UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                   FORM 10-QSB

                                   (Mark One)

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

                For the Quarterly Period Ended September 30, 2006

     [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

      For the transition period from ________________to ___________________

                        Commission File Number: 000-24595

                            NEXTPHASE WIRELESS, INC.

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

                    Nevada                           88-0343832
        ------------------------------- ---------------------------------
        (State or other jurisdiction of (IRS Employer Identification No.)
                         incorporation or organization)


                 300 S. Harbor Blvd., Anaheim, California 92805
                 ----------------------------------------------
                    (Address of principal executive offices)


                                 (800) 748-5548
                ------------------------------------------------
                (Issuer's telephone number, including area code)


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

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

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEEDING FIVE YEARS.

Check whether registrant filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.   Yes    No
                                        ---    ---

APPLICABLE TO CORPORATE ISSUERS

State the number of shares  outstanding  of each of the issuer's class of common
equity, as of the latest practicable date: There are 25,364,683 shares of common
stock issued and outstanding as of November 10, 2006.

Transitional  Small Business Disclosure Format (check one) Yes      No X
                                                              ---     ---

<PAGE>


                            NEXTPHASE WIRELESS, INC.

                     Quarterly Report on Form 10-QSB for the
                   Quarterly Period Ending September 30, 2006

                                TABLE OF CONTENTS

                                                                        Page no.
                                                                        --------

PART I - FINANCIAL INFORMATION.......................................F-1

      Financial Statements (Unaudited)........................F-1 to F-13

    Item 2.  Management's Discussion and Analysis or Plan
             of Operation............................................3

    Item 3.  Controls and Procedures.................................7

PART II - OTHER INFORMATION..........................................7

    Item 1.  Legal Proceedings.......................................7

    Item 2.  Unregistered Sales of Equity Securities and
             Use of Proceeds.........................................7

    Item 3.  Defaults Upon Senior Securities.........................7

    Item 4.  Submission of Matters to a Vote of Security Holders.....7

    Item 5.  Other Information.......................................7

    Item 6.  Exhibits................................................7

SIGNATURES...........................................................9

                                       -2-

<PAGE>

PART I. FINANCIAL INFORMATION

                            NextPhase Wireless, Inc.
                      Condensed Consolidated Balance Sheet
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                    September 30,
                                                                                        2006
                                                                                    -----------
ASSETS

Current assets
<S>                                                                                 <C>
    Cash and cash equivalents                                                       $     5,607
    Accounts receivable, net of allowance of $9,481 (note 4)                            112,600
    Other receivables (note 5)                                                           45,000
    Other current assets (note 6)                                                           610
                                                                                    -----------

      Total current assets                                                              163,817

    Property and equipment, net of accumulated depreciation of $ 148,019 (note 7)       352,687
    Customer contracts, net of accumulated amortization of  $60,000 (note 7)          1,140,000
    Trademarks                                                                          100,000
    Supplier contracts, net of accumulated amortization of $10,000 (note 7)              90,000
    Deposits                                                                              8,637
                                                                                    -----------

Total assets                                                                        $ 1,855,141
                                                                                    ===========

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
Current liabilities

   Accounts payable and accrued liabilities (note 8)                                $   959,244
   Deferred revenue (note 1)                                                             80,444
   Cash advances payable (note 9)                                                       100,000
   Notes payable and capital leases - current portion  (note 10)                         94,223
                                                                                    -----------

      Total current liabilities                                                       1,233,911

   Notes payable and capital leases, net of discount of $52,778 (note 11)             2,301,512

Total liabilities                                                                     3,535,424

Commitments and contingencies (note 11)                                                      --

(Deficiency in) stockholder's equity Preferred stock, 0.001 par value:
      20,000,000 shares authorized, no shares issued and outstanding                         --
   Common stock, $0.001 par value; 200,000,000 shares authorized;
   24,363,296 shares issued and 24,273,116 shares outstanding at September 30,
   2006 (note 9)                                                                         24,273
   Treasury Stock                                                                            --
   Additional paid-in capital                                                         5,397,808
   Deferred Compensation (note 9)                                                       (36,764)
   Accumulated deficit                                                               (7,065,600)
                                                                                    -----------
      Total (deficiency in) stockholder's equity                                     (1,680,283)
                                                                                    -----------
Total liabilities and (deficiency in) stockholders' equity                            1,855,141
                                                                                    ===========
</TABLE>

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

                                      F-1

<PAGE>

                            NextPhase Wireless, Inc.
                Condensed Consolidated Statements of Operations
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                  For the Three   For the Three   For the Six     For the Six
                                                  Months Ended    Months Ended    Months Ended    Months Ended
                                                  September 30    September 30    September 30    September 30
                                                      2006            2005            2006            2005
                                                  ------------    ------------    ------------    ------------
<S>                                               <C>             <C>             <C>             <C>
Revenues                                          $    636,426    $     95,476    $  1,157,704    $    242,800

   Cost of revenue                                     300,739          80,375         611,015         233,989
                                                  ------------    ------------    ------------    ------------

Gross profit                                           335,687          15,101         546,689           8,811

Operating expenses:

   Selling, general and administrative expenses        610,195         495,832       1,200,590         843,026
   Depreciation and amortization                        67,554          14,815         133,323          28,664

                                                  ------------    ------------    ------------    ------------
      Total operating expenses                         677,749         510,647       1,333,913         871,690

Operating loss                                        (342,062)       (495,546)       (787,224)       (862,879)

Other (income) expense:

   Interest (income) expense                            69,906          11,243         127,840          13,701
   Other (income) expense                                    0          (2,120)         (4,251)         (2,120)
                                                  ------------    ------------    ------------    ------------

      Total other (income) expense                      69,906           9,123         123,589          11,581

  Loss before income taxes                            (411,968)       (504,669)       (910,813)       (874,460)

   Provision for income taxes                               --              --              --              --

                                                  ------------    ------------    ------------    ------------
Net loss                                          $   (411,968)   $   (504,669)   $   (910,813)   $   (874,460)
                                                  ============    ============    ============    ============

Net loss per share - basic and diluted            $      (0.02)   $      (0.02)   $      (0.04)   $      (0.04)
                                                  ============    ============    ============    ============
Weighted average shares outstanding -
                                                  ------------    ------------    ------------    ------------
   basic and diluted                                24,217,310      21,927,581      24,081,201      21,179,166
                                                  ============    ============    ============    ============
</TABLE>

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

                                      F-2

<PAGE>

                       NextPhase Wireless, Inc.
            Condensed Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                         For the Six     For the Six
                                                                         Months Ended    Months Ended
                                                                         September 30    September 30
                                                                             2006            2005
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
Cash flows from operating activities:
   Net loss                                                               $  (910,813)   $  (874,460)
  ADJUSTMENTS TO RECONCILE NET LOSS TO NET
  CASH USED IN OPERATING ACTIVITIES:
    Non-cash compensation                                                     151,528         33,160
    Amortization of deferred compensation                                                     50,000
    Amortization of discount on notes payable                                  16,920          6,667
   Interest expense                                                            49,859              0
    Depreciation and amortization                                             133,323         28,664
  Changes in assets and liabilities:
     (Increase) decrease in assets:
        Accounts receivable, net                                              133,501        (23,606)
        Other current assets                                                    2,018             --
        Other receivables                                                     (91,890)            --
        Deposits                                                                 (600)
 Increase (decrease) in liabilities:
        Accounts payable                                                      341,172        146,325
        Advances Payable                                                                      (3,604)
        Deferred revenue                                                       46,663          2,445
                                                                          -----------    -----------
   NET CASH USED IN OPERATING ACTIVITIES                                     (128,319)      (634,409)
                                                                          -----------    -----------
Cash flows from investing activities:
   Purchase of property and equipment                                      (1,538,989)       (11,728)
   Purchase of company stock                                                   (9,979)             0
                                                                          -----------    -----------
   NET CASH USED IN INVESTING ACTIVITIES                                   (1,548,968)       (11,728)
                                                                          -----------    -----------
Cash flows from financing activities:
    Proceeds from notes payable                                             1,561,000         25,000
    Proceeds from cash advances payable                                       100,000        800,000
    Principal payments on notes payable and capital leases                    (13,953)      (170,632)
    Proceeds from sale of common stock                                             --        410,000
    Common stock subscribed                                                        --         35,000
    Increase in deposits                                                           --         (3,376)
                                                                          -----------    -----------
   NET CASH PROVIDED BY FINANCING ACTIVITIES                                1,647,047      1,095,992
                                                                          -----------    -----------
Increase in cash and cash equivalents                                         (30,240)       449,855
Cash and cash equivalents at beginning of period                               35,847         50,948
                                                                          -----------    -----------
Cash and cash equivalents at end of period                                $     5,607    $   500,803
                                                                          ===========    ===========

