UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q




(Mark
      One)ý
            
            Quarterly
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934For
      the Quarterly Period Ended June 30, 2008oro
            
            Transition
      Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934For
      the transition period
      from                             to




Commission
File No. 000-24595




NEXTPHASE
WIRELESS, INC.


(Exact
name of registrant as specified in its charter)




Nevada
              (State
      or other jurisdiction ofincorporation
      or organization)
            
            88-0343832
              (I.R.S.
      EmployerIdentification
      No.)300
      S. Harbor Blvd., Suite 500, Anaheim, California
              (Address
      of principal executive offices)
            
            92805
              (Zip
      Code)(714)
      765-0100
              (Registrant's
      telephone number, including area
code)




Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding twelve months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past
90 days.    Yes o    No ý






Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):






Large
accelerated filer   o    Accelerated
filer  o    Non-accelerated
filer     o    Smaller
reporting company  ý






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






The
number of shares of the issuer's Common Stock, $0.001 par value, outstanding on
August 12, 2008 was 5,821,181






________________________________________________________________


(Former
name, former address and former fiscal year if changed since last
report)
















NEXTPHASE
WIRELESS, INC.











TABLEOF
CONTENTS




Page
      no.PART
      I - FINANCIAL INFORMATION
            1Item
      1. Condensed Consolidated Financial Statements (Unaudited)
            1Unaudited
      Condensed Consolidated Balance Sheets, June 30, 2008  and March
      31, 2008
            1Unaudited
      Condensed Consolidated Statements of Operations for the Three Months Ended
      June 30, 2008 and June 30, 2007
            2Unaudited
      Consolidated Statements of Cash Flows for the Three Months Ended June 30,
      2008 and June 30, 2007
            3Notes
      to Unaudited Condensed Consolidated Financial Statements
            4Item
      2. Management's Discussion and Analysis of Financial Condition and Plan of
      Operations
            8Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk
            13Item
      4. Controls and Procedures
            13PART
      II - OTHER INFORMATION
            14Item
      1. Legal Proceedings
            14Item
      2. Unregistered Sales of Equity Securities and Use of
    Proceeds
            14Item
      3. Defaults Upon Senior Securities
            14Item
      4. Submission of Matters to a Vote of Security Holders
            14Item
      5. Other Information
            14Item
      6. Exhibits
            14SIGNATURES
            15
















PART I. FINANCIAL INFORMATION





NEXTPHASE
WIRELESS, INC.


CONDENSED
CONSOLIDATED BALANCE SHEETS


(Unaudited)


June
      30
              
              
              March
      312008
              
              
              2008ASSETSCurrent
      assets:Cash
              
              $
              1,966
              
              
              $
              592Accounts
      receivable
              
              
              168,070
              
              
              
              38,601Prepaid
      expenses
              
              
              95,853
              
              
              
              39,703Total
      current assets
              
              
              265,889
              
              
              
              78,896Property
      and equipment, net
              
              
              302,535
              
              
              
              330,166Intangible
      assets, net
              
              
              623,833
              
              
              
              1,168,000Deposits
              
              
              8,637
              
              
              
              8,636Total
      assets
              
              
              1,200,894
              
              
              $
              1,585,698LIABILITIES
      AND STOCKHOLDERS' DEFICITCurrent
      liabilities:Accounts
      payable
              
              $
              1,267,137
              
              
              $
              1,241,018Accrued
      expenses
              
              
              410,493
              
              
              
              225,175Deferred
      revenue
              
              
              153,000
              
              
              
              101,500Cash
      advance payable
              
              
              375,000
              
              
              
              375,000Due
      to officer and shareholders
              
              
              499,353
              
              
              
              326,852Notes
      payable - current portion
              
              
              3,963,299
              
              
              
              3,762,323Total
      current liabilities
              
              
              6,668,282
              
              
              
              6,031,868Long-
      term notes payable, net of current portion
              
              
              22,031
              
              
              
              23,766Total
      liabilities
              
              
              6,690,313
              
              
              
              6,055,634Stockholders'
      deficit:Class
      A Convertible Preferred stock, $0.001 par value;20,000,000
      shares authorized; no shares issued or outstanding
              
              
              -
              
              
              
              -Common
      stock, $0.001 par value; 10,000,000 shares authorized;5,461,181
      and 1,591,948 shares issued and outstanding, respectively
              
              
              5,461
              
              
              
              4,123Additional
      paid-in capital
              
              
              15,066,853
              
              
              
              13,872,121Accumulated
      deficit
              
              
              (20,561,733
              )
              
              
              (18,346,180
              )Total
      stockholders' deficit
              
              
              (5,489,419
              )
              
              
              (4,469,936
              )Total
      liabilities and stockholders' deficit
              
              $
              1,200,894
              
              
              $
              1,585,698


The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.




