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 June 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 24,123,296 shares of common
stock issued and outstanding as of August 08, 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 June 30, 2006



                                TABLE OF CONTENTS
                                                                        Page no.
                                                                     -------



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



    Item 1.  Financial Statements (Unaudited)........................F-1 to F-14



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



    Item 3.  Controls and Procedures.................................6



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...........................................................8


                                       -2-




PART I.  FINANCIAL INFORMATION


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

                                                                      June 30,
                                                                        2006
                                                                    -----------
ASSETS
Current assets

    Cash and cash equivalents                                       $    73,613
    Accounts receivable, net of allowance of $8,383 (note 5)             59,216
    Other receivables (note 6)                                           91,891
    Other current assets (note 7)                                         2,261
                                                                    -----------

      Total current assets                                              226,981

    Property and equipment, net of accumulated depreciation
      of $ 115,467 (note 8)                                             360,806
    Customer contracts, net of accumulated amortization of
      $30,000 (notes 3, 8)                                            1,170,000
    Trademarks                                                          100,000
    Supplier contracts, net of accumulated amortization of
      $5,000 (notes 3, 8)                                                95,000
    Deposits                                                              8,037
                                                                    -----------

Total assets                                                        $ 1,960,824
                                                                    ===========

LIABILITIES AND (DEFICIENCY IN) STOCKHOLDERS' EQUITY
Current liabilities

   Accounts payable and accrued liabilities (note 9)                $   703,032
   Deferred revenue (note 1)                                             77,530
   Cash advances payable (note 10)                                      100,000
   Notes payable and capital leases - current
      portion  (note 11)                                                103,455
                                                                    -----------

      Total current liabilities                                         984,017

   Notes payable and capital leases, net of discount of
      $61,622 (notes 11)                                              2,286,473

Total liabilities                                                     3,270,489

Commitments and contingencies (note 13)

(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; 24,073,296 shares issued and outstanding
      at June 30, 2006 (note 12)                                         24,073
   Additional paid-in capital                                         5,383,087
   Deferred Compensation                                                (63,193)
   Accumulated deficit                                               (6,653,633)
                                                                    -----------
      Total (deficiency in) stockholder's equity                     (1,309,666)

                                                                    -----------
Total liabilities and (deficiency in) stockholders' equity          $ 1,960,824
                                                                    ===========

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


                                      F-1
<PAGE>



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

                                                  For the Three    For the Three
                                                  Months Ended      Months Ended
                                                     June 30          June 30
                                                      2006             2005
                                                   ------------    ------------

Revenues                                           $    521,278    $    147,324

   Cost of revenue                                      310,276         153,614
                                                   ------------    ------------

Gross profit                                            211,002          (6,290)

Operating expenses:
   Selling, general and administrative expenses         590,395         347,194
   Depreciation and amortization                         65,769          13,849
                                                   ------------    ------------
      Total operating expenses                          656,164         361,043

Operating loss                                         (445,163)       (367,333)

Other (income) expense:
   Interest (income) expense                             57,934           2,458
   Other (income) expense                                (4,251)           --
                                                   ------------    ------------

      Total other (income) expense                       53,683           2,458

  Loss before income taxes                             (498,846)       (369,791)

   Provision for income taxes                              --              --

                                                   ------------    ------------
Net loss                                           $   (498,846)   $   (369,791)
                                                   ============    ============

Net loss per share - basic and diluted             $      (0.02)   $      (0.02)
                                                   ============    ============

Weighted average shares outstanding -
                                                   ------------    ------------
   basic and diluted                                 23,955,662      20,422,526
                                                   ============    ============