Supplemental disclosure of cash flow information:

                                       Cash paid during the period for:
                                                               Interest   $       770    $        --
                                                                          ===========    ===========
                                                                  Taxes   $        --    $        --
                                                                          ===========    ===========
    Issued of common stock previously subscribed                          $    25,000    $   245,000
                                                                          ===========    ===========
    Acquisition of automotibile for note payable                          $    50,650    $        --
                                                                          ===========    ===========
    Cancellation of stock from legal settlements                          $   250,000    $        --
                                                                          ===========    ===========
    Cancellation of shares originally obtained in reverse merger          $       121    $        --
                                                                          ===========    ===========
    Common stock issued for accounts payable                              $    37,639    $        --
                                                                          ===========    ===========
    Beneficial conversion feature of notes payable                                       $    20,000
                                                                          ===========    ===========
    Common stock issued for acquisition of Blazen                                        $    25,000
                                                                          ===========    ===========
    Shares issued for legal settlement, previously accrued                $    20,000    $        --
                                                                          ===========    ===========
    Beneficial conversion feature of note payable                         $    69,697    $        --
                                                                          ===========    ===========
    Amortization of disocunt on note payable associated
        with beneficial conversion feature                                               $     6,667
                                                                          ===========    ===========
    Amortization of deferred compensation                                 $    52,572    $    50,000
                                                                          ===========    ===========
    Common stock issued for services                                      $    98,957    $    33,160
                                                                          ===========    ===========
</TABLE>

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

                                      F-3

<PAGE>

                            NEXTPHASE WIRELESS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                September 30, 2006
                                   (Unaudited)

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

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

On August 3, 2004 the company  consummated  a share  exchange in which it issued
12,943,000  shares  of  common  stock,  or  approximately  76% of the  company's
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 the company.  NTI was formed on September 14, 2000.
For accounting purposes,  this transaction is considered a "reverse merger", and
the financial statements of the Company reflect the operations of NTI.

The Company has a limited operating history with revenue-generating products and
services only recently entering the market. The financial statements include the
accounts  of  the  Company  and  its  wholly  owned  subsidiaries,   Next  Phase
Technologies,  Inc. ("NTI") and  SpeedFactory,  Inc.  ("SpeedFactory").  NTI was
acquired  in a reverse  acquisition  on August 3, 2004,  and prior to that time,
NextPhase had no  operations.  On January 21, 2005 the Company  changed its name
from Edison  Renewables,  Inc.  to  NextPhase  Wireless,  Inc. On April 5, 2005,
NextPhase  acquired  the  internet  service  and  connectivity  business  assets
previously   operated  by  Synkronus,   Inc.  under  the  name   "SpeedFactory".
Management's plans are discussed further in the Going Concern portion of Note 1.

     o As we have  extended our  wireless  `footprint'  in Southern  California,
through a combination of organic growth and  acquisitions,  we have continued to
add  small to medium  business  subscribers,  small  office/home  office  (SOHO)
subscribers, and residential subscribers in underserved markets to our network.

     o By their very nature,  the markets targeted by our Professional  Services
division (e.g.  municipalities,  public safety,  transport,  homeland  security,
enterprises, large-scale systems integrators etc.) have complex value chains and
extended sales cycles. Typically,  projects consist of multiple phases, with the
early  phases  requiring  extensive   non-billable  activity  such  as  customer
relationship activity and pre-sales support, especially when considered relative
to the  resultant  revenue  from those  phases.  As the  customer  relationships
develop and deepen,  the revenues  derived from  successive  phases (e.g.  as we
build and deploy  networks  that we've  previously  designed,  or we operate and
maintain networks that we've previously deployed)often  increases.  Depending on
the  type of  project,  many  of the  activities  that  provide  support  to our
customers are understood to be value-adding and as such, become billable.

With the  acquisition  of  SpeedFactory,  we have  enhanced  out  position  as a
nationwide  provider  of  scalable,  reliable  and cost  effective  connectivity
solutions, expanding our portfolio of products and services to include DSL, T1s,
co-location and web hosting.

Interim  Financial  Information
-----------------------------

The accompanying  unaudited interim  financial  statements have been prepared by
the  Company,  in  accordance  with  generally  accepted  accounting  principles
pursuant to Regulation S-B of the Securities  and Exchange  Commission.  Certain
information  and footnote  disclosures  normally  included in audited  financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted. Accordingly,  these interim financial statements
should  be read in  conjunction  with the  Company's  financial  statements  and
related  notes as contained in form 10-KSB for the year ended March 31, 2006. In
the  opinion  of  management,  the  interim  financial  statements  reflect  all
adjustments,   including  normal  recurring  adjustments,   necessary  for  fair
presentation of the interim periods presented. The results of the operations for
the three  months  September  30,  2006 are not  necessarily  indicative  of the
results of operations to be expected for the full year.

                                      F-4

<PAGE>

Reclassification
----------------

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

Basis  of  Presentation
-----------------------

The accompanying  financial statements include the accounts of NextPhase and its
wholly owned  subsidiaries  NextPhase  Technologies,  Inc. ("NTI"), a California
corporation  formed on September  14,  2000,  and  SpeedFactory,  Inc., a Nevada
corporation  formed on March 14, 2006. The term  "Company"  refers to NextPhase,
NTI, and SpeedFactory  collectively.  All significant inter-company accounts and
transactions have been eliminated in consolidation.

The  Company  conducts  its  operations  from its  office  located  in  Anaheim,
California.

Effective August 3, 2004,  NextPhase  acquired all of the issued and outstanding
common stock of NTI. As a result of this transaction,  NTI's former shareholders
obtained  control of NextPhase,  a shell  corporation  with no  operations.  For
accounting purposes,  this acquisition has been treated as a reverse acquisition
of NextPhase.

Effective April 5, 2006, through its wholly-owned subsidiary SpeedFactory, Inc.,
NextPhase  acquired  the  internet  service  and  connectivity  business  assets
previously operated by Synkronus, Inc. under the name "SpeedFactory".

The financial  statements  presented  include only the accounts of NTI, from its
inception  (September  14, 2000) through  December 31, 2004,  of NextPhase  from
August 3, 2004 through  September 30, 2006,  and of  SpeedFactory  from April 6,
2006 through September 30, 2006.

Revenue Recognition
-------------------

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 No. 104, REVENUE RECOGNITION  ("SAB104"),  which superceded
Staff Accounting Bulletin No. 101, REVENUE  RECOGNITION IN FINANCIAL  STATEMENTS
("SAB101"). SAB 101 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  00-21  ("EITF  00-21"),
MULTIPLE-DELIVERABLE  REVENUE ARRANGEMENTS.  EITF 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 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:

                                      F-5

<PAGE>

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. All revenue from the provision of internet  services is
recognized in the month the service is provided.

Revenue  from  operating  as an  internet  service  provider  by  the  Company's
SpeedFactory  subsidiary.  Internet services are billed at the beginning of each
period's  activity at a fixed rate for each  customer.  Customers sign either an
annual  or a month to month  agreement.  When  customers  pay for more  than one
monthly  billing  period in advance,  the portion  paid in excess of the current
month is charged to deferred revenue. All revenue from the provision of internet
services is recognized in the month the service is provided.