1


NEXTPHASE
WIRELESS, INC.
 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
 (Unaudited)
 For
      the Three Months Ended June 30,2008
                
                
                2007Revenue
                
                $
                425,372
                
                
                $
                480,989Cost
      of revenue
                
                
                258,290
                
                
                
                323,091Gross
      Profit
                
                
                167,082
                
                
                
                157,898Operating
      expenses:General
      and administrative expenses
                
                
                1,813,077
                
                
                
                681,034Selling
      and marketing expenseTotal
      operating expenses
                
                
                1,813,077
                
                
                
                681,034Operating
      loss
                
                
                (1,645,995
                )
                
                
                (523,136
                )Other
      income (expense)Loss
      on impairment of intangibles
                
                
                (490,000
                )
                
                
                -Legal
      settlements
                
                
                -
                
                
                
                74,069Interest  expense,
      net
                
                
                (79,558
                )
                
                
                (57,752
                )Total
      other income (expense)
                
                
                (569,558
                )
                
                
                16,317Net
      Loss
                
                $
                (2,215,553
                )
                
                $
                (506,819
                )Basic
      and diluted net loss per share
                
                $
                (0.46
                )
                
                $
                (0.33
                )Weighted
      average shares outstanding
                
                
                4,863,818
                
                
                
                1,525,200Shares
                
                
                5,461,180
                
                
                
                4,123,000




The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.




2





NEXTPHASE
WIRELESS, INC.


CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS


(Unaudited)


For
      the Three MonthsEnded
      June 30,2008
              
              
              2007Cash
      flows from operating activities:Net
      loss
              
              $
              (2,215,553
              )
              
              $
              (506,819
              )Adjustments
      to reconcile net loss to netcash
      used in operating activities:Forgiveness
      of notes payable, and accrued expenses
              
              
              -
              
              
              
              (96,291
              )Issuance
      of common stock for consulting services
              
              
              1,136,070
              
              
              
              130,000Amortization
      of discount on notes payable
              
              
              -
              
              
              
              8,844Depreciation
      and amortization
              
              
              577,553
              
              
              
              86,171Changes
      in assets and liabilities:(Increase)
      decrease in assets:Accounts
      receivable
              
              
              (129,467
              )
              
              
              27,804Other
      current assets
              
              
              (56,150
              )
              
              
              -Increase
      (decrease) in liabilities:Accounts
      payable and accrued liabilities
              
              
              211,435
              
              
              
              183,228Due
      to officers-shareholders
              
              
              172,501
              
              
              
              -Deferred
      revenue
              
              
              51,500
              
              
              
              (18,000
              )Net
      cash used in operating activities
              
              
              (252,111
              )
              
              
              (185,063
              )Cash
      flows from investing activities:Purchase
      of property and equipment
              
              
              (5,755
              )
              
              
              (26,410
              )Net
      cash used in investing activities
              
              
              (5,755
              )
              
              
              (26,410
              )Cash
      flows from financing activities:Proceeds
      from notes payable
              
              
              259,240
              
              
              
              150,000Principal
      payments on notes payable and capital leases
              
              
              -
              
              
              
              (3,250
              )Net
      cash provided by financing activities
              
              
              259,240
              
              
              
              146,750Net
      increase (decrease) in cash
              
              
              1,374
              
              
              
              (64,723
              )Cash
      at beginning of period
              
              
              592
              
              
              
              71,683Cash  end
      of period
              
              $
              1,966
              
              
              $
              6,960Supplemental
      disclosure of cash flow information:Non-cash
      investing and financing transactions:Common
      stock issued for accounts payable and accrued expenses
              
              $
              13,750
              
              
              $
              108,100


The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.




3





NEXTPHASE
WIRELESS, INC.


NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


JUNE
30, 2008


(Unaudited)




NOTE
1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES





Basis
of Presentation





The
unaudited condensed financial statements included in this Form 10-Q have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, these
financial statements do not include all of the disclosures required by U.S.
generally accepted accounting principles for complete financial
statements.  These unaudited interim financial statements should be
read in conjunction with the audited financial statements for the fiscal year
ended March 31, 2008 in the Company’s annual report on Form 10-K.  The
financial information furnished herein reflects all adjustments consisting of
normal, recurring adjustments which, in the opinion of management, are necessary
for a fair presentation of the Company's financial position, the results of
operations and cash flows for the periods presented.  Operating
results for the period ended June 30, 2008 are not necessarily indicative of the
results that may be expected for the year ending March 31, 2009.




Reclassification




Certain
reclassifications have been made to conform prior periods' data to the current
presentation. These reclassifications had no effect on reported
loss.




Basis
of Presentation




The
condensed consolidated financial statements include the accounts and
transactions of NextPhase Wireless, Inc. and its subsidiaries. The results of
operations for Interactive Network Systems Inc. ("INS") have been included since
the date of acquisition on July 23, 2007. All significant inter-company accounts
and transactions have been eliminated in consolidation.





Business
Condition




The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America,
which contemplate the continuation of the Company as a going concern. As of June
30, 2008, the Company has an accumulated deficit of $18,346,180. During the
three months ended June 30, 2008, the Company suffered a loss of $2,022,000 and
used $178,361 of cash in its operating activities. The Company has a working
capital deficit of $6,384,393 and a stockholders’ deficit of $4,987,866 at June
30, 2008. These factors raise substantial doubt about the Company's ability to
continue as a going concern. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. These unaudited
condensed consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts, or
amounts and classification of liabilities that might result from this
uncertainty.





The
Company has developed a plan to integrate additional Internet Service Providers
(“ISPs”) in a scalable roll-up strategy.  The Company plans to acquire
only profitable operations, both wireless and landline based, which are
synergistic to the Company’s current operations in California, Georgia and
New Jersey. Through its business plan to position Nextphase as a nationwide
provider of WiMax ready networks and advanced wired and wireless broadband
connectivity solutions, management expects to generate positive operating cash
flow during the 1st calendar quarter of 2009. There is no assurance that
management will achieve its plan. There is further no assurance that the
proceeds from operating cash flows or future financings will be sufficient to
obtain profitable operations.  The Company will need to raise
additional debt and/or equity capital in order to finance its business plan and
needs for working capital. Such financing(s), if available, may increase the
risk of the Company not being able to service its debt obligations, and/or cause
dilution to existing equity holders.







