**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 endedDecember
      31, 2005





**[  ]    
      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)





153
      East
      53 rd Street,
      48 th Floor


New
      York, NY 10022


(Former
      Address if changed since last report)







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 [ ]





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





As
      of
      February 9, 2006, there were outstanding 5,949,730 shares of the Registrant’s
      Common Stock ($0.01 par value per share).





Transitional
      Small Business Disclosure Format. Yes [
      ]     No [X]







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


**(A
      Development Stage Company)**


**DECEMBER
      31, 2005 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 December 31, 2005
            
            2Condensed
                Consolidated Statements of Operations for the Three and SixMonths
                Ended December 31, 2005 and 2004
            
            3Condensed
                Consolidated Statements of Cash Flows for the Six MonthsEnded
                December 31, 2005 and 2004
            
            4Notes
                to Condensed Consolidated Financial Statements
            
            5ITEM
                2. Management’s Plan of Operation
            
            17ITEM
                3. Controls and Procedures
            
            21PART
                II -- OTHER INFORMATIONITEM
                1. Legal Proceedings
            
            21ITEM
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            21ITEM
                3. Defaults Upon Senior Securities
            
            21ITEM
                4. Submission of Matters to a Vote of Security Holders
            
            21ITEM
                5. Other Information
            
            21ITEM
                6. Exhibits
            
            21







**SPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTS**





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





To
      the
      extent that the information presented in this Quarterly Report on Form 10-QSB
      discuss 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
      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 the other cautionary statements in this Quarterly
      Report.







2





**Part
      I — FINANCIAL INFORMATION**




**ITEM
      1. Financial Statements**




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


**(A
      Development Stage Company)**


**CONDENSED
      CONSOLIDATED BALANCE SHEET**


**(Unaudited)**





**December
                31,****2005****ASSETS**Current
                assets:Cash
            
            $
            970,000**Total
                assets**
            
            **$**
            **970,000****LIABILITIES
                AND STOCKHOLDERS' EQUITY**Current
                liabilities:Accrued
                liabilities
            
            $
            16,000**Total
                liabilities**
            
            
            **16,000**Commitments
                and contingenciesStockholders'
                equity:Preferred
                stock, 1,000,000 shares authorized at $.01 par value,no
                shares issued or outstanding at December 31, 2005Common
                stock, 19,000,000 shares authorized at $.01 par value,4,999,730
                shares issued and outstanding
            
            
            50,000Additional
                paid in capital
            
            
            990,000Deficit
                accumulated during the development stage
            
            
            (86,000
            )**Total
                stockholders' equity**
            
            
            **954,000****Total
                liabilities and stockholders' equity**
            
            **$**
            **970,000**See
                notes to condensed consolidated financial
                statements.







3


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


**(A
      Development Stage Company)**


**CONDENSED
      CONSOLIDATED STATEMENTS OF OPERATIONS**


**(Unaudited)**


**THREE
                MONTHS ENDED**
            
            **SIX
                MONTHS ENDED**
            
            **Successor****Company****DECEMBER
                31,**
            
            **DECEMBER
                31,**
            
            **Cumulative**
              **Period**
              **From
                Inception**
              **(April
                1, 2005)****Successor**
            
            **Predecessor**
            
            **Successor**
            
            **Predecessor**
            
            **To****Company**
            
            **Company**
            
            **Company**
            
            **Company**
            
            **December
                31,****2005**
            
            **2004**
            
            **2005**
            
            **2004**
            
            **2005****Continuing
                operations**General
                and administrative expenses
            
            $
            (26,000
            )
            $
            (420,000
            )
            $
            (61,000
            )
            $
            (727,000
            )
            $
            (86,000
            )Interest
                income
            
            
            -
            
            
            9,000
            
            
            -
            
            
            24,000
            
            
            -Interest
                expense
            
            
            -
            
            
            5,000
            
            
            -
            
            
            5,000
            
            
            -Other
                expenses
            
            
            -
            
            
            (8,000
            )
            
            -
            
            
            (9,000
            )
            
            -Loss
                before reorganization itemsand
                discontinued operations
            
            
            (26,000
            )
            
            (414,000
            )
            
            (61,000
            )
            
            (707,000
            )
            
            (86,000
            )Reorganization
                itemsProfessional
                fees and U.S. Trustee fees
            
            
            -
            
            
            (12,000
            )
            
            -
            
            
            (69,000
            )
            
            -Loss
                before discontinued operations
            
            
            (26,000
            )
            
            (426,000
            )
            
            (61,000
            )
            
            (776,000
            )
            
            (86,000
            )**Discontinued
                operations**Loss
                on discontinued operations
            
            
            -
            
            
            (93,000
            )
            
            -
            
            
            (247,000
            )
            
            -Loss
                from discontinued operations
            
            
            -
            
            
            (93,000
            )
            
            -
            
            
            (247,000
            )
            
            -**Net
                loss**
            
            **$**
            **(26,000**
            **)**
            **$**
            **(519,000**
            **)**
            **$**
            **(61,000**
            **)**
            **$**
            **(1,023,000**
            **)**
            **$**
            **(86,000**
            **)**Basic
                and diluted net loss per share:Loss
                before reorganization itemsand
                discontinued operations
            