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.

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.

Deferred Revenue
----------------

Deferred  revenue  consists of  prepayments  the Company  has  received  for its
services.  At September 30, 2006, the Company had recorded  deferred  revenue in
the amount of $80,444.

Going  Concern
--------------

The  accompanying  financial  statements  have been prepared in conformity  with
generally accepted accounting principles,  which contemplate continuation of the
Company as a going concern.  While the Company now has an established  source of
revenue, it has experienced net operating losses of $7,065,600 since inception.

The Company has a working  capital  deficit of $1,070,095 at September 30, 2006.
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  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.

Management's Plan
-----------------

NextPhase  Wireless,   Inc.  is  a  connectivity  company  that  specializes  in
delivering integrated Internet,  voice and data communications  solutions to our
customers.  We  offer a full  portfolio  of  connectivity  solutions,  including
dial-up access,  DSL,  wireless,  T1,  co-location and  web-hosting.  We design,
deploy and operate  our own  wireless  networks,  and we also  provide  wireless
connectivity solutions to businesses and municipalities.

NextPhase  has been  operating  in this  business  since  August 3, 2004 when we
acquired  our  subsidiary  NextPhase  Technologies,  Inc.  in a  share  exchange
transaction.

On April 05, 2006, through our wholly-owned  subsidiary  SpeedFactory,  Inc., we
acquired  the  internet  service and  connectivity  business  assets  previously
operated by Synkronus, Inc. under the name "SpeedFactory".

Based in Atlanta, SpeedFactory is a highly respected ISP, providing a full range
of  business-class  connectivity  services since 1998.  With the  acquisition of
SpeedFactory,  we  have  enhanced  our  position  as a  nationwide  provider  of
scalable,  reliable and  cost-effective  connectivity  solutions,  expanding our
portfolio  of products and services to include  DSL,  T1s,  co-location  and web
hosting, and increased our customer base by over 1100%

                                      F-6

<PAGE>

The  acquisition  has had a significant  impact on the majority of our financial
comparatives  including  revenue,  operating  costs and  expenses and assets and
liabilities.

The combined  company has 12 employees  with offices in Anaheim,  California and
Atlanta, Georgia.

NextPhase continues to develop an integrated portfolio of connectivity  products
and services which include:

o    Operating  as  an  Internet  Service  Provider  (ISP)  of  tiered  Internet
     connectivity services to business and residential subscribers, nationwide.

o    Design, deployment, operation and support of integrated wireless networking
     solutions.

o    Bundling multiple  technologies,  such as Broadband  Wireless Access (BWA),
     Voice over  Internet  Protocol  (VoIP) and WiFi,  along with a high service
     component that target vertical markets such as public safety, transport and
     homeland security.

NextPhase is exploiting the broadband connectivity and integration markets, by:

o    Developing  and  deploying  our  portfolio  of  connectivity  products  and
     services.

o    Continuing to develop our management  team with  best-in-class  experienced
     executives and professionals.

o    Seeking strategic alliances, relationships, and acquisitions to augment the
     growth of our connectivity products and services operations.

o    Growing our market share and  extending  our  footprint  through  selective
     acquisitions and franchise and licensing programs.

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.

Income  Taxes
-------------

The Company  accounts for income  taxes using the  liability  method.  Under the
liability  method,  deferred  income taxes are  determined  based on differences
between the financial  reporting and tax bases of assets and  liabilities.  They
are  measured  using the  enacted tax rates and laws that will be in effect when
the differences  are expected to reverse.  The Company is required to adjust its
deferred tax  liabilities  in the period when tax rates or the provisions of the
income tax laws change.  Valuation allowances are established to reduce deferred
tax assets to the amounts expected to be realized.

Disclosures about Fair Value of Financial Instruments
-----------------------------------------------------

The carrying  amounts of the  Company's  financial  instruments,  which  include
accounts  receivable and accounts  payable,  approximate fair value at September
30, 2006.

                                      F-7

<PAGE>

Stock Based Compensation
--------------------------

On  January  1, 2006 the  company  adopted  Statement  of  Financial  Accounting
Standards  No. 123 (revised  2004)  "Share-Based  Payment"  ("SFAS 123 (R) which
requires  the  measurement  and  recognition  of  compensation  expense  for all
share-based  payment awards made to employees and directors  including  employee
stock options and employee stock purchases  related to a Employee Stock Purchase
Plan based on the estimated  fair values.  SFAS 123 (R) supersedes the company's
previous accounting under Accounting Principles Board Opinion No.25, "Accounting
for Stock Issued to Employees" ("APB 25") for the periods beginning fiscal 2006.

The  company  adopted  SFAS 123 (R) using the  modified  prospective  transition
method,  which required the application of the accounting standard as of January
1, 2006. The company's  Consolidated  Financial  Statements as of and for twelve
months  Ended March 31, 2006 reflect the impact of SFAS  123(R).  In  accordance
with the modified  prospective  transition  method,  the company's  Consolidated
Financial  Statements  for the prior  periods have not been restated to reflect,
and do not include the impact of SFAS 123 (R). Stock based compensation  expense
recognized  under SFAS 123 (R) for the three months ended September 30, 2006 was
$0.  Pro  forma  stock  based  compensation  was $0 for the three  months  ended
September 30, 2006.

Stock-based  compensation  expense  recognized during the period is based on the
value of the portion of share-based  payment awards that is ultimately  expected
to vest during the period.

A summary  of option  activity  under the Plan as of  September  30,  2006,  and
changes during the period then ended are presented below:

                                                                    Weighted-
                                                                Average Exercise
                                                Options              Price
                                                --------        ----------------

      Outstanding at June 30, 2006                    0           $    0.00
      Issued                                          0                0.00
      Exercised                                       0                0.00
      Forfeited or expired                            0                0.00

      Outstanding at September 30, 2006               0           $    0.00
      Non-vested at September 30, 2006                0                0.00
      Exercisable at September 30, 2006               0           $    0.00



Aggregate  intrinsic  value of options  outstanding  and options  exercisable at
September 30, 2006 was $0.  Aggregate  intrinsic value represents the difference
between the company's  closing stock price on the last trading day of the fiscal
period,  which  was $0.13 as of  September  30,  2006,  and the  exercise  price
multiplied by the number of options outstanding. As of September 30, 2006, total
unrecognized  stock-based  compensation  expense  related  to  non-vested  stock
options  was  $0.  The  total  fair  value  of  options  vested  was $0 for  the
three-month periods ended September 30, 2006 and 2005, respectively.

                                      F-8

<PAGE>

The modified  transition method of SFAS 123 (R) requires the presentation of pro
forma  information  for periods  presented prior to the adoption of SFAS 123 (R)
regarding  net loss an net loss per share as if we had  accounted  for our stock
plans under the fair value method of SFAS 123 (R). For pro forma  purposes,  the
fair  value of stock  options  was  estimated  using  the  Black-Scholes  option
valuation model and amortizing on a straight-line  basis.  The pro forma amounts
are as follows:

                                                  For the three    For the six
                                                   months ended    months ended
                                                   September 30,   September 30,
                                                       2005           2005
                                                     ---------     ---------
Net loss - as reported                               $(504,669)    $(874,460)
Add:     Total stock based employee
         compensation expense
         as reported under intrinsic value
         method (APB No. 25)                                --            --

Deduct:  Total stock based employee compensation
         expense as reported under fair value
         based method (SFAS No. 123)                        --            --
                                                     ---------     ---------
Net loss - Pro forma                                 $(504,669)    $(874,460)

Net loss attributable to common
  shareholders - Pro forma                           $(504,669)    $(874,460)

Basic and diluted loss per share - as reported       $   (0.02)    $   (0.04)
                                                     =========     =========

Basic and diluted loss per share - Pro forma         $   (0.02)    $   (0.04)
                                                     =========     =========


Earnings (Loss) per Common Share
--------------------------------

The company  computes  earnings per share under  Financial  Accounting  Standard
No.128,  "Earnings Per Share" (SFAS 128).  Net loss per common share is computed
by dividing  net loss by the weighted  average  number of shares of common stock
and dilutive  common stock  equivalents  outstanding  during the year.  Dilutive
common  stock  equivalents   consist  of  shares  issuable  upon  conversion  of
convertible  notes and the exercise of the company's  stock options and warrants
(calculated  using the  treasury  stock  method).  During the three months ended
September 30, 2006 and 2005, common stock equivalents were not considered in the
calculation of the weighted average number of common shares outstanding  because
they would be anti-dilutive, thereby decreasing the net loss per common share.