4





Revenue
Recognition and Deferred Revenue




Revenues
are recognized in the period that services are provided.  For revenue
from product sales, the Company recognizes revenue in accordance with Staff
Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” when (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred; (3) the selling
price is fixed and determinable; and (4) collectibility is reasonably assured.
Determination of criteria (3) and (4) are based on management's judgments
regarding the fixed nature of the selling prices of the products delivered and
the collectibility of those amounts. Provisions for discounts and rebates to
customers, estimated returns and allowances, and other adjustments are provided
for in the same period the related sales are recorded. The Company defers any
revenue for which the product has not been delivered or for which services have
not been rendered or are subject to refund until such time that the Company and
the customer jointly determine that the product has been delivered or services
have been rendered or no refund will be required.




SAB No.
104 incorporates Emerging Issues Task Force Issue (“EITF”) No.00-21,
“Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF No. 00-21,
on the Company's unaudited condensed consolidated financial position and results
of operations was not significant.




The
Company considers amounts to be earned once evidence of an arrangement has been
obtained, services are delivered, fees are fixed or determinable, and
collectibility is reasonably assured.  The Company generates and
recognizes revenue as follows:




Revenue
from operating as a wireless Internet service provider of tiered wireless
Internet services to business and residential subscribers:  Internet
services are billed at the beginning of each month's activity at a fixed rate
for each customer.  Customers sign an annual agreement or utilize the
service on a month-to-month basis.  Revenue not yet earned is recorded
as deferred revenue.




Revenue
from the sale and configuration of wireless equipment:  NextPhase acts
as a reseller of certain components and equipment related to its products and
services.  Equipment revenue is recognized at the time of shipment FOB
to the customer.  Configuration is billed at an hourly rate and
recognized after completion. Costs associated with the equipment are expensed at
the time of shipment.  In order to maximize the Company’s cash flows,
revenue from the sale and configuration of wireless equipment is sometimes
billed in advance of shipment. In such cases, these invoices are recorded as
deferred revenue.




Revenue
from professional and consulting services provided by its
staff:  These services include wireless network consulting,
interference surveys, network management and telephone
consulting.  Revenue is recognized after the professional or
consulting service has been provided. In order to maximize the Company’s cash
flows, revenue from professional services is sometimes billed in advance of
project completion. In such cases, these invoices are recorded as deferred
revenue.




Recent
Accounting Pronouncements




In
September 2006, the Financial Accounting Standard Board ("FASB") issued
SFAS No. 157 “Fair Value Measurements,”  to eliminate the diversity in
practice that exists due to the different definitions of fair value and the
limited guidance for applying those definitions in accounting principles
generally accepted in the United States of America that are dispersed among the
many accounting pronouncements that require fair value
measurements.




Basic
and Diluted Loss per Common Share


Basic
loss per share is calculated by dividing net loss by the weighted average common
shares outstanding during the period. Diluted net loss per share reflects the
potential dilution to basic EPS that could occur upon conversion or exercise of
dilutive securities, options or other such items to common shares using the
treasury stock method, based upon the weighted average fair value of our common
shares during the period.  The potentially dilutive shares for the
three months ended June 30, 2008 is 457,958.




5





NOTE
2 - ACQUISITIONS




On July
23, 2007, the Company, through its wholly-owned subsidiary SpeedFactory,
acquired assets (excluding cash) and assumed certain liabilities of INS,
pursuant to an asset purchase agreement between SpeedFactory and INS. The assets
and liabilities acquired by SpeedFactory comprised the INS Internet service
and connectivity business.





The
following unaudited condensed combined pro forma results of operations reflect
the pro forma combination of the NextPhase and INS businesses as if the
combination had occurred on April 1, 2007.  The unaudited pro forma
condensed combined results of operations do not purport to represent what
the companies’ combined results of operations would have been if such
transaction had occurred at the beginning of the periods presented, and are not
necessarily indicative of the Company's future results.





NOTE
3 - RELATED PARTY TRANSACTIONS





In June
2008, the Company issued 230,769 shares of common stock with a fair value of
$24,231 to its President and Chief Executive Officer in lieu of cash
salary.  Stock issued for this purchase was recorded





From time
to time the officer-shareholders have advanced funds to the
Company.  As of June 30 2008, $196,952 was due to
officer-shareholders.