            $
            (0.01
            )
            
            (a)
            
            $
            (0.01
            )
            
            (a)
            
            $
            (0.01
            )Loss
                from discontinued operations
            
            
            -
            
            
            (a)
            
            
            -
            
            
            (a)
            
            
            -Net
                loss per share
            
            $
            (0.01
            )
            
            (a)
            
            $
            (0.01
            )
            
            (a)
            
            $
            (0.01
            )Weighted
                average common shares outstanding, basic and diluted
            
            
            4,337,000
            
            
            (a)
            
            
            4,168,000
            
            
            (a)
            
            
            4,168,000See
                notes to condensed consolidated financial statements.(a)
                See Note 4.





4





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


**(A
      Development Stage Company)**


**CONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS**


**(Unaudited)**





**Successor****Company****For
                the six months ended December 31,**
            
            **Cumulative**
              **Period**
              **From
                Inception**
              **(April
                1, 2005)****2005**
            
            **2004**
            
            **to****Successor**
            
            **Predecessor**
            
            **December
                31,****Company**
            
            **Company**
            
            **2005****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (61,000
            )
            $
            (1,023,000
            )
            $
            (86,000
            )Adjustments
                to reconcile net loss to net cash used inoperating
                activities:Provision
                for doubtful accounts
            
            
            -
            
            
            52,000
            
            
            -Changes
                in operating assets and liabilities:Accounts
                receivable
            
            
            -
            
            
            (39,000
            )
            
            -Due
                from factor
            
            
            -
            
            
            63,000
            
            
            -Due
                from winning auction sale bidder
            
            
            -
            
            
            107,000
            
            
            -Prepaids
                and other current assets
            
            
            -
            
            
            287,000
            
            
            -Accounts
                payable and accrued liabilities
            
            
            (3,000
            )
            
            271,000
            
            
            16,000Prepetition
                liabilities subject to compromise
            
            
            -
            
            
            52,000
            
            
            -Net
                cash used in operating activities
            
            
            (58,000
            )
            
            (230,000
            )
            
            (70,000
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Decrease
                in restricted cash
            
            
            -
            
            
            456,000
            
            
            -Transfer
                to Chapter 11 escrow accounts
            
            
            -
            
            
            (222,000
            )
            
            -Net
                cash provided by investing activities
            
            
            -
            
            
            234,000
            
            
            -**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Receipts
                from new issuances of stocks
            
            
            1,000,000
            
            
            
            
            
            1,000,000Proceeds
                from Plan Sponsor
            
            
            -
            
            
            -
            
            
            100,000Costs
                related to acquisition of shell
            
            
            -
            
            
            -
            
            
            (60,000
            )Payments
                for real estate lease termination
            
            
            -
            
            
            (456,000
            )
            
            -Net
                cash provided (used in) financing activities
            
            
            1,000,000
            
            
            (456,000
            )
            
            1,040,000Net
                increase (decrease) in cash and cash equivalents
            
            
            942,000
            
            
            (452,000
            )
            
            970,000Cash
                and cash equivalents, beginning of period
            
            
            28,000
            
            
            912,000
            
            
            -Cash
                and cash equivalents, end of period
            
            $
            970,000
            
            $
            460,000
            
            $
            970,000See
                notes to condensed consolidated financial
                statements.





5


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


**(A
      Development Stage Company)**


**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”), our majority shareholder. The Company intends to serve as a vehicle
      to effect an asset acquisition, merger, exchange of capital stock or other
      business combination with a domestic or foreign business.





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





Trinad,
      a
      hedge fund dedicated to investing in micro-cap companies, is seeking to raise
      additional capital with a view to making us an attractive vehicle with which
      to
      acquire a business. It will then seek a suitable acquisition candidate. No
      such
      business has been identified and we are therefore subject to a number of risks,
      including: any acquisition consummated by us may turn out to be unsuccessful;
      our investors will not know what operating business, if any, will be acquired,
      including the particular industry in which the business operates, 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 stages 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.





Trinad
      has agreed that it will not dispose of any of our common stock held by it until
      an acquisition transaction has been consummated and a Current Report on Form
      8-K
      setting forth the terms of the acquisition and audited financial statements
      of
      the acquisition target have been filed with the Securities and Exchange
      Commission (“SEC”).





**Reorganization
      and the Liquidation Trust**





On
      March
      18, 2005, in accordance with the Plan (as defined below under the section
      titled, “Chapter 11 Proceedings”), Trinad, our Plan sponsor, became the holder
      of 93% of our newly issued common stock as further discussed in the paragraphs
      below (the “Reorganization”).





Additionally,
      on March 18, 2005, Robert Ellin became a director and our Chief Executive
      Officer, Jay Wolf became a director and our Chief Operating Officer and Chief
      Financial Officer and Barry Regenstein became a director. Robert Ellin and
      Jay
      Wolf are the Managing Member and Managing Director of Trinad,
      respectively.