Management Estimates
--------------------

The presentation of financial  statements in conformity with generally  accepted
accounting principles 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 date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

New Accounting Pronouncements
-----------------------------

On February 16, 2006 the Financial Accounting Standards Board (FASB) issued SFAS
155,  "Accounting  for  Certain  Hybrid  Instruments,"  which  amends  SFAS 133,
"Accounting for Derivative  Instruments and Hedging  Activities,"  and SFAS 140,
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of  Liabilities."  SFAS 155  allows  financial  instruments  that have  embedded
derivatives  to be accounted for as a whole  (eliminating  the need to bifurcate
the  derivative  from its host) if the holder  elects to  account  for the whole
instrument on a fair value basis.  SFAS 155 also  clarifies  and amends  certain
other  provisions of SFAS 133 and SFAS 140. This  statement is effective for all
financial  instruments  acquired  or  issued  in fiscal  years  beginning  after
September  15,  2006.  The  Company  does not  expect its  adoption  of this new
standard  to have a  material  impact  on its  financial  position,  results  of
operations or cash flows.

In March 2006, the FASB issued FASB Statement No. 156,  Accounting for Servicing
of Financial  Assets - an amendment to FASB  Statement  No. 140.  Statement  156
requires that an entity recognize a servicing asset or servicing  liability each
time it undertakes an obligation to service a financial asset by entering into a
service  contract  under certain  situations.  The new standard is effective for
fiscal years beginning after September 15, 2006. The Company does not expect its
adoption  of this  new  standard  to have a  material  impact  on its  financial
position, results of operations or cash flows.

In September 2006 the Financial  Account Standards Board (the "FASB") issued its
Statement of Financial Accounting  Standards 157, Fair Value Measurements.  This
Statement  defines fair value,  establishes a framework for measuring fair value
in generally accepted  accounting  principles  (GAAP),  and expands  disclosures
about fair value  measurements.  This Statement  applies under other  accounting
pronouncements that require or permit fair value measurements,  the Board having
previously  concluded in those accounting  pronouncements that fair value is the
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement  will change  current  practice.  FAS 157 effective date is for fiscal
years beginning after November 15, 2007. The Company does not expect adoption of
this standard will have a material impact on its financial position,  operations
or cash flows.  In  September  2006 the FASB issued its  Statement  of Financial
Accounting Standards 158 "Employers'  Accounting for Defined Benefit Pension and
Other  Postretirement  Plans".  This Statement improves  financial  reporting by
requiring an employer to recognize  the  overfunded or  underfunded  status of a
defined  benefit  postretirement  plan (other than a  multiemployer  plan) as an
asset or  liability  in its  statement  of  financial  position and to recognize
changes in that  funded  status in the year in which the changes  occur  through
comprehensive  income of a business entity or changes in unrestricted net assets
of  a  not-for-profit  organization.  This  Statement  also  improves  financial
reporting by requiring an employer to measure the funded  status of a plan as of
the  date  of  its  year-end  statement  of  financial  position,  with  limited
exceptions.  The  effective  date for an employer  with  publicly  traded equity
securities  is as of the end of the fiscal year ending after  December 15, 2006.
The  Company  does not expect  adoption  of this  standard  will have a material
impact on its financial position, operations or cash flows.

Comprehensive Income
--------------------

The Company has no items of other  comprehensive  income  (loss) for the periods
ended September 30, 2006 and 2005.

NOTE 2 - SYNKRONUS ACQUISITION

On April 5,  2006,  through  its  wholly-owned  subsidiary  SpeedFactory,  Inc.,
acquired all of the assets of Synkronus,  Inc.,  excluding cash,  pursuant to an
Asset  Purchase  Agreement  dated  March  29,  2006  between   SpeedFactory  and
Synkronus.  The assets acquired by SpeedFactory  comprise  Synkronus's  internet
service  and  connectivity   business  operated  by  Synkronus  under  the  name
"SpeedFactory".

SpeedFactory paid $1,500,000 in cash for the assets at closing. SpeedFactory did
not assume any pre-closing liabilities from Synkronus.  The amount of $1,200,000
was  delivered  to the seller on April 7, 2006 and the  closing  documents  were
released  from escrow on that date.  The amount of  $300,000  was  delivered  to
escrow  on  April  7,  2006,  pending  resolution  of  certain  elements  of the
transaction. The closing was effective as of April 5, 2006.

NextPhase borrowed $1,500,000 to fund the purchase price from a private lender.
This  borrowing was secured by  substantially  all the assets of NextPhase.  The
company previously  disclosed the terms of this loan in a Current Report on Form
8-K which was filed with the  Securities  and  Exchange  Commission  on April 5,
2006.

The  acquisition  of Synkronus was  accounted  for using the purchase  method in
accordance with SFAS 141, "Business  Combinations."  There were no shares of the
Company's  common  stock  issued as a part of the  acquisition.  The  results of
operations  for  Synkronus  have been  included  in the  unaudited  consolidated
condensed Statements of Operations since the date of acquisition.

The components of the purchase price were as follows:

Common stock                                        $       --
Cash                                                 1,500,000
                                                   -----------
Total purchase price                                $1,500,000
                                                   ===========

In  accordance  with  Financial  Accounting  Standard  (SFAS) No. 141,  Business
Combinations, the total purchase price was allocated to the estimated fair value
of  assets  acquired  and  liabilities  assumed.  The fair  value of the  assets
acquired  was based on  management's  best  estimates.  The  company  has made a
preliminary  allocation  of the  purchase  price  to  the  Synkronus  assets  at
estimated fair values. This allocation is subject to revision.

The  purchase  price was  allocated  to the fair  value of assets  acquired  and
liabilities assumed as follows:

                                                                   Estimated
                                                       Amount        Lives
                                                    ----------   ----------
Computers and related equipment                     $  100,000     3 years
Customer lists                                       1,200,000    10 years
Trademarks                                             100,000   indefinite
Supply contracts                                       100,000     5 years
                                                    ----------
Total purchase price                                $1,500,000
                                                    ==========

The trademarks are deemed to have an indefinite life and,  accordingly,  are not
being amortized,  but will be subject to periodic  impairment  testing at future
periods  in  accordance  with  SFAS No.  142  ("Goodwill  and  Other  Intangible
Assets").  The customer lists and supply  contracts  will be amortized  based on
estimated weighted cash flows over their lives.

The  following  unaudited  condensed  combined pro forma  results of  operations
reflect the pro forma  combination of the NextPhase and Synkronus  businesses as
if the combination had occurred at the beginning of the periods  presented.  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.

(Proforma)

                                           Three
                                        Months Ended        Six Months Ended
                                      September 30, 2005   September 30, 2005
                                      ------------------   ------------------
Sales
  NextPhase                              $    95,476          $   242,800
  Synkronus                                  462,321              941,029
                                         -----------          -----------
  Total sales                            $   557,797          $ 1,183,829
                                         -----------          -----------
  Net Loss                               $  (455,802)         $  (668,086)
                                         ===========          ===========
NextPhase, as reported
  Loss per share                               (0.02)               (0.03)
Pro forma
  Loss per share                               (0.02)               (0.03)

NOTE 3 - RELATED PARTY TRANSACTIONS

During the three months ended  September 30, 2006, the Company had the following
transactions with related parties:

The Company has a line of credit with America  Express of $4,400.  The Company's
chairman  co-signs  on this  line of  credit.  During  the  three  months  ended
September 30, 2006 the Company had an outstanding  balance on the credit card of
$3,965.