NOTE
4 – NOTES PAYABLE AND CAPITAL LEASE




June
      30,
              
              
              March
      31,Notes
      payable consisted of the following as of
              
              2008
              
              
              2007Secured
      convertible note payable, interest at 6%,net
      of unamortized discount of $0 and $0, respectively
              
              $
              2,300,000
              
              
              $
              2,300,000Convertible
      notes, interest at 6%
              
              
              -
              
              
              
              -Convertible
      notes, interest at 7%
              
              
              1,650,000
              
              
              
              1,440,000Convertible
      notes, interest at 10%
              
              
              13,300
              
              
              
              13,300Automobile
      loan,interest at 5.9%, due $924 monthly
              
              
              22,790
              
              
              
              32,789Capital
      lease, imputed interest at 8.17%, $360 per month due April
      2009
              
              
              -
              
              
              
              -Total
      Notes Payable
              
              
              3,986,090
              
              
              
              3,786,089Less:
      Current portion
              
              
              (3,762,323
              )
              
              
              (3,762,323
              )$
              223,767
              
              
              $
              23,766Advance
      payable on demand, interest at 9%
              
              $
              375,000
              
              
              $
              375,000




The
convertible note payable in the amount of $2,300,000 is dated March 31, 2006 and
is fully secured by all the assets of the Company. It was deemed effective at
the date upon when the cash was received by Synkronus on behalf of the Company,
or April 7, 2006. The note bears interest at the rate of 6% per annum, and was
due in full on April 1, 2008. Upon maturity, the note and accrued interest were
convertible into common stock of the Company at the lower of the fair market
value of the Company's common stock at the date of conversion or $6.60 per
share. The minimum price at which the note and accrued interest may convert is
$3.00 per share. The Company determined the value of the embedded beneficial
conversion feature of this note payable at the time of issuance to be $69,697,
which is considered a discount to the note. The Company is amortizing the
discount over the life of the note and charged $8,844, $8,844, $26,532 and
$25,763 to interest expense for the three and nine months ended
December 31, 2007 and 2006, respectively.  On July 18, 2007, the
Company issued 32,271 shares of its common stock for payment of accrued interest
at June 30, 2007 in the amount of $78,908 and on December 18, 2007 issued 11,753
shares for accrued interest of $42,241(see Note 5).




During
the year ended March 31, 2007, the Company issued 11 convertible notes totaling
$390,000, with an interest rate of 7%, and all maturing in one year from the
date of issuance. The maturity dates of the notes were between December 2007 and
March 2008. As a stipulation, if the Company’s common stock reaches $4.00 or
above for a period of 10 consecutive days, the principal and accrued interest
due under the note will convert into common stock of the Company, at the
company's option, at a rate of $3.00 per share.





During
the three months ended June 30, 2007, the Company issued 2 convertible notes
totaling $150,000, with an interest rate of 7%, and all maturing in one year
from the date of issuance with a stipulation when the Company’s common stock
reaches $6.00 or above for a period of 10 consecutive days, the principal and
accrued interest due under the note will convert at the Company’s
option into common stock of the Company at a rate of $3.00 per
share








6





During
the three months ended September 30, 2007, the Company issued 13 convertible
notes totaling $395,000, with an interest rate of 7%, and all maturing in one
year from the date of issuance with a stipulation when the Company’s common
stock reaches $6.00 or above for a period of 10 consecutive days, the principal
and accrued interest due under the note will convert, at the Company’s option,
into common stock of the Company at a rate of $3.00 per
share.




During
the three months ended December 31, 2007, the Company issued 6 convertible notes
totaling $170,000, with an interest rate of 7%, maturing in one year from the
date of issuance with a stipulation when the Company’s common stock reaches
$6.00 or above for a period of 10 consecutive days, the principal and accrued
interest due under the note will convert, at the Company’s option, into common
stock of the Company at a rate of $3.00 per share.  If the notes
were convertible at December 31, 2007, the Company would have recorded a debt
discount of $25,250.  The notes are not convertible unless the stock price
reaches $6.00 per share, or more, for ten consecutive days.The Company also issued
3 additional convertible notes due between ninety and 180 days in the amount of
$195,000 and convertible into stock of the Company at prices between $2 and $3
per share.





On
January 4, 2008, the Company issued a convertible note in the amount of $80,000,
with an interest rate of 7%, maturing in three months and was convertible at
$2.00 per share into the Company’s common stock at holders option. On February
29, 2008, the Company issued a convertible note in the amount of $60,000, with
an interest rate of 7%, maturing in two years from the date of issuance. On
April 10, 2008, the Company issued a convertible note in the amount of $150,000,
with an interest rate of 7%, maturing in one year from the date of issuance and
is convertible at $1.50 per share into the Company’s common stock at the holders
option. During June 2008,the Company issued a convertible note in the amount of
$110,000, with an interest rate of 7%, maturing in 12 months and is convertible
at $3.00 per share into the Company’s common stock at the holders
option.





NOTE
5 – EQUITY





In
March  2008, the Company issued 340,000 shares of common stock for
business advisory services.  These shares were valued at $255,000
which amount was charged to stock based compensation.
 
 On April
4, 2008 the Company issued 50,000 common shares in redemption of convertible
promissory notes payable totaling $50,000.
 
 On April
7, 2008, the Company issued 25,000 common shares in payment of legal
fees.
 
 Between
April 1, 2008 and June 30, 2008 the Company issued 1,348,000 shares of common
stock to various consultants for business advisory services.  These
shares were valued at $1,209,820 which amount was charged to stock based
compensation.
 
 In June
2008, the Company issued 230,769 shares of common stock with a fair value of
$24,231 to its President and Chief Executive Officer in lieu of cash
salary.  Stock issued for this purchase was recorded.
 
 None of
the sales of securities described above have been registered with the Securities
and Exchange Commission because they are believed to be exempt from registration
under the Securities Act of 1933 pursuant to Regulation D, Rule 506, promulgated
thereunder or generally section 4(2) of the Act. Each purchaser represented his,
her or its intention to acquire the securities for investment only and not with
a view toward distribution. Each investor was given adequate information about
us to make an informed investment decision. We did not engage in any general
solicitation or advertising. The stock certificates issued in each case contain
an appropriate legend identifying each as restricted stock.


