad”), our majority stockholder.





**Management’s
      Discussion and Plan of Operation**





The
      Company has raised additional capital with a view to making us an attractive
      vehicle with which to acquire a business. On June 14, 2006, the Company entered
      into an Agreement and Plan of Merger (“Merger Agreement”) with StarVox
      Communications, Inc. Upon closing, the loans receivable will be converted into
      capital of the newly merged entity, and the shares of StarVox common and
      preferred stock outstanding immediately prior to the effective time of the
      merger shall be converted on a pro rata basis automatically into the right
      to
      receive 451.004079 shares of fully paid and non-assessable shares of the
      Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of preferred stock and common stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of the Company’s preferred stock, which such number
      of shares of the Company’s preferred stock to be based on the exchange ratio
      used in the merger, to existing warrant holders of StarVox such that the holder
      of such warrants upon exercise will receive that number of shares of the
      Company’s common stock as such holder would have been entitled to receive
      pursuant to the merger had such holder exercised such warrants immediately
      prior
      to the effective time of the merger, with the same expiration date as currently
      exists and at a per share exercise price proportionately adjusted for the
      exchange ratio.





There
      can
      be no assurance that the merger will be consummated or, if consummated, that
      it
      will be consummated on the terms set forth in the Merger Agreement. We are
      therefore subject to a number of risks, including: this or any other acquisition
      consummated by us may turn out to be unsuccessful; and whether financing that
      could have a dilutive effect on our present stockholders will be required in
      connection therewith. The historical operations of a specific business
      opportunity may not necessarily be indicative of the potential for the future;
      we may acquire a company in the early stage of development, causing us to incur
      further risks; we may be dependent upon the management of an acquired business
      which has not proven its abilities or effectiveness; we will be controlled
      by a
      small number of stockholders and such control could prevent the taking of
      certain actions that may be beneficial to other stockholders; our common stock
      will likely be thinly traded, and the public market may provide little or no
      liquidity for holders of our common stock.


11




On
      March
      10, 2006, the Company and Trinad Management, LLC ("Trinad Management") entered
      into a Management Agreement, pursuant to which Trinad Management agrees to
      provide the Company with certain management services (the "Management
      Services"), including, without limitation, the sourcing, structuring and
      negotiation of a potential business combination involving the Company. As
      compensation for such Management Services the Company will pay Trinad Management
      a monthly management fee of $30,000 for a period of five years. The Company
      may
      terminate the agreement by paying a termination fee of $1,000,000. Trinad and
      its affiliates collectively own approximately 40% of the Company's issued
      and outstanding common stock. The Company paid $90,000 in fees to Trinad
      Management during the three months ended September 30, 2006.





**Stock
      Sales and Liquidity**





On
      December 30, 2005, the Company sold 1,000,000 units; on January 18, 2006, the
      Company sold 950,000 units; on March 10, 2006, the Company sold 800,000 units;
      and on March 31, 2006, the Company sold 2,750,000 units. Each unit sold
      consisted of one share of common stock and one warrant, and the sales price
      of
      each unit was $1.00 per unit. The Company’s stock prices on the dates of closing
      were $1.65, $1.50, $1.65 and $2.30, respectively. The Company realized net
      proceeds of $5,413,000 after the costs of the offering. The warrants have an
      exercise price of $2 per share and expire as follows: 1,000,000 in December
      2007, 950,000 in January 2008 and 3,550,000 in March 2008. The total fair value
      of the units totaled approximately $21,000,000 upon issuance.





As
      of
      September 30, 2006, the Company had approximately $954,000 of cash, which
      management believes is sufficient to satisfy our monetary needs for the next
      fiscal year.





We
      do not
      currently have an operating business and therefore have no ability to generate
      cash flow from operations in order to fund our ongoing financial needs past
      the
      next fiscal year.





**CRITICAL
      ACCOUNTING POLICIES**





The
      accompanying financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States of America.





**Estimates
      and Assumptions**





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 and the disclosure of contingent assets and liabilities at the
      dates
      of the financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those estimates.





**QUANTITATIVE
      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**





We
      currently have no floating rate indebtedness, hold no derivative instruments,
      and do not earn foreign-sourced income. Accordingly, changes in interest rates
      or currency exchange rates do not generally have a direct effect on our
      financial position. Changes in interest rates may affect the amount of interest
      we earn on available cash balances as well as the amount of interest we pay
      on
      borrowings. To the extent that changes in interest rates and currency exchange
      rates affect general economic conditions, we may also be affected by such
      changes.





**Stock-based
      Compensation**




On
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123(R)”),
      which requires the measurement and recognition of compensation expense for
      all
      share-based payment awards made to employees and directors based on estimated
      fair values. SFAS 123(R) supersedes the Company’s previous accounting under
      Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees” (“APB 25”) for periods beginning in fiscal 2006. In March 2005, the
      Securities and Exchange Commission issued Staff Accounting Bulletin No. 107
      (“SAB 107”) relating to SFAS 123(R). The Company has applied the provisions of
      SAB 107 in its adoption of SFAS 123(R).