              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 Three Months Ended
                                                                                    June 30,
                                                                          --------------------------
                                                                              2006           2005
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
Cash flows from operating activities:
   Net loss                                                               $  (498,846)   $  (369,791)
  Adjustments to reconcile net loss to to net
  cash used in operating activities:
    Non-cash compensation                                                     100,199           --
    Amortization of discount on notes payable                                   8,075          1,667
   Interest expense                                                            49,859              0
    Depreciation and amortization                                              65,769         13,849
  Changes in assets and liabilities:
     (Increase) decrease in assets:
        Accounts receivable, net                                              139,995       (135,190)
        Other current assets                                                      367           --
        Other receivables                                                     (91,891)          --
 Increase (decrease) in liabilities:
        Accounts payable                                                       84,959        199,456
        Deferred revenue                                                       43,749          3,912
                                                                          -----------    -----------
   Net cash used in operating activities                                      (97,765)      (286,097)
                                                                          -----------    -----------

Cash flows from investing activities:
   Purchase of property and equipment                                      (1,514,554)       (14,630)
                                                                          -----------    -----------
   Net cash used in investing activities                                   (1,514,554)       (14,630)
                                                                          -----------    -----------

Cash flows from financing activities:

    Proceeds from notes payable                                             1,561,000         25,000
    Proceeds from cash advances payable                                       100,000           --
    Principal payments on notes payable and capital leases                    (10,915)      (135,600)
    Proceeds from sale of common stock                                           --          345,000
    Common stock subscribed                                                      --           35,000
    Increase in deposits                                                         --           (3,376)
                                                                          -----------    -----------
   Net cash provided by financing activities                                1,650,085        266,024
                                                                          -----------    -----------

Increase in cash and cash equivalents                                          37,766        (34,703)

Cash and cash equivalents at beginning of period                               35,847         50,948

                                                                          -----------    -----------
Cash and cash equivalents at end of period                                $    73,613    $    16,245
                                                                          ===========    ===========

                                      F-3
<PAGE>

Supplemental disclosure of cash flow information:

                                       Cash paid during the period for:
                                                               Interest   $       519    $      --
                                                                          ===========    ===========

                                                                  Taxes   $      --      $      --
                                                                          ===========    ===========


    Issued of common stock previously subscribed                          $    25,000    $   280,000
                                                                          ===========    ===========

    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    $      --
                                                                          ===========    ===========

    Amortization of discount on beneficial conversion
      of notes payable                                                    $     8,075    $     1,667
                                                                          ===========    ===========

    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    $    20,000
                                                                          ===========    ===========

    Amortization of deferred compensation                                 $    26,142    $      --
                                                                          ===========    ===========

    Common stock issued for services                                      $    54,057    $      --
                                                                          ===========    ===========

Accrual of cost of goods sold billed to customer by vendor                $      --      $   114,688
                                                                          ===========    ===========


</TABLE>

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

                                      F-4
<PAGE>

                            NEXTPHASE WIRELESS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                June 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,   NextPhase
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 Orange County through a
combination  of  organic  growth  and  acquisitions,  we have  continued  to add
residential  subscribers in underserved markets, small office/home office (SOHO)
subscribers and small to medium business subscribers 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  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.

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 June 30, 2006 are not necessarily  indicative of the results of
operations to be expected for the full year.

                                      F-5
<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 June 30, 2006,  and of  SpeedFactory  from April 6, 2006
through June 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:

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.

                                      F-6
<PAGE>

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 June 30, 2006,  the Company had recorded  deferred  revenue in the
amount of $77,530.

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 $6,653,633 since inception.

The Company has a working capital deficit of ($757,036) at June 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%.

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 15 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.
                                      F-7
<PAGE>

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 June 30,
2006.

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 June 30, 2006 reflect the impact of SFAS 123(R). In accordance with
the modified prospective transition method, the company's Consolidated Financial
Statements  for 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 June 30,  2006 was $0. Pro forma
stock based compensation was $0 for the three months ended June 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 June 30,  2006,  and changes
during the period then ended are presented below:

                                      F-8
<PAGE>

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

      Outstanding at March 31, 2006                    0           $    0.00
      Issued                                           0                0.00
      Exercised                                        0                0.00
      Forfeited or expired                             0                0.00

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


Aggregate intrinsic value of options outstanding and options exercisable at June
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 June 30, 2006,  and the exercise  price  multiplied by the
number  of  options  outstanding.  As  of  June  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 June
30, 2006 and 2005, respectively.