NOTE
6 – COMMITMENTS AND CONTINGENCIES




Indemnities and
Guarantees




The
Company has made certain indemnities and guarantees, under which it may be
required to make payments to a guaranteed or indemnified party, in relation to
certain actions or transactions. The Company indemnifies its directors,
officers, employees and agents, as permitted under the laws of the State of
Nevada. The duration of the guarantees and indemnities varies, and is generally
tied to the life of the agreement. These guarantees and indemnities do not
provide for any limitation of the maximum potential future payments the Company
could be obligated to make. Historically, the Company has not been obligated nor
incurred any payments for these obligations and, therefore, no liabilities have
been recorded for these indemnities and guarantees in the accompanying condensed
consolidated balance sheet.





Litigation


The
Company is, from time to time, involved in various legal and other proceedings
which arise in the ordinary course of operating its business. In the opinion of
management, the amount of ultimate liability, if any, with respect to these
actions will not materially affect the financial position or results of
operations of the Company.




During
the year ended March 31, 2007 the Company entered into a settlement agreement in
which the Company was to pay $45,000.  During the Nine months ended
December 31, 2007, the Company recorded an additional expense $22,222 related to
the settlement agreement which was recorded to reduce gain on settlement of
liabilities.






7




NOTE
7 – SUBSEQUENT EVENTS




On July
15, 2008 a vendor filed a complaint for breach of lease agreement in the amount
of $55,412. The company believes that the lawsuit is without merit and
anticipates resolving the matter.





ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATIONS




Forward Looking
Statements





Certain
information contained in this report may include "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, and
is subject to the safe harbor created by that act. The safe harbor created by
the Securities Litigation Reform Act will not apply to certain "forward looking
statements" because we issued "penny stock" (as defined in Section 3(a) (51) of
the Securities Exchange Act of 1934 and Rule 3a51-1 under the Exchange Act)
during the three year period preceding the date(s) on which those forward
looking statements were first made, except to the extent otherwise specifically
provided by rule, regulation or order of the Securities and Exchange
Commission(“SEC”). We caution readers that certain important factors may affect
our actual results and could cause such results to differ materially from any
forward-looking statements which may be deemed to have been made in this Report
or which are otherwise made by or on behalf of us. For this purpose, any
statements contained in this report that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the generality
of the foregoing, words such as "may", "will", "expect", "believe", "explore",
"consider", "anticipate", "intend", "could", "estimate", "plan", "propose",
"seem", "hope" or "continue" or the negative variations of those words or
comparable terminology are intended to identify forward-looking statements.
Factors that may affect our results include, but are not limited to, the risks
and uncertainties associated with:




o
            our
      ability to generate sufficient cash to pay our lenders and other
      creditors,





o
            our
      ability to obtain regulatory permits and approvals to operate in the
      high-speed wireless network
industry,





o
            the
      introduction of new broadband connectivity technologies by our competitors
      that may have advantages over our planned products and may make our
      planned products less attractive to our potential
    customers,





o
            our
      ability to identify and complete acquisitions and successfully integrate
      the businesses we acquire, if any,





o
            our
      ability to employ and retain qualified management and
      employees,





o
            our
      dependence on the efforts and abilities of our current employees and
      executive officers,





o
            changes
      in government regulations that are applicable to our anticipated
      business,





o
            changes
      in the demand for our services,





o
            he
      degree and nature of our
competition,





o
            our
      lack of diversification of our business
plan,





o
            the
      general volatility of the capital markets and the establishment of a
      market for our shares, and




o
            disruption
      in the economic and financial conditions primarily from the impact of past
      terrorist attacks in the United States, threats of future attacks, police
      and military activities overseas and other disruptive worldwide political
      events.






We are
also subject to other risks detailed from time to time in other SEC filings and
elsewhere in this report. Any one or more of these uncertainties, risks and
other influences could materially affect our results of operations and whether
forward-looking statements made by us ultimately prove to be accurate. Our
actual results, performance and achievements could differ materially from those
expressed or implied in these forward-looking statements. We undertake no
obligation to publicly update or revise any forward-looking statements, whether
from new information, future events or otherwise.




Management
believes that cash on hand and cash generated from operations may be
insufficient to fund its current or planned operating needs, and the Company
currently has insufficient revenue to fund its operations. The Company plans on
funding working capital requirements, necessary equipment purchases, marketing
costs, and all other operations for the next quarter and foreseeable future by
raising capital with the sale of equity and/or debt securities.








8





Financial Statement
Overview




Nature
of Operations




NextPhase
Wireless, Inc. (“NextPhase” or the “Company”) was incorporated on August 28,
1995 in Nevada under the name of Professional Mining Consultants,
Inc.




On August
3, 2004, NextPhase  consummated  a share  exchange
in which it issued
2,943,000  shares  of  common  stock,  or  approximately  76%
of its outstanding common stock, to the shareholders of NextPhase Technologies,
Inc. ("NTI")  in  exchange  for all of the shares
of NTI.  As a result, NTI became a wholly owned subsidiary of
NextPhase.  NTI was formed on September 14, 2000. For accounting
purposes, this transaction is considered a "reverse merger,” and the historical
financial statements of NextPhase reflect the operations of
NTI.  Effective on the merger date, all financial activity became
generated by NextPhase and NTI became an inactive subsidiary.  On
January 21, 2005 the Company changed its name to NextPhase Wireless,
Inc.