The Company has a line of credit with Bank of America of $25,000.  The Company's
chairman  co-signs  on this  line of  credit.  During  the  three  months  ended
September 30, 2006 the company had and outstanding balance on the credit card of
$19,830.

The Company's  chairman has made payments in the Company's  behalf in the amount
of $7,030.

                                      F-9

<PAGE>

NOTE 4 - ACCOUNTS RECEIVABLE

The Company has trade accounts receivable in the amount of $122,081 at September
30, 2006 and has  reserved  the amount of $9,481.  Net  accounts  receivable  at
September 30, 2006 are $112,600.

NOTE 5 - OTHER RECEIVABLES

Other  receivables  at September 30, 2006 consist of a net amount of $45,000 due
from  Synkronus,  Inc. in connection  with the sale of Synkronus'  assets to the
Company's  subsidiary  SpeedFactory,  Inc.  (see note 10). As the  Company  took
control of an  ongoing  internet  hosting  business  with a high  volume of cash
transactions,  the  Company is  maintaining  a record of amounts due to and from
Synkronus in order to achieve an accurate accounting of cash and receivables. In
October  2006,  the  Company  reached an  agreement  finalizing  these  amounts.
Pursuant to the terms of this agreement, The Company will receive $45,000 of the
amount held in escrow.  The Company charged to operations the balance of $46,890
as an impairment to the amount receivable.

NOTE 6 - OTHER CURRENT ASSETS

Other current assets consists of prepaid expenses.

NOTE 7 - PROPERTY AND EQUIPMENT ASSETS

Communications Towers
---------------------

The company intends to utilize  broadcast  towers as their main POP's (Points of
Presence)  and to deliver  Point to  Multipoint  broadband  connectivity  to the
company's  existing  and  potential  clients.  Depending  on tower  location and
visibility,  each  tower  will  cover a range  from 240 to 360  degrees,  with a
broadcast  strength  in excess of 25 miles  delivering  an  average of 32Mbps of
broadband  data service.  Within this coverage  area, the company will sell data
circuits for internet service, video and/or VoIP service.

At September 30, 2006, there were ten towers in operation.  The estimated useful
life of the towers is approximately  ten years. The company begins to depreciate
the cost of each tower when the tower is placed into service.

Property and  equipment  are recorded at cost.  Depreciation  is provided by the
straight-line  method over the  estimated  useful  lives of the related  assets,
which is estimated to be three years. Major classes of property and equipment at
September 30, 2006 consists of the followings:

Property and equipment consist of the following at September 30, 2006:

Telecommunications equipment                   $ 166,261
Computer equipment                               135,260
Communications towers                            118,068
Automobile                                        50,650
Furniture and fixtures                            23,291
Leasehold improvements                             7,176
                                               ---------
Total property and equipment                     500,706
Less: accumulated depreciation                  (148,019)
                                               ---------
Net property and equipment                     $ 352,687
                                               =========

                                      F-10

<PAGE>

Intangible Assets
-----------------

Intangible assets consist of the following at September 30, 2006:

                     Customer                    Supplier
                     Contracts     Trademarks    Contracts
                    ----------     ----------   ----------
Original amount     $1,200,000      $ 100,000    $ 100,000
Less: Accumulated
Amortization:          (60,000)            --      (10,000)
                    ----------     ----------   ----------
Net book value      $1,140,000      $ 100,000    $  90,000
                    ==========     ==========   ==========

Property  and  equipment  and  other  long-term  assets  are  depreciated  on  a
straight-line basis over periods ranging from 24 to 120 months. Depreciation and
amortization  expense for the three months ended September 30, 2006 and 2005 was
$67,554 and $14,815, respectively. Depreciation and amortization expense for the
six  months  ended  September  30,  2006  and  2005 was  $133,323  and  $28,664,
respectively.

NOTE 8 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities consisted of the following at September
30, 2006:

Accounts payable and accrued liabilities       $ 767,030
Payroll and related                               39,186
Accrued interest                                 149,364
Sales taxes                                        3,664
                                               ---------
                                               $ 959,244
                                               =========

NOTE 9 - CASH ADVANCES PAYABLE

During the three months ended  September  30, 2006,  the Company  received  cash
advances  from an investor in the  aggregate  of $100,000.  These cash  advances
accrued  interest at the rate of 9% per annum,  which  amounted to $2,300 during
the three months ended September 30, 2006.

Also during the three the three months ended June 30, 2006 the Company converted
cash  advances  of  $800,000  from the same  investor  into a  convertible  note
payable. (See note 9.)

NOTE 10 - NOTES PAYABLE AND CAPITAL LEASES

Notes payable at September 30, 2006 consisted of the following:

Convertible  note payable in the amount of $2,300,000 dated March
31, 2006. The note is deemed effective at the date upon which the
cash was  received  by the  Company,  or April 7, 2006.  The note
bears interest at the rate of 6% per annum, and is due in full on
April 1, 2008. Upon maturity,  the note and accrued  interest are
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 $0.33 per share.  The  minimum  price at which the
note and accrued  interest  may  convert is $0.15 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.  This
discount is amortized over the life of the note. During the three
months  ended  September  30, 2006,  $8,844 of this  discount was
amortized,  and at September 30, 2006, the remaining  discount is
$52,777.                                                            $ 2,247,222

Convertible  note payable in the amount of $61,000  dated June 9,
2006. The note bears interest at the rate of 6% per annum, and is
due in full on June 9, 2007. Upon maturity,  the note and accrued
interest are 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 $0.33 per share.  The minimum price at
which the note and  accrued  interest  may  convert  is $0.15 per
share.   The  Company   determined  the  value  of  the  embedded
beneficial conversion feature of this note payable at the time of
issuance to be $0.                                                       61,000

Note payable in the amount of $50,650 for an auto loan. This note
is dated  June  14,  2006,  and is  payable  in 60 equal  monthly
installments of $979.25.  This note bears interest at the rate of
5.9% per annum,  and is  guaranteed  by the  Company's  chairman.
During the three months  ended  September  30, 2006,  the Company
made two payment on this Note, consisting of interest of $736 and
principal of $2,201.                                                     47,718

Convertible  note  payable in the amount of $30,000  payable to a
board  member.  The  note  bears  interest  at the rate of 6% per
annum,  and is due in full on April 1, 2007.  Upon maturity,  the
note and accrued  interest are  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 $0.32 per
share.  The minimum price at which the note and accrued  interest
may  convert  is  $0.15  per  share.   There  was  no  beneficial
conversion feature embedded in this note at the time of issuance.        30,000

Capital lease in the amount of $13,291 for furniture  located the
Company's  corporate office. The lease calls for payments of $360
per month for 44 months; the final payment is due April 15, 2009.
During the three months  ended  September  30, 2006,  the Company
made four payments in the aggregate amount of $1,080,  consisting
of principal of $829 and interest of $251.                                9,795
                                                                    -----------
Total                                                               $ 2,395,735

Less: Short-term portion                                                (94,223)
                                                                    -----------
Long-term portion                                                   $ 2,395,737
                                                                    ===========

                                      F-11

<PAGE>

Aggregate maturities of long-term debt as of September 30, 2006 are as follows:

                      Fiscal Year
                    Ending March 31,             Amount
                    ----------------          -----------
                         2007                 $    70,469
                         2008                      42,656
                         2009                   2,312,107
                         2010                       9,959
                         2011                      10,580
                         2012                       2,743
                                              -----------
Total                                         $ 2,448,514
Discount                                          (52,779)
                                              -----------
                                              $ 2,395,735
                                              ===========

NOTE 11 - EQUITY

The Company has  authorized  20,000,000  shares of Preferred  Stock,  with a par
value of $.001 per share. As of September 30, 2006, the Company has no Preferred
Stock issued and outstanding.  The Company has authorized  200,000,000 shares of
common stock, with a par value of $.001 per share. As of September 30, 2006, the
Company has 24,363,296 shares of common stock issued and outstanding.