12





The
      Company adopted SFAS 123(R) using the modified prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of the Company’s third quarter in fiscal year 2006. The
      Company’s consolidated financial statements as of and for the year ended
      June 30, 2006 reflect the impact of SFAS 123(R). In accordance with the
      modified prospective transition method, the Company’s consolidated financial
      statements for prior periods have not been restated to reflect, and do not
      include, the impact of SFAS 123(R). Stock-based compensation expense recognized
      under SFAS 123(R) for the year ended June 30, 2006 was approximately $381,000
      which consisted of warrants granted to Board Members and an Officer. There
      was
      no stock-based compensation expense related to employee equity awards for the
      year ended June 30, 2005 under APB 25.





SFAS
      123(R) requires companies to estimate the fair value of share-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service period in the Company’s consolidated
      statement of operations. SFAS 123(R) requires forfeitures to be estimated at
      the
      time of grant and revised, if necessary, in subsequent periods if actual
      forfeitures differ from those estimates. Prior to the adoption of SFAS 123(R),
      the Company accounted for employee equity awards and employee stock purchases
      using the intrinsic value method in accordance with APB 25 as allowed under
      Statement of Financial Accounting Standards No. 123, “Accounting for
      Stock-Based Compensation”  (“SFAS 123”). Under the intrinsic value
      method, no stock-based compensation expense had been recognized in the Company’s
      consolidated statement of operations, other than as related to acquisitions,
      because the exercise price of the Company’s stock options granted to employees
      and directors equaled the fair market value of the underlying stock at the
      date
      of grant.





The
      fair
      value of share-based payment awards is estimated at the grant date using the
      Black-Scholes option valuation model. The Company’s determination of fair value
      of share-based payment awards on the date of grant using an option-pricing
      model
      is affected by the Company’s stock price as well as assumptions regarding a
      number of highly complex and subjective variables. These variables include,
      but
      are not limited to, the Company’s expected stock price volatility over the term
      of the awards, and actual and projected employee stock option exercise
      behaviors.





On
      November 10, 2005, the FASB issued FASB Staff Position No. 123(R)-3,
“Transition Election Related to Accounting for Tax Effects of Share-Based
      Payment Awards.” The Company has elected to adopt the modified prospective
      transition method provided in the FASB Staff Position for calculating the tax
      effects of stock-based compensation pursuant to SFAS 123(R). The alternative
      transition method includes simplified methods to establish the beginning balance
      of the additional paid-in capital pool (“APIC pool”) related to the tax effects
      of employee stock-based compensation, and to determine the subsequent impact
      on
      the APIC pool and consolidated statements of cash flows of the tax effects
      of
      employee stock-based compensation awards that are outstanding upon adoption
      of
      SFAS 123(R).





**ITEM
      3. CONTROLS AND PROCEDURES**





**(a)
      Evaluation of Disclosure Controls and Procedures.** Our
      principal executive officer and principal financial officer, after evaluating
      the effectiveness of our disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
      by this Quarterly Report on Form 10-QSB, have concluded that, based on such
      evaluation, our disclosure controls and procedures were adequate and effective
      to ensure that material information relating to us, was made known to them
      by
      others within those entities, particularly during the period in which this
      Quarterly Report on Form 10-QSB was being prepared.





**(b)
      Changes in Internal Controls.** There
      were no significant changes in our internal control over financial reporting,
      identified in connection with the evaluation of such internal control, that
      occurred during our last fiscal quarter that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





**PART
      II — OTHER INFORMATION**





**ITEM
      1. LEGAL PROCEEDINGS**





We
      are
      not currently subject to any material legal proceedings. However, we may from
      time to time become a party to legal proceedings arising in the ordinary course
      of our business.





**ITEM
      2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF
      PROCEEDS**


There
          have been no recent sales of unregistered equity securities during the
          period
          for which this report is presented or any such issuances have been previously
          reported on a Current Report on Form 8-K.
  13





**ITEM
      3. DEFAULTS UPON SENIOR SECURITIES**





None.





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





None.





**ITEM
      5. OTHER INFORMATION**





None.





**ITEM
      6. EXHIBITS**





**Exhibit
      No.  Description of Exhibit**





31.1
            
            Certification
                of Principal Financial Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                1350





31.2
            
            Certification
                of Principal Executive Officer Pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                1350





32.1
            
            Certification
                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Subsection
                (A)
                and (B) of Section 1350, Chapter 63 of Title 18, United States
                Code





14




**SIGNATURES**





In
      accordance with Section 13 or 15 of the Exchange Act, the Registrant caused
      this
      Report to be signed on its behalf by the undersigned, thereunto duly authorized.




**U.S.
                WIRELESS DATA, INC.**Dated:
                November 20, 2006
            By:
            /s/
                Robert EllinRobert
                Ellin
              Chief
                  Executive Officer
              (Principal
                  Executive Officer)Dated:
                November 20, 2006
            /s/
                Jay WolfJay
                Wolf
              Chief
                Operating Officer and
                Chief
                  Financial Officer
                  (Principal Financial
                    Officer)




15