6




In
      accordance with the Plan, Trinad contributed $400,000 in cash to the Predecessor
      Company (as defined in Note 2) and as of the close of business on March 18,
      2005
      (immediately before the Reorganization), all of the assets and liabilities
      of
      the Predecessor Company, with the exception of the public entity shell company,
      along with all contingent assets and liabilities, were transferred to the USWD
      Liquidation Trust (the “Liquidation Trust”). In addition, Trinad contributed
      $100,000 in cash to the Successor Company (as defined in Note 2) in exchange
      for
      93% of the new common stock issued under the Plan, with the remaining 7% of
      the
      new common stock issued to the holders of record of our Series C Preferred
      Stock
      and our Common Stock as of February 7, 2005, with 3.5% going to each class.
      Simultaneously, all of the Company’s originally issued and outstanding Series C
      preferred stock and common stock were cancelled. In accordance with the Plan,
      the cash in the Liquidation Trust will be used to pay administrative costs
      and
      creditors in the Chapter 11 Proceedings. If there is any remaining cash in
      the
      Liquidation Trust, it will be used to settle a small portion of the aggregate
      $32,302,000 liquidation preference to which the holders of our Series C
      Preferred Stock are entitled as of February 7, 2005.





**Chapter
      11 Proceedings**





On
      March
      26, 2004 (the “Petition Date”), we filed a voluntary petition for relief under
      Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the
      United States Bankruptcy Court for the Southern District of New York (the
“Court”), in re U.S. Wireless Data, Inc., Case Number 04-12075 (the “Chapter 11
      Proceedings”). Prior to the Chapter 11 Proceeding, we were principally engaged
      in providing wireless transaction delivery and gateway services to the payment
      processing industry. Since our inception, we had incurred significant losses
      and
      negative cash flow from operations.





We
      operated as a debtor-in-possession (“DIP”) under the jurisdiction of the Court
      and in accordance with the applicable provisions of the Bankruptcy Code and
      orders of the Court until the Reorganization.





On
      December 27, 2004, the Court confirmed our Amended Plan of Reorganization (the
      “Plan”). Additional details concerning the Plan are in the Amended Disclosure
      Statement filed with the Court in November 2004 in support of the Plan, the
      Amended Plan of Reorganization and Order Confirming Amended Plan of
      Reorganization, each of which is filed as an exhibit to the Company’s Current
      Report on Form 8-K filed with the SEC on January 18, 2005.





On
      January 19, 2005 we paid approximately $889,000 as an initial payment to
      creditors for pre-petition liabilities representing approximately 50% of
“allowed claims” under the Plan.





The
      following assets and liabilities from our Balance Sheet as of the close of
      business on March 18, 2005, immediately before the Reorganization, along with
      all contingent assets and liabilities, were transferred to the Liquidation
      Trust
      (as provided for under the terms of the Plan), and the Company effectuated
      the
      completion of the Reorganization, thereby emerging from the Chapter 11
      Proceedings:





7


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


**(A
      Development Stage Company)**


**NOTES
      TO CONDENSED CONSOLIDATED TO FINANCIAL STATEMENTS**


**(Unaudited)**





**NOTE
      1 — THE COMPANY (continued)**







ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            100,000Cash
                and cash equivalents in escrow
            
            
            2,225,000Due
                from Plan Sponsor
            
            
            400,000Due
                from winning auction sale bidder
            
            
            64,000Prepaid
                and other current assets
            
            
            13,000$
            2,802,000LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            212,000Accrued
                liabilities
            
            
            73,000Total
                liabilities not subject to compromise
            
            
            285,000Pre-petition
                liabilities subject to compromise
            
            
            1,572,000Total
                liabilities
            
            
            1,857,000





“Pre-petition
      liabilities subject to compromise” were as follows:





Accounts
                payable
            
            $
            1,154,000Accrued
                liabilities
            
            
            206,000Obligation
                for rejected real property lease
            
            
            212,000$
            1,572,000




**Loan,
      Stock Sales and Liquidity**





On
      September 23, 2005, the Company executed a loan agreement with Trinad whereby
      Trinad agreed to loan the Company up to a principal amount of $100,000 (the
      “Loan”), at any time and from time to time, prior to the Company’s consummation
      of a Next Financing (as defined below). Trinad shall make advances to the
      Company in such amounts as the Company shall request from time to time. The
      Loan
      bears interest at the prime rate plus 1 percent per annum. The entire
      outstanding principal amount of the Loan and any accrued interest thereon shall
      be due and payable by the Company upon, and not prior to, the consummation
      of a
      sale of securities (other than a sale of shares of the Company’s Common Stock to
      officers, directors or employees of, or consultants to, the Company in
      connection with their provision of services to the Company), to a third party
      or
      parties with proceeds to the Company of not less than $200,000 (a “Next
      Financing”). As of December 31, 2005, the Company had not borrowed any amounts
      under the Loan and, thus, no amounts were outstanding under the loan
      agreement.