Common stock
------------

The Company had the following common stock transactions  during six months ended
September 30, 2006:

The  Company  issued  350,921  shares  of common  stock  valued  at  $82,457  to
consultants  and employees for services,  during the three months ended June 30,
2006.

The  Company  issued  1,491,229  shares of common  stock  valued at  $263,456 to
consultants and employees for services  performed in a prior period. The cost of
these  services  was accrued  during the year ended March 31,  2006,  during the
three months ended June 30, 2006.

The  Company  issued  50,000  shares  of common  stock  valued  at  $25,000  for
subscriptions payable, during the three months ended June 30, 2006.

The Company  issued 40,000 shares of common stock valued at $20,000  pursuant to
the terms of a legal settlement, during the three months ended June 30, 2006.

The Company received for cancellation 1,000,000 shares of common stock valued at
$250,000  pursuant to the terms of a legal  settlement from a prior period.  The
value of these shares was charged to stock cancellation  receivable in the prior
period, during the three months ended June 30, 2006.

The  Company   charged  to   operations   the  amount  of  $26,142  of  deferred
compensation, during the three months ended June 30, 2006.

The Company recorded a discount related to the beneficial  conversion feature of
a note  payable in the amount of $69,697 and charged  this amount to  additional
paid-in capital, during the three months ended June 30, 2006.

The Company issued 50,000 shares of common stock valued at $4,500 as a bonus for
services performed, during the three months ended September 30, 2006.

The Company issued 240,000 shares of common stock valued at $20,400  pursuant to
the terms of a consulting agreement, during the three months ended September 30,
2006.

The  Company   charged  to   operations   the  amount  of  $31,529  of  deferred
compensation, during the three months ended September 30, 2006.

The Company  purchased  shares of the  Company's  common stock valued at $9,979,
during the three months ended September 30, 2006.

Deferred Compensation
---------------------

The Company  sometimes  pays its service  providers with shares of the Company's
common stock.  When such  payments are made in advance of services,  the Company
charged  to  deferred  compensation  the fair  value of the  stock  issued,  and
amortized to operations  the cost of those services over the life of the related
contract.  During  the three  months  ended  September  30,  2006,  the  Company
amortized  the amount of $26,427 to  operations,  and at September  30, 2006 the
amount of $36,764  remained in deferred  compensation  representing  the cost of
services to be performed through February, 2007.

                                      F-12

<PAGE>

NOTE 12 - CONTINGENCIES

On April 7, 2006, the Company completed the acquisition of certain of the assets
of  Synkronus,  Inc.  Pursuant to this  acquisition,  the Company  acquired  the
ongoing internet connectivity business of Synkronus.  The Company's wholly-owned
subsidiary  SpeedFactory  currently  operates this business.  This business is a
high-transaction  volume  internet  connectivity  operation,   and  has  several
thousand customers who pay both in arrears and in advance of services.  In order
to ensure an  accurate  cutoff of revenue,  accounts  receivable,  and  accounts
payable between the Company and the seller,  the Company has deposited  $300,000
of the purchase price into an escrow account.  The Company made an initial claim
against  these  funds  for  adjustments  for the  timing  of  revenue,  accounts
receivable,  and accounts payable cutoff, and other adjustments in the amount of
$91,890.

In October 2006,  the Company  reached an agreement  finalizing  these  amounts.
Pursuant to the terms of this agreement, The Company will receive $45,000 of the
amount held in escrow.  The Company charged to operations the balance of $46,890
as an impairment to the amount receivable (see note 3).

NOTE 13 - GOING CONCERN MATTERS

The accompanying  condensed consolidated financial statements have been prepared
on a going concern basis,  which  contemplates the realization of assets and the
satisfaction  of liabilities  in the normal course of business.  As shown in the
Company's  audited  financial  statements  for the year ended  March 31, 2006 as
filed on Form 10-KSB,  the Company had an  accumulated  deficit of $6,154,787 at
March 31, 2006. The Company also has a limited operating history.  These factors
among  others  indicate  that the  Company  may be unable to continue as a going
concern for a reasonable period of time.

The Company may require additional financing in order to successfully  implement
its business  plan.  There can be no assurance the Company will be successful in
obtaining these funds on terms favorable to the Company, if at all.

If operations and cash flows continue to improve,  management  believes that the
Company  can  continue  to  operate.  However,  no  assurance  can be given that
management's  actions will result in profitable  operations or the resolution of
its liquidity problems.

The  Company's  existence  is  dependent  upon  management's  ability to develop
profitable operations and resolve its liquidity problems. Management anticipates
the Company will attain  profitable status and improve its liquidity through the
continued  developing,  marketing  and selling of its  services  and  additional
equity  investment  in the  Company.  The  accompanying  condensed  consolidated
financial statements do not include any adjustments that might result should the
Company be unable to continue as a going concern.

NOTE 14 - SUBSEQUENT EVENTS

The  Company  issued  480,000  shares of common  stock  valued at  approximately
$40,800 pursuant to the terms of a consulting agreement, subsequent to September
30, 2006.

The  Company  issued  611,567  shares of common  stock  valued at  approximately
$81,000 to consultants  and employees for services,  subsequent to September 30,
2006.

                                      F-13

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

                           FORWARD LOOKING STATEMENTS

Certain  information  contained in this  discussion and elsewhere 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. 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" 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 raise  capital  necessary  to sustain  our  anticipated
          operations and implement our proposed business plan,

     o    our ability to implement our proposed business plan,

     o    the ability to successfully  integrate the operations of businesses we
          have acquired, or may acquire in the future, into our operations.

     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    the 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,

     o    our ability to generate sufficient cash to pay our creditors, 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
Securities and Exchange Commission 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.

                                        3

<PAGE>

Critical Accounting Policy and Estimates
----------------------------------------

Our  Management's  Discussion  and Analysis of Financial  Condition  and Plan of
Operations section discusses our consolidated  financial statements,  which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the financial  statements and the reported
amounts of revenues and expenses  during the  reporting  period.  On an on-going
basis, management evaluates its estimates and judgments, including those related
to  revenue   recognition,   accrued   expenses,   financing   operations,   and
contingencies  and litigation.  Management  bases its estimates and judgments on
historical  experience  and on various  other  factors  that are  believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making judgments about the carrying value of assets and liabilities that are not
readily  apparent  from other  sources.  Actual  results  may differ  from these
Estimates  under different  assumptions or conditions.  There are no significant
accounting estimates inherent in the preparation of our financial statements.

Background
----------

The  following  discussion  should  be read in  conjunction  with the  financial
statements  of the company and related notes  included  elsewhere in this Report
and in the  company's  Annual Report on Form 10-KSB for the year ended March 31,
2006.

Business Overview
-----------------

NextPhase  Wireless,   Inc.  is  a  connectivity  company  that  specializes  in
delivering integrated Internet,  voice and data communications  solutions to our
customers.  We  offer a full  portfolio  of  connectivity  solutions,  including
dial-up access,  DSL,  wireless,  T1,  co-location and  web-hosting.  We design,
deploy and operate  our own  wireless  networks,  and we also  provide  wireless
connectivity solutions to businesses and municipalities.

NextPhase  has been  operating  in this  business  since  August 3, 2004 when we
acquired  our  subsidiary  NextPhase  Technologies,  Inc.  in a  share  exchange
transaction.

On April 05, 2006, through our wholly-owned  subsidiary  SpeedFactory,  Inc., we
acquired  the  internet  service and  connectivity  business  assets  previously
operated by Synkronus, Inc. under the name "SpeedFactory".

Based in Atlanta, SpeedFactory is a highly respected ISP, providing a full range
of  business-class  connectivity  services since 1998.  With the  acquisition of
SpeedFactory,  we  have  enhanced  our  position  as a  nationwide  provider  of
scalable,  reliable and  cost-effective  connectivity  solutions,  expanding our
portfolio  of products and services to include  DSL,  T1s,  co-location  and web
hosting, and increased our customer base by over 1100%.

The  acquisition  has had a significant  impact on the majority of our financial
comparatives  including  revenue,  operating  costs and  expenses and assets and
liabilities.