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
                                                     months ended
                                                       June 30,
                                                        2005
                                                    -----------
Net loss - as reported                              $  (255,103)
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                                $  (255,103)

Net loss attributable to common
  shareholders - Pro forma                          $  (255,103)

Basic and diluted loss per share - as reported      $     (0.01)
                                                    ===========

Basic and diluted loss per share - Pro forma        $     (0.01)
                                                    ===========

Disclosure  for the period  ended June 30,  2006 was not  presented  because the
amounts are recognized in the consolidated financial statements.

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 June
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.

                                      F-9
<PAGE>

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

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

NOTE  2 - CHANGE IN PRIOR PERIOD

In October 2005, the Company discovered an error in its previously filed results
for the three months ended June 30,2005. Cost of sales in the amount of $114,688
had been omitted from the  statement  of  operations  for the three months ended
June 30,  2005.  The cost of sales for the nine months  ended  December 31, 2005
includes these previously omitted costs.

The net effect of this adjustment is as follows:

                                  As originally
                                     stated                           Restated
                                    3 months       Adjustment        3 months
                                     ended        for cost of          ended
                                  June 30, 2005    goods sold      June 30, 2005
                                  --------------  -------------    -------------

Cost of goods sold                  $  38,926       $ 114,688        $ 153,614

Accounts payable and
  accrued liabilities                 187,069         114,688          301,757

Net loss                             (255,103)       (114,688)        (369,791)

Net loss per common share,
  Basic and diluted                 $   (0.01)      $   (0.01)       $   (0.02)


NOTE 3 - 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
                                                    ==========

                                      F-10
<PAGE>

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
                                         June 30, 2005
                                          ----------
Sales
  NextPhase                               $  147,324
  Synkronus                                  478,708
                                          ----------
  Total sales                             $  626,032
                                          ----------

  Net Loss                                $ (212,284)
                                          ==========
NextPhase, as reported
  Loss per share                              (0.01)
Pro forma
  Loss per share                              (0.01)



NOTE  4 - RELATED PARTY TRANSACTIONS

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

The Company made principal payments in the amount of $9,100 on a note payable to
an ex-Company  officer.  Principal in the amount of $0 remains outstanding under
this note at June 30, 2006.

The Company  issued an  aggregate  of 240,000  shares of common  stock valued at
$60,000 to two  officers in lieu of cash salary  during the three  months  ended
March 31, 2006.  The value of these  shares was accrued  during the three months
ended March 31, 2006.

The Company  issued an  aggregate  of 900,000  shares of common  stock valued at
$126,000 to two officers as a bonus for the year ended March 31, 2006. The value
of these shares was accrued during the three months ended March 31, 2006.

The Company's chairman personally  guaranteed payment on a note from the Company
to a lender in the amount of $50,650 with regard to the acquisition of a Company
vehicle.

NOTE 5 - ACCOUNTS RECEIVABLE

The Company has trade  accounts  receivable in the amount of $67,599 at June 30,
2006 and has reserved the amount of $8,383. Net accounts  receivable at June 30,
2006 are $59,216.

NOTE 6 - OTHER RECEIVABLES

Other  receivables  at June 30, 2006 consist of a net amount of $91,891 due from
the sellers of  Synkronus,  Inc. (see note 3). As the Company took control of an
ongoing  internet  connectivity  business  with a high volume of cash and credit
card  transactions,  the Company is  maintaining  a record of amounts due to and
from the sellers of Synkronus in order to achieve an accurate accounting of cash
and receivables.  The Company expects to finalize these amounts during the three
months ended September 30, 2006.

NOTE 7 - OTHER CURRENT ASSETS

Other current assets consists of prepaid expenses.