On
      December 30, 2005, the Company sold one million units consisting of one share
      of
      common stock and one warrant at a price of $1 per unit in a private placement
      for gross proceeds of $1,000,000. The warrants have an exercise price of $2
      per
      share and expire in December 2007. As of December 31, 2005, the Company had
      approximately $970,000 of cash, which management believes is sufficient to
      satisfy our monetary needs for the next fiscal year.


8


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


**(A
      Development Stage Company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**NOTE
      1 — THE COMPANY (continued)**





We
      have
      had no liabilities related to the Chapter 11 Proceedings. 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.





**NOTE
      2 - BASIS OF PRESENTATION**





The
      Company may be referred to as the “Predecessor Company” for all periods through
      the Reorganization and as the “Successor Company” for all periods after the
      recognition of the Reorganization. The Reorganization was effectuated as of
      the
      close of business on March 18, 2005; however, there was virtually no activity
      between March 19, 2005 and March 31, 2005. Therefore, for accounting purposes,
      we used March 31, 2005 as the date the Reorganization was effectuated.





As
      a
      result of (i) the sale of virtually all of our operating assets, and (ii) the
      Reorganization, the historical financial statements are irrelevant to any
      assessment of the Company on an ongoing basis. Accordingly, readers are advised
      not to rely on any historical financial information in considering an investment
      in or disposition of the Company’s stock.





There
      were no revenues during the three and six month periods ended December 31,
      2005
      and 2004 from discontinued operations.





**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 SEC. 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
      the Company’s Annual Report on Form 10-KSB for the year ended June 30, 2005.





The
      accompanying financial statements have been prepared in accordance with
      Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in
      Reorganization under the Bankruptcy Code”. SOP 90-7 requires that the financial
      statements for periods subsequent to the Chapter 11 filing petition distinguish
      transactions and events that are directly associated with the reorganization
      from the ongoing operations of the business. All pre-petition claims were
      transferred to the Liquidation Trust on March 18, 2005 in accordance with the
      Reorganization. Revenues, expenses, realized gains and losses and provision
      for
      losses resulting from the reorganization are reported separately as
“Reorganization items” in the accompanying condensed consolidated statements of
      operations.





9




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 revenue and expenses during
      the reporting period. Actual results could differ from those estimates.





All
      of
      the common stock that was outstanding prior to the Petition Date was cancelled
      and new shares of common stock were issued in accordance with the Plan. The
      reorganization value of the assets of the emerging entity immediately before
      the
      date of confirmation exceeded the total of all post-petition liabilities and
      allowed claims; therefore, the Company did not qualify for fresh start
      accounting under SOP 90-7 and continued its basis of accounting.





The
      Company is subject to a number of risks similar to those of other development
      stage companies 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.





**Reclassifications**





Certain
      amounts in the prior period condensed consolidated financial statements have
      been reclassified to conform to the current presentation.




**Stock-based
      Compensation**





We
      account for employee stock-based compensation cost using the intrinsic value
      method of accounting prescribed by the Accounting Principles Board Opinion
      No.
      25, “Accounting for Stock Issued to Employees” (“APB No. 25”). The Company has
      adopted the disclosure-only provisions of Statement of Financial Accounting
      Standards (“SFAS”) No. 123, “Accounting for Stock Based-Compensation” and SFAS
      No. 148, “Accounting for Stock-Based Compensation - Transition and Disclosure”
for employee stock arrangements. Restricted stock or stock awards are recorded
      as compensation expense over the vesting period, if any, based on the market
      value on the date of grant.





For
      stock-based compensation issued to non-employees, we utilize the fair value
      method prescribed in SFAS No. 123.




10


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


**(A
      Development Stage Company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





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





**Stock-based
      Compensation (continued)**





Prior
      to
      the effective date of the Plan, we had four fixed stock-based compensation
      plans. The exercise price of each option granted pursuant to these plans was
      equal to the market price of the Company’s common stock on the date of grant.
      Accordingly, pursuant to APB No. 25, no compensation cost has been recognized
      for such grants. Had compensation cost been determined based on the fair value
      at the grant dates for such awards consistent with the method prescribed by
      SFAS
      No. 123, the Company’s net loss and loss per share for the periods indicated
      would have been as follows:




Three
                  months ended December 31,
              
              Six
                  months ended December 31,2005
              
              2004
              
              2005
              
              2004SuccessorCompany
              
              PredecessorCompany
              
              SuccessorCompany
              
              PredecessorCompanyLoss
                  from continuing operations
              
              $
              (26,000
              )
              $
              (426,000
              )
              $
              (61,000
              )
              $
              (776,000
              )Loss
                  from discontinued operations
              
              
              -
              
              
              (93,000
              )
              
              -
              
              
              (247,000
              )Net
                  loss, as reported
              
              
              (26,000
              )
              
              (519,000
              )
              
              (61,000
              )
              
              (1,023,000
              )Deduct: Total stock-based
                  compensation
                    expense
                  determined
                    under fair
                  value
                    based method
              
              
              -
              
              
              (62,000
              )
              
              -
              
              
              (139,000
              )Pro
                  forma net loss
              
              $
              (26,000
              )
              $
              (581,000
              )
              $
              (61,000
              )
              $
              (1,162,000
              )Per
                  share, as reported (a)From
                  continuing operations
              
              $
              (0.01
              )
              
              (a)
              
              $
              (0.01
              )
              
              (a)From
                  discontinued operations
              
              
              -
              
              
              (a)
              
              
              -
              
              
              (a)Net
              
              $
              (0.01
              )
              
              (a)
              
              $
              (0.01
              )
              
              (a)Per
                  share, pro forma (a)From
                  continuing operations
              
              $
              (0.01
              )
              
              (a)
              
              $
              (0.01
              )
              
              (a)From
                  discontinued operations
              
              
              -
              
              
              (a)
              
              
              -
              
              
              (a)Net
              
              $
              (0.01
              )
              
              (a)
              
              $
              (0.01
              )
              
              (a)(a)
                  See Note 4.