Effective
April 5, 2006, through its wholly-owned subsidiary SpeedFactory, Inc.
(“SpeedFactory”), NextPhase acquired the Internet service and connectivity
business assets previously operated by Synkronus, Inc. (“Synkronus”) under the
name "SpeedFactory." Effective July 23, 2007 SpeedFactory acquired the Internet
service and connectivity business assets previously operated by Interactive
Network Systems, Inc.  (“INS”).





Prior to
the acquisition of SpeedFactory, NextPhase had a limited operating history with
revenue-generating products and services only recently entering the
market.





With the
acquisition of SpeedFactory, NextPhase enhanced its position as a nationwide
provider of scalable, reliable and cost effective connectivity solutions,
expanding its portfolio of products and services to include DSL, T1s,
co-location and web hosting. NextPhase continues to extend its wireless
“footprint” in Southern California, through a combination of organic growth and
acquisition, NextPhase has continued to add small to medium business
subscribers, small office/home office (SOHO) subscribers, and residential
subscribers in underserved markets to its network.




Effective
October 1, 2006, all revenue generating activity was combined with SpeedFactory
and INS a division of SpeedFactory.




The
Company conducts its operations from its office located in Anaheim, California,
the SpeedFactory location in Marietta, Georgia and the INS operation in
Blackwood, New Jersey.





The
condensed consolidated financial statements presented include only the accounts
of NTI, from its inception (September 14, 2000) through June 30, 2008, of
NextPhase from August 3, 2004 through June 30, 2008, of SpeedFactory from April
6, 2006 (date of acquisition) through June 30, 2008 and INS, a division of
SpeedFactory, from July 23, 2007 (date of acquisition) through June 30,
2008.




Results of
Operations




Three
Months ended June 30, 2008 and 2007:




For the
three months ended June 30, 2008, revenue was $425,372 as compared with $480,989
in the same period of the previous year. The reduction was due to the decreased
emphasis on the sale of wired services and an increased effort for the sale of
wireless services.




Cost of
revenue was $170,737 or 40.1% of revenue for the three months ended June 30,
2008, compared to $236,920 or 49.3% during the three months ended June 30,
2007.  As a result, gross profit increased to $254,635 or 59.9% for
the three months ended June 30, 2008 as compared with $244,069 for the same
period in the previous year.





Selling,
general, and administrative expenses were $670,257 for the three months ended
June 30, 2008 as compared with $551,034 for the three months ended June 30,
2007, an increase of $119,223 or approximately 21.6%.  The
increase was due primarily to one time costs incurred to support the paradigm
shift from wired to wireless services. Management believes that based on its
cost cutting program, savings will be realized for this sector for future
months.







9




Stock-based
compensation expense was $1,124,820 in the three months ended June 30, 2008 as
compared with $130,000 in the same period in the previous year. The
increase was due to the cost of stock issued for the payment of consulting fees
utilized to assist the company in the implementation of is new business
plan.





Depreciation
and amortization expense for the three months ended June 30, 2008 and 2007 was
$94,000 and $86,171 respectively. Amortization of the intangible assets acquired
in the SpeedFactory and INS acquisitions was $52,000 and $35,000 for the three
months ended June 30, 2008 and 2007.




The
operating loss for the Company for the three months ended June 30, 2008 was
$1,634,442 versus $523,136 for the same period in the prior year. The increase
was due primarily to the one time charges to stock based compensation.




Interest expense,
net of interest income, for the three months ended June 30, 2008 was
$79,558, as compared with interest income of $57,752 for the same
period in the previous year.





Net loss
for the three months ended June 30, 2008 was $2,204,000 or $.346 per share as
compared with a net loss of $506,819 or $0.33 per share for the three months
ended June 30, 2007. Monthly operating cash losses are now
approximately $50,000 per month.  Management expects this to
continue to decline as the Company continues to implement its new business
plan.





Liquidity and Capital
Resources




As of
June 30, 2008, the Company had a cash balance of $1,966 and the Company's
accumulated deficit was $20,060,180. The Company had negative working capital of
$6,384,393.  Total liabilities were $6,650,282 which included accounts
payable of $1,267,137, accrued expenses of $410,493, deferred revenue of
$153,000 and notes and advances payable of $4,841,683.  The Company’s
cash used in operations for the three months ended June 30, 2008 was $178,361 and the Company
currently is using $50,000 cash per month in operations.




Off-Balance Sheet
Arrangements





We have
no off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operation, liquidity, capital
expenditures or capital resources that is material to investors.




Inflation





In the
opinion of management, inflation has not had a material effect on the Company's
financial condition or results of its operations.