NOTE 8 - LONG-TERM 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 wireless customers. Depending on tower location

                                      F-11
<PAGE>

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 June 30, 2006, there were nine 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
June 30, 2006 consists of the followings


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

Telecommunications equipment                   $ 166,260
Computer equipment                               135,260
Communications Towers                             93,636
Automobile                                        50,650
Furniture and Fixtures                            23,291
Leasehold improvements                             7,176
                                               ---------
Total property and equipment                     476,273
Less: accumulated depreciation                  (115,467)
                                               ---------
Net property and equipment                     $ 360,806
                                               =========

Other long-term assets consist of the following at June 30, 2006:

                      Customer                   Supplier
                     Contracts     Trademarks    Contracts
                    ----------     ----------   ----------
                   $ 1,200,000      $ 100,000    $ 100,000
Less: Accumulated
Amortization:          (30,000)         N/A        (5,000)
                    ----------     ----------   ----------
Net book value     $ 1,170,000      $ 100,000    $ 95,000
                    ==========     ==========   ==========

Property  and  equipment  and  other  long-term  assets  are  depreciated  on  a
straight-line basis over periods ranging from 36 to 120 months. Depreciation and
amortization  expense  for the three  months  ended  June 30,  2006 and 2005 was
$65,769 and $13,849, respectively.

NOTE 9 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

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

Accounts payable and accrued liabilities       $ 572,825
Payroll and related                               36,281
Accrued interest                                  92,320
Sales taxes                                        1,606
                                               ---------
                                               $ 703,032
                                               =========

NOTE  10 - CASH ADVANCES PAYABLE

During the three months ended June 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 $450 during the three
months ended June 30, 2006.

Also during 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 11.)

NOTE  11 - NOTES PAYABLE AND CAPITAL LEASES

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

Convertible note payable in the amount of $2,300,000 dated
March 31, 2006, effective on the date of the receipt of cash,
or April 7, 2006. This amount consists of $1,500,000 loan to

                                       F-12
<PAGE>

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 June 30,
2006, $8,075 of this discount was amortized, and at June 30,
2006, the remaining discount is $61,622.                            $ 2,238,378



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 June 30,
2006, the Company made two payment on this Note, consisting
of interest of $498 and principal of $1,460.                             49,920


Convertible note payable in the amount of $30,000 payable to
the Company's chairman. 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 June 30, 2006,
the Company made four payments in the aggregate amount of
$1,440, consisting of principal of $1,085 and interest of
$355.                                                                    10,630

                                                                    ------------
Total                                                               $ 2,389,928

Less: Short-term portion at June 30, 2006                              (103,455)
                                                                    ------------
Long-term portion                                                   $ 2,286,473
                                                                    ============



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



                    Fiscal Year
                  Ending March 31,             Amount
                    -----------              ----------
                       2007                $    70,262
                       2008                     43,096
                       2009                  2,314,003
                       2010                     10,968
                       2011                     11,273
                       2012                      1,948
                                             ----------
                     Total                 $ 2,451,550
                     Discount                 ( 61,622)
                                             ----------
                                           $ 2, 389,928
                                             ==========


NOTE 12 - EQUITY

The Company has  authorized  20,000,000  shares of Preferred  Stock,  with a par
value of $.001 per share.  As of June 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 June 30,  2006,  the
Company has 24,073,296 shares of common stock issued and outstanding.

                                      F-13
<PAGE>

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

The Company had the  following  common  stock  transactions  during three months
ended June 30, 2006:


The  Company  issued  350,921  shares  of common  stock  valued  at  $82,457  to
consultants and employees for services.

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.

The  Company  issued  125,462  shares  of common  stock  valued  at  $37,639  in
satisfaction of certain accounts payable.

The  Company  issued  50,000  shares  of common  stock  valued  at  $25,000  for
subscriptions payable.

The Company  issued 40,000 shares of common stock valued at $20,000  pursuant to
the terms of a legal settlement.

The Company  cancelled  120,625  shares of common stock  received by the Company
during the twelve  months  ended  March 31, 2005  pursuant  to a stock  purchase
agreement.  Upon cancellation,  the Company credited  additional paid-in capital
with the par value of these Shares, or $120.