11


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


**(A
      Development Stage Company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





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





**Stock-based
      Compensation (continued)**





In
      determining the fair value of each option, we used the Black-Scholes
      option-pricing model as prescribed by SFAS No. 123 using the following
      assumptions: dividend yield of zero, expected volatility of 123%, an average
      expected option life of 3.5 years and an average risk-free interest rate of
      2.31% for the year ended June 30, 2003. We did not grant options during the
      year
      ended June 30, 2004 or the nine months ended March 31, 2005.





As
      of the
      effective date of the Plan and as provided for under the provisions of the
      Plan,
      all outstanding warrants and options expired without value.





**NOTE
      3 - AUCTION SALES**





Loss
      from
      the discontinued operations relating to the auction sales are as follows:




**Three
                    months ended****December
                  31,**
              
              
              **Six
                    months ended****December
                  31,**Revenues
              
              $
              -
              
              $
              -
              
              $
              -
              
              $
              -Loss
                  from operations
              
              
              -
              
              $
              (93,000
              )
              
              -
              
              $
              (247,000
              )


**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 Statements of
      Operations, such incremental amounts have been excluded from the calculation
      since their effect would be anti-dilutive. At December 31, 2005 ,
      t he
      incremental share amounts were excluded from the calculation  totaling
      1,000,000 shares of common stock issuable
      upon the exercise of the warrants issued in connection with the private
      placement offering .




As
      of the
      close of business on March 18, 2005, our assets, liabilities and contingencies
      were transferred to the Liquidation Trust (as provided for under the terms
      of
      the Plan) and the Company effectuated the completion of the Reorganization.
      In
      addition, all issued and outstanding shares of the Company’s capital stock were
      cancelled and new shares were issued. The Company’s current operations are not
      representative or comparable to that of the Company prior to March 18, 2005
      and,
      accordingly, net loss per share is not presented for periods prior to March
      18,
      2005.






12





**NOTE
      5 — SUPPLEMENTAL CASH FLOW INFORMATION**





Supplemental
      disclosure of non-cash financing and investing activities:





Six
      months ended December 31, 2005 and 2004





1.
            
            Conversion
                of 10,000 shares of Series C Convertible Preferred Stock into 16,667
                shares of Common Stock during the six months ended September 30,
                2004.





**NOTE
      6 - EQUITY TRANSACTIONS**





During
      December 2005, the Company sold one million units consisting of one share of
      common stock and one warrant at a price of $1 per unit in a private placement.
      The warrants have an exercise price of $2 per share and expire in December
      2007.





**NOTE
      7 —RECENT ACCOUNTING PRONOUNCEMENTS**





In
      December 2004, the Financial Accounting Standards Board (“FASB”) issued Staff
      Position 109-1 (“FSP 109-1”), Application of FASB Statement No. 109 (FASB No.
      109”), “Accounting for Income Taxes”, to the Tax Deduction on Qualified
      Production Activities Provided by the American Jobs Creation Act of 2004. FSP
      109-1 clarifies guidance that applies to the new deduction for qualified
      domestic production activities. When fully phased-in, the deduction will be
      up
      to 9% of the lesser of “qualified production activities income” or taxable
      income. FSP 109-1 clarifies that the deduction should be accounted for as a
      special deduction under FASB No. 109 and will reduce tax expense in the period
      or periods that the amounts are deductible on the tax return. **** Any
      tax
      benefits resulting from the new deduction will be effective for the Company’s
      fiscal year ending December 31, 2005. This staff position is not expected to
      have a material impact on the Company’s condensed consolidated financial
      statements.




On
      December 16, 2004, the Financial Accounting Standards Board (FASB) issued
      Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004),
      Share-Based Payment, which revised SFAS No. 123, Accounting for Stock-Based
      Compensation. SFAS No. 123(R) supersedes APB No. 25, Accounting for Stock Issued
      to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the
      approach in SFAS No. 123(R) is similar to the approach described in SFAS 123.
      However, SFAS No.123(R) requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the income
      statement based on their fair values. Pro forma disclosure is no longer an
      alternative. In March 2005, the Securities and Exchange Commission issued Staff
      Accounting Bulletin No. 107 ("SAB 107") which expresses views of the SEC staff
      regarding the application of SFAS No. 123(R). Among other things, SAB 107
      provides interpretive guidance related to the interaction between SFAS No.
      123
      (R) and certain SEC rules and regulations, as well as provides the SEC staff's
      views regarding the valuation of share-based payment arrangements for public
      companies. On April 14, 2005, the SEC announced the adoption of a new rule
      that
      amends the compliance dates of SFAS 123 (R). The new rule allows companies
      to
      implement SFAS 123 (R) at the beginning of their next fiscal year that begins
      after June 15, 2005 or December 15, 2005 for small business
      issuers.