10




Critical Accounting
Policies
 
 Our
consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the U.S., which requires us to make estimates
and assumptions in certain circumstances that affect amounts reported. In
preparing these financial statements, management has made its best estimates and
judgments of certain amounts, giving due consideration to materiality. We
believe that of our significant accounting policies (more fully described in
notes to the consolidated financial statements), which are particularly
important to the portrayal of our results of operations and financial position
and may require the application of a higher level of judgment by our management,
and as a result are subject to an inherent degree of uncertainty. While there
are a number of accounting policies, methods and estimates affecting our
unaudited condensed consolidated financial statements, areas that are
particularly significant include:


Revenue
Recognition and Deferred Revenue


Revenues
are recognized in the period that services are provided.  For revenue
from product sales, the Company recognizes revenue in accordance with Staff
Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”, which superseded SAB
No. 101, Revenue Recognition in Financial Statements). SAB No. 104 requires that
four basic criteria must be met before revenue can be recognized: (1) persuasive
evidence of an arrangement exists; (2) delivery has occurred; (3) the selling
price is fixed and determinable; and (4) collectibility is reasonably assured.
Determination of criteria (3) and (4) are based on management's judgments
regarding the fixed nature of the selling prices of the products delivered and
the collectibility of those amounts. Provisions for discounts and rebates to
customers, estimated returns and allowances, and other adjustments are provided
for in the same period the related sales are recorded. The Company defers any
revenue for which the product has not been delivered or for which services have
not been rendered or are subject to refund until such time that the Company and
the customer jointly determine that the product has been delivered or services
have been rendered or no refund will be required.




SAB 104
incorporates Emerging Issues Task Force Issue (“EITF”) No. 00-21,
“Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF No. 00-21
on the Company's consolidated financial position and results of operations was
not significant.




The
Company considers amounts to be earned once evidence of an arrangement has been
obtained, services are delivered, fees are fixed or determinable, and
collectibility is reasonably assured.  The Company generates and
recognizes revenue as follows:




Revenue
from operating as a wireless Internet service provider of tiered wireless
Internet services to business and residential subscribers:  Internet
services are billed at the beginning of each month's activity at a fixed rate
for each customer.  Customers sign an annual agreement or utilize the
service on a month-to-month basis.  Revenue not yet earned is recorded
as deferred revenue.




Revenue
from the sale and configuration of wireless equipment:  NextPhase acts
as a reseller of certain components and equipment related to its products and
services.  Equipment revenue is recognized at the time of shipment FOB
to the customer.  Configuration is billed at an hourly rate and
recognized after completion. Costs associated with the equipment are expensed at
the time of shipment.  In order to maximize the Company’s cash flows,
revenue from the sale and configuration of wireless equipment is sometimes
billed in advance of shipment. In such cases, these invoices are recorded as
deferred revenue.




Revenue
from professional and consulting services provided by its
staff:  These services include wireless network consulting,
interference surveys, network management and telephone
consulting.  Revenue is recognized after the professional or
consulting service has been provided. In order to maximize the Company’s cash
flows, revenue from professional services is sometimes billed in advance of
project completion. In such cases, these invoices are recorded as deferred
revenue.




Long-Lived
Assets


The
Company reviews its fixed assets and certain identifiable intangibles for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The test for impairment is
required to be performed by management at least annually. Recoverability of
assets to be held and used is measured by a comparison of the carrying amount of
an asset to the future undiscounted operating cash flow expected to be generated
by the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the asset
exceeds the fair value of the asset. Long-lived assets to be disposed of are
reported at the lower of carrying amount or fair value less costs to
sell.







11




Goodwill and Other Intangible
Assets
 The
Company has adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS
No. 142 requires that goodwill and intangible assets deemed to have indefinite
lives are no longer amortized but are subject to an annual impairment test which
has two steps to determine whether asset impairment exists. The first step of
the impairment test identifies potential impairment by comparing the fair value
with the carrying amount of the reporting unit, including goodwill. If the
carrying amount of the reporting unit exceeds its fair value, the second step of
the impairment test shall be performed to measure the amount of the impairment
loss, if any. Intangibles with indefinite useful lives are measured for
impairment by the amount that the carrying value exceeds the estimated fair
value of the intangible. The fair value is calculated using the income approach.
Intangible assets with definite useful lives will continue to be amortized over
their estimated useful lives. Any impairment is recorded at the date of
determination.
  The
Company’s policy provides for annual evaluation of goodwill on the first day of
the fourth fiscal quarter and whenever events and changes in circumstances
suggest that the carrying amount may not be recoverable. Impairment of goodwill
is tested at the operating segment level by comparing the segments' net carrying
value, including goodwill, to the fair value of the segment. The fair values of
our segments are estimated using a combination of the income or discounted cash
flows approach and the market approach, which uses comparable market data. If
the carrying amount of the segment exceeds its fair value, goodwill is
potentially impaired and a second test would be performed to measure the amount
of impairment loss, if any.


Business
Combinations


In
accordance with SFAS No. 141,  “Business Combinations,” the Company
allocates the purchase price of acquired entities to the tangible and intangible
assets acquired and, liabilities assumed, based on their estimated fair
values.  Such a valuation requires management to make significant
estimates and assumptions, especially with respect to intangible
assets.




Management
makes estimates of fair values based upon assumptions believed to be reasonable.
These estimates are based on historical experience and information obtained from
the management of the acquired companies. Critical estimates in valuing certain
of the intangible assets include but are not limited to: future expected cash
flows from revenues, customer relationships, key management and market position,
assumptions about the period of time the acquired trade names will continue to
be used in the Company's combined product portfolio, and discount rates used to
establish fair value. These estimates are inherently uncertain and
unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated
events and circumstances may occur which may affect the accuracy or
validity of such assumptions, estimates or actual results.