The combined  company has 12 employees  with offices in Anaheim,  California and
Atlanta, Georgia.

NextPhase continues to develop an integrated portfolio of connectivity  products
and services which include:

o    Operating  as  an  Internet  Service  Provider  (ISP)  of  tiered  Internet
     connectivity services to business and residential subscribers, nationwide.

                                        4

<PAGE>

o    Design, deployment, operation and support of integrated wireless networking
     solutions.

o    Bundling multiple  technologies,  such as Broadband  Wireless Access (BWA),
     Voice over  Internet  Protocol  (VoIP) and WiFi,  along with a high service
     component that target vertical markets such as public safety, transport and
     homeland security.

NextPhase is exploiting the broadband connectivity and integration markets, by:

o    Developing  and  deploying  our  portfolio  of  connectivity  products  and
     services.

o    Continuing to develop our management  team with  best-in-class  experienced
     executives and professionals.

o    Seeking strategic alliances, relationships, and acquisitions to augment the
     growth of our connectivity products and services operations.

o    Growing our market share and  extending  our  footprint  through  selective
     acquisitions and franchise and licensing programs.

RESULTS OF OPERATIONS

Three months ended September 30, 2006 and September 30, 2005:

Revenue for the quarter  ended  September  30,  2006 was  $636,426,  compared to
$95,476 for the quarter ended  September  30, 2005.  The increase of $540,950 or
567% in revenue is due to the  acquisition  of  SpeedFactory,  Inc.  on April 5,
2006. The Company's first  revenue-generating  products and services entered the
market during the third fiscal quarter ended December 31, 2004.

Cost of goods sold was $300,739 for the three months ended  September  30, 2006,
compared to $80,375 for the quarter  ended  September  30, 2005,  an increase of
$220,364 or 274%.  Gross  profit for the quarter  ended  September  30, 2006 was
$335,687  compared to $15,101 for the quarter  ended  September  30,  2005.  The
increase of $320,586 in gross profit is due to the acquisition of  SpeedFactory,
Inc. on April 5, 2006 and increased revenues from the Company's expanded ISP and
Professional Services operations.

Total  selling,  general  and  administrative  expenses  for the  quarter  ended
September  30, 2006 were  $610,195,  an increase of $114,363 or 23%  compared to
$495,832  for the  quarter  ended  September  30,  2005.  Selling,  general  and
administrative  expenses for the three months ended September 30, 2006 consisted
primarily of payroll and related costs of $231,748; legal and accounting fees of
$110,847; non-cash  compensation  of $71,329;  facilities  and related costs of
$71,226;  impairment  expense of $46,890;  consulting and  professional  fees of
$17,770;  office  expenses of $15,738,  public  relations and marketing costs of
$14,821, bank services charges of $13,552, and travel and entertainment costs of
$7,289.

Depreciation and  amortization  expense for the three months ended September 30,
2006 was $67,554  compared to $14,815 for the quarter ended  September 30, 2005,
an  increase  of $52,739 or 356%.  The  reason  for the  increased  depreciation
expense is an increase in the Company's  capital assets as we continue to expand
our operations.

Interest  expense,  net of interest expense for the three months ended September
30, 2006 was $69,906, an increase of $58,663 or 522% compared to interest income
of $11,243 for the three months ended  September 30, 2005.  The increase was due
to an  increase  in the  Company's  debt  along  with  the  amortization  of the
discounts associated with the beneficial conversion features of notes payable.

For the reasons  above,  the Company had a net loss for the three  months  ended
September 30, 2006 of $411,968,  a  decrease of $92,701 or 18% compared to a net
loss of $504,669 for the three months ended September 30, 2005.

Six months ended September 30, 2006 and September 30, 2005:

Revenue for the six months ended  September 30, 2006 was $1,157,704  compared to
$242,800 for the quarter ended  September 30, 2005.  The increase of $914,904 or
377% is due to the  acquisition  of  SpeedFactory,  Inc.  on April 5, 2006.  The
Company's  first  revenue-generating  products and  services  entered the market
during the third fiscal quarter ended December 31, 2004.

Cost of goods sold was  $611,015 for the six months  ended  September  30, 2006,
compared to $233,989 for the six months ended September 30, 2005, an increase of
$377,026 or 161%.  Gross profit for the six months ended  September 30, 2006 was
$546,689  compared to $8,811 for the six months ended  September  30, 2005.  The
increase of $531,878 in gross profit is due to the acquisition of  SpeedFactory,
Inc. on April 5, 2006 and increased revenues from the Company's expanded ISP and
Professional Services operations.

Total  selling,  general and  administrative  expenses  for the six months ended
September 30, 2006 were $1,200,590,  an increase of 42% compared to $843,026 for
the six months ended  September 30, 2005.  Selling,  general and  administrative
expenses  for the six months ended  September  30, 2006  consisted  primarily of
payroll and related costs of $402,881;  legal and accounting  fees of $238,526 ;
non-cash  compensation  of $151,528;  facilities  and related costs of $138,545;
consulting  and  professional  fees  of  $58,956;  impairment  expense  $46,890;
equipment rental and equipment costs of $41,749;  office expense $26,745; public
relations and marketing costs of $22,982;  bank service charges of $20,767;  and
travel and entertainment expenses of $20,128.

Depreciation  expense for the six months ended  September  30, 2006 was $133,323
compared to $28,664 for the six months ended  September 30, 2005, an increase of
$104,659  or 365%.  The  reason  for the  increased  depreciation  expense is an
increase  in  the  Company's  capital  assets  as  we  continue  to  expand  our
operations.

Interest  expense net of interest  income for the six months ended September 30,
2006 was  $127,840,  an  increase of  $114,139  compared  to interest  income of
$13,701 for the six months ended  September 30, 2005. The increase was due to an
increase in the  Company's  debt along with the  amortization  of the  discounts
associated with the beneficial conversion features of notes payable.

For the  reasons  above,  the  Company  had a net loss for the six months  ended
September  30, 2006 of $910,813,  an increase of $36,353 or 4% compared to a net
loss of $874,460 for the six months ended September 30, 2005.

Liquidity and Capital Resources
-------------------------------

As of  September  30, 2006,  the company had a cash  balance of $5,607,  and the
company's accumulated deficit was $7,065,600. Total liabilities were $3,535,424,
consisting of notes and capital leases payable of $2,301,512 (net of discount of
$52,778); trade accounts payable of $959,244; cash advances payable of $100,000;
and deferred revenue of $80,444.

                                        5

<PAGE>

Notes payable are as follows:

Convertible note payable in the amount of $2,300,000. This amount
consists of  $1,500,000  loan to the Company  for  financing  the
Synkronus acquisition (note 3), and $800,000 which was previously
loaned to the  Company by this  investor as a cash  advance.  The
note is  deemed  effective  at the date  upon  which the cash was
received  by the  Company,  or April  7,  2006.  The  note  bears
interest at the rate of 6% per annum, and is due in full on April
1,  2008.  Upon  maturity,  the note  and  accrued  interest  are
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 $0.33 per share.  The  minimum  price at which the
note and accrued  interest  may  convert is $0.15 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.  This
discount is amortized over the life of the note. During the three
months ended  September  30, 2006,  $16,920 of this  discount was
amortized,  and at September 30, 2006, the remaining  discount is
$52,777.                                                              2,247,222

Convertible  note payable in the amount of $61,000  dated June 9,
2006. The note bears interest at the rate of 6% per annum, and is
due in full on June 9, 2007. Upon maturity,  the note and accrued
interest are 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 $0.33 per share.  The minimum price at
which the note and  accrued  interest  may  convert  is $0.15 per
share.   The  Company   determined  the  value  of  the  embedded
beneficial conversion feature of this note payable at the time of
issuance to be $0.                                                       61,000

Note payable in the amount of $50,650 for an auto loan. This note
is dated  June  14,  2006,  and is  payable  in 60 equal  monthly
installments of $XX. This note bears interest at the rate of 5.9%
per annum,  and is guaranteed by the Company's  chairman.  During
the three months ended September 30, 2006, the Company made three
payment  on  this  Note,  consisting  of  interest  of  $736  and
principal of $2,201.