SFAS
      No.
      123(R) permits public companies to adopt its requirements using one of two
      methods:




13




A
      "modified prospective" method in which compensation cost is recognized beginning
      with the effective date (a) based on the requirements of SFAS No. 123(R) for
      all
      share-based payments granted after the effective date and (b) based on the
      requirements of SFAS No.123 for all awards granted to employees prior to the
      effective date of SFAS No. 123(R) that remain unvested on the effective
      date.




A
      "modified retrospective" method which includes the requirements of the modified
      prospective method described above, but also permits entities to restate based
      on the amounts previously recognized under SFAS No. 123 for purposes of pro
      forma disclosures either (a) all prior periods presented or (b) prior interim
      periods of the year of adoption.




The
      Company will adopt SFAS No. 123(R) effective January 1, 2006 using the modified
      prospective method.




As
      permitted by SFAS No. 123, the Company currently accounts for share-based
      payments to employees using the intrinsic value method per Accounting Principles
      Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and,
      as
      such, generally recognizes no compensation cost for employee stock options.
      Accordingly, the adoption of Statement 123(R)'s fair value method may have
      a
      significant impact on our results of operations, although it will have no impact
      on our overall financial position. The impact of the adoption of SFAS No. 123(R)
      cannot be predicted at this time because it will depend on levels of share-based
      awards granted in the future. However, had the Company adopted SFAS No. 123(R)
      in prior periods, the impact of that standard would have approximated the impact
      of SFAS No. 123 as described in the disclosure of pro forma net income and
      income per share in "Share-Based Compensation" in Note 2--" Basis of
      Presentation" in the accompanying condensed consolidated financial statements.
      SFAS No. 123(R) also requires the benefits of tax deductions in excess of
      recognized compensation cost to be reported as a financing cash flow rather
      than
      as an operating cash flow as required under current literature. This requirement
      may reduce net operating cash flows and increase net financing cash flows in
      periods after adoption. The Company cannot estimate what those amounts will
      be
      in the future because they depend on, among other things, when employees
      exercise stock options.





The
      FASB
      issued SFAS 153, Exchange of Nonmonetary Assets, which changes the guidance
      in
      Accounting Principles Board (APB) Opinion 29, Accounting for Nonmonetary
      Transactions. This statement amends Opinion 29 to eliminate the exception for
      nonmonetary exchanges of similar productive assets and replaces it with a
      commercial substance. A nonmonetary exchange has commercial substance if the
      future cash flows of the entity are expected to change significantly as a result
      of the exchange. SFAS 153 is effective for the nonmonetary assets exchange
      occurring in the fiscal period beginning after June 15, 2005. The Company does
      not believe the adoption of SFAS No. 153 will have a material impact on the
      Company’s condensed consolidated financial statements.





In
      June
      2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections,
      a
      replacement of APB Opinion No. 20 and SFAS 3. The statement applies to all
      voluntary changes in accounting for and reporting of a change in accounting
      principle. SFAS is effective for accounting changes and error corrections made
      in the fiscal year beginning December 15, 2005. The Company does not believe
      the
      adoption of SFAS No. 154 will have a material impact on the Company’s condensed
      consolidated financial statements.


14


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


**(A
      Development Stage Company)**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**(Unaudited)**





**NOTE
      8 - SUBSEQUENT EVENTS**





On
      January 16, 2006, the Company completed the second and final tranche of a
      private placement offering of 950,000 units at $1 per unit for gross proceeds
      of
      $950,000. Each unit consisted of (i) one share of its common stock, par value
      $.01 per share, and (ii) one warrant to purchase, for a period of two years
      and
      at an exercise price of $2.00 per share, one full share of common stock The
      Company will use the proceeds from the sale of the units for working capital
      and
      general corporate purposes. No underwriter or placement agent was involved
      in
      the transaction, and no commissions or other remuneration were paid in
      connection with the offer and sale of the units.





On
      January 18, 2006, Mr. David Chazen was appointed President and a member of
      the
      Board of Directors, and will be compensated for his services as President at
      a
      rate of $10,000 per month. As compensation 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, at an exercise price of $1.00 that
      expires on January 18, 2008. Additionally, on January 18, 2006, Mr. Barry
      Regenstein, for his services as a member of the Board of Directors, was granted
      a warrant to purchase 50,000 shares of the Company’s common stock, at an
      exercise price of $1.00 that expires on January 18, 2008. The Company has valued
      the warrants issued at approximately $300,000 using the Black-Scholes Model,
      assuming a life of two years, volatility of 445.8% and a risk free borrowing
      rate of 4.35%, and will be charged to compensation expense in the third
      quarter.