Beneficial
Conversion Feature


The
convertible feature of one of the Company’s convertible notes provided for a
rate of conversion that was below market value (see Note 4). Such feature
is normally characterized as a “beneficial conversion feature” (“BCF”). Pursuant
to Emerging Issues Task Force (“EITF”) Issue No. 98-5, “Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratio” and EITF No. 00-27, “Application of EITF Issue
No. 98-5 to Certain Convertible Instruments”, the estimated relative fair
value of the BCF was recorded as a discount from the face amount of the
convertible note. The Company amortized the discount using the effective
interest method through the conversion of such instrument.





Income
Taxes


The
Company utilizes the liability method of accounting for income taxes as set
forth in SFAS No. 109, “Accounting for Income Taxes”. Under the
liability method, deferred taxes are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates. A valuation allowance is recorded when it
is more likely than not that some of the deferred tax assets will not be
realized. The Company also determines its tax contingencies in accordance with
SFAS No. 5, “Accounting for Contingencies.” The Company records
estimated tax liabilities to the extent the contingencies are probable and can
be reasonably estimated.




Recent
Accounting Pronouncements


In
September 2006, the FASB issued SFAS No. 157 “Fair Value
Measurements,”  to eliminate the diversity in practice that exists due
to the different definitions of fair value and the limited guidance for applying
those definitions in accounting principles generally accepted in the United
States of America that are dispersed among the many accounting pronouncements
that require fair value measurements.




12




SFAS No.
157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years, although
earlier application is encouraged. Additionally, prospective application of the
provisions of SFAS No. 157 is required as of the beginning of the fiscal year in
which it is initially applied, except when certain circumstances require
retrospective application. The Company is currently evaluating the effect of
adopting SFAS No. 157 on its consolidated financial statements.
  SFAS No.
159 permits all entities to choose to measure eligible items at fair value at
specified election dates. A business entity will report unrealized gains and
losses on items for which the fair value option has been elected in earnings (or
another performance indicator if the business entity does not report earnings)
at each subsequent reporting date. The fair value option: ( a ) may be applied instrument
by instrument, with a few exceptions, such as investments otherwise accounted
for by the equity method; ( b ) is irrevocable (unless a
new election date occurs); and ( c ) is applied only to entire
instruments and not to portions of instruments. SFAS No. 159 is effective as of
the beginning of an entity’s first fiscal year that begins after November 15,
2007.  Early adoption is permitted as of the beginning of the previous
fiscal year provided that the entity makes that choice in the first 120 days of
that fiscal year and also elects to apply the provisions of SFAS No. 157. The
adoption of this pronouncement is not expected to have material effect on the
Company’s consolidated financial statements.




ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




There
have been no significant changes in our primary market risk exposures or in how
these exposures are managed during the three month period ended June 30,
2008.




ITEM
4. CONTROLS AND PROCEDURES.




Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, among other things, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.





Evaluation of Disclosure
Controls and Procedures





As of the
end of the period covered by this Quarterly Report, we conducted an evaluation,
under the supervision and with the participation of our principal financial
officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e)
of the Exchange Act). Based on his evaluation, our principal financial officer
concluded that our current system of disclosure controls and procedures still
contains a significant deficiency.




There was
no change in our internal control over financial reporting (as defined in Rule
13a-15(f) of the Exchange Act) that occurred during the fiscal quarter to which
this report relates that has materially affects, or is reasonable likely to
materially affect, our internal control over financial reporting.







13




PART II - OTHER
INFORMATION
  ITEM1: LEGAL
PROCEEDINGS.
  None
  ITEM2: UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS.
  In
March  2008, the Company issued 340,000 shares of common stock for
business advisory services.  These shares were valued at $255,000
which amount was charged to stock based compensation.
 
 On April
4, 2008 the Company issued 50,000 common shares in redemption of convertible
promissory notes payable totaling $50,000.
 
 On April
7, 2008, the Company issued 25,000 common shares in payment of legal
fees.
 
 Between
April 1, 2008 and June 30, 2008 the Company issued 1,348,000 shares of common
stock to various consultants for business advisory services.  These
shares were valued at $1,209,820 which amount was charged to stock based
compensation.
 
 In June
2008, the Company issued 230,769 shares of common stock with a fair value of
$24,231 to its President and Chief Executive Officer in lieu of cash
salary.  Stock issued for this purchase was recorded.
 
 None of
the sales of securities described above have been registered with the Securities
and Exchange Commission because they are believed to be exempt from registration
under the Securities Act of 1933 pursuant to Regulation D, Rule 506, promulgated
thereunder or generally section 4(2) of the Act. Each purchaser represented his,
her or its intention to acquire the securities for investment only and not with
a view toward distribution. Each investor was given adequate information about
us to make an informed investment decision. We did not engage in any general
solicitation or advertising. The stock certificates issued in each case contain
an appropriate legend identifying each as restricted stock.
  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
 
 Please
see Exhibit Index located behind the signature page.
   14
  SIGNATURES
 
  In
accordance with the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
   NextPhase
      Wireless, Inc.August
      19, 2008
              By:
              /s/ Thomas
      HemingwayThomas
      HemingwayChief
      Financial Officer and
                Interim
      Chief Executive Officer
    
  15
  EXHIBIT
INDEX
 
 Exhibit Number
              
              Description of Exhibit31
              
              Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to Section
      302 of the Sarbanes-Oxley Act of 200232
              
              Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to Section
      906 of the Sarbanes-Oxley Act of 2002
       16