                                                                         47,718

Convertible  note  payable in the amount of $30,000  payable to a
board  member.  The  note  bears  interest  at the rate of 6% per
annum,  and is due in full on April 1, 2007.  Upon maturity,  the
note and accrued  interest are  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 $0.32 per
share.  The minimum price at which the note and accrued  interest
may  convert  is  $0.15  per  share.   There  was  no  beneficial
conversion feature embedded in this note at the time of issuance.        30,000

Capital lease in the amount of $13,291 for furniture  located the
Company's  corporate office. The lease calls for payments of $360
per month for 44 months; the final payment is due April 15, 2009.
During the three months  ended  September  30, 2006,  the Company
made three payments in the aggregate amount of $1,080, consisting
of principal of $829 and interest of $251.                                9,795
                                                                    -----------
Total                                                               $ 2,395,735

Less: Short-term portion                                                (94,223)
                                                                    -----------
Long-term portion                                                   $ 2,301,512
                                                                    ===========

Cash advances of $100,000  consists of a loan made by an investor,  payable upon
demand, which bears interest at the rate of 6% per annum.

                                        6

<PAGE>

The Company's  cash on hand may be  insufficient  to fund its planned  operating
needs.  NextPhase  continues to seek funding for working  capital  requirements,
necessary  equipment  purchases,  marketing  costs, and other operations for the
next year and  foreseeable  future by raising capital through the sale of equity
and/or debt securities, issuing common stock in lieu of cash for services and by
advances from shareholders.

We expect that any sale of additional equity securities or convertible debt will
result in  additional  dilution  to our  stockholders.  The  company can give no
assurance that it will be able to generate adequate funds from operations,  that
funds  will  be  available  to us  from  debt or  equity  financing,  or that if
available,  the company will be able to obtain such funds on favorable terms and
conditions. If the company cannot secure additional funds it will not be able to
continue  as  a  going  concern.   The  company   currently  has  no  definitive
arrangements with respect to additional financing.

While we have raised capital to meet our working  capital and financing needs in
the past,  additional  financing  is  required  in order to meet our current and
projected  cash flow deficits from  operations and  development.  We are seeking
financing  in the form of  equity  in order to  provide  the  necessary  working
capital.  We currently have no commitments for financing.  There is no guarantee
that we will be successful in raising the funds required.

By adjusting our  operations  and  development  to the level of  capitalization,
management  believes we have sufficient capital resources to meet projected cash
flow deficits  through the next twelve months . However,  if thereafter,  we are
not successful in generating  sufficient liquidity from operations or in raising
sufficient  capital  resources,  on terms  acceptable  to us,  this could have a
material  adverse effect on our business,  results of operations,  liquidity and
financial condition.

The  independent  auditors  report  on our  March  31,  2006 and 2005  financial
statements states that our recurring losses raise  substantial  doubts about our
ability to continue as a going concern.

INFLATION

The impact of inflation on the costs of the Company,  and the ability to pass on
cost increases to its customers  over time is dependent upon market  conditions.
The  Company  is not  aware  of any  inflationary  pressures  that  have had any
significant  impact on the Company's  operations over the past quarter,  and the
Company does not anticipate  that  inflationary  factors will have a significant
impact on future operations.

OFF-BALANCE SHEET ARRANGEMENTS

The  Company  does  not  maintain  off-balance  sheet  arrangements  nor does it
participate in non-exchange  traded  contracts  requiring fair value  accounting
treatment.

ITEM 3. 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  Chief
Executive Officer and Chief Financial  Officer,  of our disclosure  controls and
procedures  (as defined in Rule  13a-15(e)  of the Exchange  Act).  Based on his
evaluation,  our Chief Executive  Officer and Chief Financial  Officer concluded
that our current system of disclosure controls and procedures was effective.

                                        7

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1:    LEGAL PROCEEDINGS.

On August 25, 2006,  NextPhase  commenced an action  against  Buchanan ITS, LLC,
Buchanan,  LLC d/b/a  Exocom  Networks  and their  common  principal  ,  Michael
Buchanan,  in the  California  Superior  Court  in  Orange  County,  California,
alleging multiple causes of action, including a claim that the defendants failed
to deliver to NextPhase,  and diverted certain assets , that the defendants sold
to NextPhase in November  2004,  for their own purposes,  in breach of the Asset
Purchase Agreement between Buchanan ITS and NextPhase. The defendants claim that
the contract  should be interpreted to exclude the assets in question from those
transferred  to  NextPhase.  On the  defendant's  motion,  the  causes of action
arising  under  the  Asset  Purchase  Agreement  were  referred  by the court to
mandatory  arbitration.  On September 26, 2006, Buchanan ITS commenced an action
against NextPhase seeking injunctive relief that NextPhase remove its operations
from  Buchanan's  ITS' data  center.  That action has been  referred to the same
court in which NextPhase's original action is pending.

NextPhase intends to vigorously pursue its claims against the defendants as well
as vigorously  defend the claim by the defendants.  NextPhase  believes that its
claims,  and defenses in the related action,  are meritorious.  However,  due to
uncertainties  inherent  in  litigation,  NextPhase  cannot  predict  if it will
prevail in these actions.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

All of the shares  listed below were offered and sold under the  exemption  from
registration provided by Section 4(2) of the Securities Act of 1933.

                                       Number of   Total    Type of
Holder Name          Date issued        Shares     Price    Consideration
-----------          ------------      ---------   -----    -------------
Daryl Foster         August 4, 2006      50,000   $ 4,500   Employee bonus

Redwood Investment
  Group             August 21, 2006     240,000    20,400   Services rendered

All of the sales described above were made

     o    directly by us to persons with whom  management had direct contact and
          personal relationships; and

     o    to persons who were introduced to us by members of our management.

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

2.   Asset Purchase Agreements dated March 29, 2006 between Synkronus,  Inc. and
     SpeedFactory, Inc. (1)

3.1  Articles of Incorporation (2)

3.2  Certificate of Amendment to Articles of Incorporation, as filed on May 15,
     2000 (3)

3.3  Certificate of Amendment to Articles of Incorporation, as filed on March
     13, 2001 (2)

3.4  Certificate of Amendment to Articles of Incorporation, as filed on May 5,
     2003(2)

3.5  Certificate of Amendment to Articles of Incorporation as filed on January
     21, 2005 (3)

3.6  Amended and Restated By-Laws (4)

10.1 Wholesale   DSL   Agreement   dated   November   17,  2005  between  Bell
     South Telecommunications, Inc. and Synkronus, Inc. (d/b/a SpeedFactory)(5)

31   Certificate  of the Principal  Executive  Officer and  Principal  Financial
     Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) as adopted pursuant to
     section 302 of the Sarbanes-Oxley Act of 2002.

32   Certificate  of the Principal  Executive  Officer and  Principal  Financial
     Officer  pursuant to 18 U.S.C.  Section 1350 as adopted pursuant to Section
     906 of Sarbanes-Oxley Act of 2002.

----------

(1)  Incorporated by reference to the exhibit to the Company's Current Report on
     Form 8-K filed on April 12, 2006.

(2)  Incorporated  herein by reference to the exhibits in the  Company's  Annual
     Report on Form 10-KSB for the year ended March 31, 2003.

(3)  Incorporated  herein by reference to the exhibit in the  Company's  Current
     Report on Form 8-K for an event dated January 21, 2005.

(4)  Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-QSB for the period ended September 30, 2004.

(5)  Incorporated herein by reference to the exhibits to the Company's Quarterly
     Report on Form 10-QSB for the period ended June 30, 2006.



                                        8

<PAGE>

                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                 Nextphase Wireless, Inc.

                                 By: /s/  Robert Ford
                                 -----------------------------------------------
                                 Robert Ford
                                 President and Chief Executive Officer

                                 Date: November 14, 2006

                                        9