15


**ITEM
      2. MANAGEMENT’S 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 Act of 1933,
      as
      amended (the “Securities Act”) or Section 21E of the Securities Exchange 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. The Company intends to serve as a vehicle
      to effect on asset acquisition, merger and exchange of capital stock or other
      business combination with a domestic or foreign business.





The
      Company may be referred to as the “Predecessor Company” for all periods through
      the Reorganization (as defined below) and as the “Successor Company” for all
      periods after the recognition of the Reorganization. The Reorganization was
      effectuated as of the close of business on March 18, 2005; however, there was
      virtually no activity between March 19, 2005 and March 31, 2005. Therefore,
      for
      accounting purposes, we used March 31, 2005 as the date the Reorganization
      was
      effectuated.





As
      a
      result of (i) the sale of virtually all of our operating assets in the Auction
      Sales (as defined below), and (ii) the Reorganization, very little of what
      is
      included in this Report on Form 10-QSB is relevant to any assessment of the
      Company on an ongoing basis. Accordingly, readers are advised not to rely on
      any
      historical information in considering an investment in or disposition of our
      stock.





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





Trinad,
      a
      hedge fund dedicated to investing in micro-cap companies, is seeking to raise
      additional capital with a view to making us an attractive vehicle with which
      to
      acquire a business. It will then seek a suitable acquisition candidate. No such business has been identified
      and we are therefore subject to a number of risks, including: any acquisition
      consummated by us may turn out to be unsuccessful; our investors will not know
      what operating business, if any, will be acquired, including the particular
      industry in which the business operates, 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 stages 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.






16




Trinad
      has agreed that it will not dispose of any of our common stock held by it until
      an acquisition transaction has been consummated and a Current Report on Form
      8-K
      setting forth the terms of the acquisition and audited financial statements
      of
      the acquisition target have been filed with the SEC.





**Reorganization
      and the Liquidation Trust**





On
      March
      18, 2005, in accordance with the Plan (as defined below under the section
      titled, “Chapter 11 Proceedings”), Trinad, our Plan sponsor, became the holder
      of 93% of our newly issued common stock as further discussed in the paragraphs
      below (the “Reorganization”).





Additionally,
      on March 18, 2005, Robert Ellin became a director and Chief Executive Officer,
      Jay Wolf became a director, Chief Operating Officer and Chief Financial Officer,
      and Barry Regenstein became a director of the Company. Robert Ellin and Jay
      Wolf
      are the Managing Member and Managing Director of Trinad,
      respectively.





In
      accordance with the Plan, Trinad contributed $400,000 in cash to the Predecessor
      Company and as of the close of business on March 18, 2005 (immediately before
      the Reorganization), all of the assets and liabilities of the Predecessor
      Company, with the exception of the public entity shell company, along with
      all
      contingent assets and liabilities, were transferred to the USWD Liquidation
      Trust (the “Liquidation Trust”). In addition, Trinad contributed $100,000 in
      cash to the Successor Company in exchange for 93% of the new common stock issued
      under the Plan, with the remaining 7% of the new common stock issued to the
      holders of record of our Series C Preferred Stock and our common stock as of
      February 7, 2005, with 3.5% going to each class. Simultaneously, all of our
      originally outstanding Series C Preferred Stock and our common stock were
      cancelled. In accordance with the Plan, the cash in the Liquidation Trust will
      be used to pay administrative costs and creditors of the Chapter 11 Proceedings.
      If there is any remaining cash in the Liquidation Trust, it will be used to
      settle a small portion of the aggregate $32,302,000 liquidation preference
      to
      which the holders of our Series C Preferred Stock are entitled as of February
      7,
      2005.





**Chapter
      11 Proceedings**





On
      March
      26, 2004 (the “Petition Date”), we filed a voluntary petition for relief under
      Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the
      United States Bankruptcy Court for the Southern District of New York (the
“Court”), in re U.S. Wireless Data, Inc., Case Number 04-12075 (the “Chapter 11
      Proceeding”). Prior to the Chapter 11 Proceeding, we were principally engaged in
      providing wireless transaction delivery and gateway services to the payment
      processing industry. Since our inception, we had incurred significant losses
      and
      negative cash flow from operations.




17




We
      operated as a debtor-in-possession (“DIP”) under the jurisdiction of the Court
      and in accordance with the applicable provisions of the Bankruptcy Code and
      orders of the Court until the Reorganization.





On
      December 27, 2004, the Court confirmed our Amended Plan of Reorganization (the
      “Plan”). Additional details concerning the Plan are in the Amended Disclosure
      Statement filed with the Court in November 2004 in support of the Plan, the
      Amended Plan of Reorganization and Order Confirming Amended Plan of
      Reorganization, each of which is filed as an exhibit to the Current Report
      on
      Form 8-K filed with the SEC on January 18, 2005.





On
      January 19, 2005 we paid approximately $889,000 as an initial payment to
      creditors for pre-petition liabilities, representing approximately 50% of
“allowed claims” under the Plan.





The
      following assets and liabilities from our Balance Sheet as of the close of
      business on March 18, 2005 immediately before the Reorganization, along with
      all
      contingent assets and liabilities, were transferred to the Liquidation Trust
      (as
      provided for under the terms of the Plan) and the Company effectuated the
      completion of the Reorganization, thereby emerging from the Chapter 11
      Proceedings:





ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            100,000Cash
                and cash equivalents in escrow
            
            
            2,225,000Due
                from Plan Sponsor
            
            
            400,000Due
                from winning auction sale bidder
            
            
            64,000Prepaid
                and other current assets
            
            
            13,000$
            2,802,000LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            212,000Accrued
                liabilities
            
            
            73,000Total
                liabilities not subject to compromise
            
            
            285,000Pre-petition
                liabilities subject to compromise
            
            
            1,572,000Total
                liabilities
            
            
            1,857,000





“Pre-petition
      liabilities subject to compromise” were as follows:





Accounts
                payable
            
            $
            1,154,000Accrued
                liabilities
            
            
            206,000Obligation
                for rejected real property lease
            
            
            212,000$
            1,572,000





**Loan,
      Stock Sales and Liquidity**





On
      September 23, 2005, the Company executed a loan agreement with Trinad whereby
      Trinad agreed to loan the Company up to a principal amount of $100,000 (the
      “Loan”), at any time and from time to time, prior to the Company’s consummation
      of a Next Financing (as defined below). Trinad shall make advances to the
      Company in such amounts as the Company shall request from time to time. The
      Loan
      bears interest at the prime rate plus 1 percent per annum. The entire
      outstanding principal amount of the Loan and any accrued interest thereon shall
      be due and payable by the Company upon, and not prior to, the consummation
      of a
      sale of securities (other than a sale of shares of the Company’s Common Stock to
      officers, directors or employees of, or consultants to, the Company in
      connection with their provision of services to the Company), to a third party
      or
      parties with proceeds to the Company of not less than $200,000 (a “Next
      Financing”). As of December 31, 2005, the Company had not borrowed any amounts
      under the Loan and, thus, no amounts were outstanding under the loan
      agreement.




18





On
      December 30, 2005, the Company sold one million units consisting of one share
      of
      common stock and one warrant at a price of $1 per unit in a private placement
      for gross proceeds of $1,000,000. The warrants have an exercise price of $2
      per
      share and expire in December 2007. As of December 31, 2005, the Company had
      approximately $970,000 of cash, which management believes is sufficient to
      satisfy our monetary needs for the next fiscal year.





On
      January 16, 2006, the Company, completed the second and final tranche of a
      private placement offering of 950,000 units at $1 per unit for gross proceeds
      of
      $950,000. Each unit consisted of (i) one share of common stock, par value $.01
      per share and (ii) one warrant to purchase, for a period of two years and at
      an
      exercise price of $2.00 per share, one full share of common stock The Company
      will use the proceeds from the sale of the units for working capital and general
      corporate purposes. No underwriter or placement agent was involved in the
      transaction and no commissions or other remuneration were paid in connection
      with the offer and sale of the units.





**Management
      Changes**





On
      January 18, 2006, upon the appointment of Mr. David Chazen as President and
      a
      member of the Board of Directors (as discussed below), 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 director, 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, that 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 has valued the warrants issued at approximately $300,000 using the
      Black-Scholes Model, assuming a life of two years, volatility of 445.8% and
      a
      risk free borrowing rate of 4.35%, and will be charged to compensation expense
      in the third quarter.





**Critical
      Accounting Policies**





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





19




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





**Financial
      Reporting by Entities in Reorganization under the Bankruptcy
      Code**





The
      accompanying financial statements have been prepared in accordance with
      Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities in
      Reorganization under the Bankruptcy Code”. SOP 90-7 requires that the financial
      statements for periods subsequent to the Chapter 11 filing petition distinguish
      transactions and events that are directly associated with the reorganization
      from the ongoing operations of the business.





All
      of
      the common stock that was outstanding prior to the Petition Date was cancelled
      and new shares of common stock were issued in accordance with the Plan. The
      reorganization value of the assets of the emerging entity immediately before
      the
      date of confirmation exceeded the total of all post-petition liabilities and
      allowed claims, therefore, the Company did not qualify for fresh start
      accounting under SOP 90-7 and continued its basis of accounting.





**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.





**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.


20


**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 SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS**





On
      December 30, 2005, the Company sold one million units consisting of one share
      of
      common stock and one warrant at a price of $1 per unit in a private placement
      for gross proceeds of $1,000,000. The warrants have an exercise price of $2
      per
      share and expire in December 2007. The units were sold to certain accredited
      investors pursuant to Rule 506 of Regulation D of the Securities Act.





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





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





32.1
            
            Certification
                of Principal Executive Officer and Principal Financial Officer Pursuant
                to
                Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                1350




21


**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:
                February 14, 2006
            By:
            /s/
                Robert EllinRobert
                EllinChief
                Executive Officer(Principal
                Executive Officer)Dated:
                February 14, 2006
            By:
            /s/
                Jay WolfJay
                WolfChief
                Operating Officer andChief
                Financial Officer(Principal
                Financial Officer)








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