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.

The  Company   charged  to   operations   the  amount  of  $26,142  of  deferred
compensation.

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.

NOTE 13 - 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  hosting  business of Synkronus.  The  Company's  wholly-owned
subsidiary  SpeedFactory  currently  operates this business.  This business is a
high-transaction volume webhosting 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 has made a claim against these funds
for adjustments  for the timing of revenue,  accounts  receivable,  and accounts
payable cutoff, and other adjustments. The Company anticipates that these claims
will be resolved upon the completion of the audit of Synkronus, Inc. for the two
years ended  December 31, 2006.

NOTE 14 - 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.

                                      F-14
<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.
                                      -2-
<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 15 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.

                                      -3-
<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 June 30, 2006:

Revenue for the quarter ended June 30, 2006 was $521,278 as compared to $147,324
for the quarter ended June 30, 2005. The increase of $373,954 or 254% 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  $310,276  for the three  months  ended  June 30,  2006,
compared  to  $153,614  for the  quarter  ended June 30,  2005,  an  increase of
$156,662 or 102%.  Gross profit for the quarter ended June 30, 2006 was $211,002
compared  to $(6,290)  for the  quarter  ended June 30,  2005.  The  increase of
$217,292 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 June
30, 2006 were $590,395,  an increase of 70% compared to $347,194 for the quarter
ended June 30, 2005. Selling,  general and administrative expenses for the three
months ended June 30, 2006  consisted  primarily of payroll and related costs of
$171,133;  legal and  accounting  fees of  $127,679 ; non-cash  compensation  of
$80,199; facilities and related costs of $67,319; equipment rental and equipment
costs of  $46,271;  consulting  and  professional  fees of  $41,186;  travel and
entertainment costs of $12,840;  office expenses of $11,007 and public relations
and marketing costs of $8,161.

Depreciation  expense  for the three  months  ended  June 30,  2006 was  $65,769
compared to $13,849 for the quarter  ended June 30, 2005, an increase of $51,920
or 375%. 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 three months ended June 30, 2006
was $57,934,  an increase of $55,476 compared to interest expense of $ 2,458 for
the three months ended June 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
June 30, 2006 of $498,846, an increase of $129,055 or 35% compared to a net loss
of $369,791 for the three months ended June 30, 2005.


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

As of June  30,  2006,  the  company  had a cash  balance  of  $73,613,  and the
company's accumulated deficit was $6,653,633. Total liabilities were $3,270,489,
consisting of notes payable,  capital leases payable, trade accounts payable and
accrued liabilities, and deferred revenue.

                                      -4-
<PAGE>

Notes payable are as follows:

Convertible note payable in the amount of $2,300,000,
effective on the date of the receipt of cash, or April 7,
2006. 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 June 30, 2006, $8,075 of this discount
was amortized, and at June 30, 2006, the remaining discount
is $61,622.                                                         $ 2,238,378




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 June 30,
2006, the Company made two payment on this Note, consisting
of interest of $498 and principal of $1,460.                             49,920


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 June 30, 2006,
the Company made four payments in the aggregate amount of
$1,440, consisting of principal of $1,085 and interest of
$355.                                                                    10,630

                                                                    ------------
Total                                                               $ 2,389,928

Less: Short-term portion                                               (103,455)
                                                                    ------------
Long-term portion                                                   $ 2,286,473
                                                                    ============


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.

                                      -5-
<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.

                                      -6-
<PAGE>
                           PART II - OTHER INFORMATION


ITEM 1:    LEGAL PROCEEDINGS.


None.


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 Sold   Shares       Price  Consideration
-----------          ---------   ---------    -----  -------------

Market Solutions                  30,000      9,600  Services rendered
Fran Miller                       10,000      3,400  Services rendered
Michael Failing                   30,000      8,400  Services rendered
Martin Moreno                     50,000      7,500  Services rendered
Steve Dahlin                      50,000     25,000  Sale of assets

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 Celecommunications, Inc. and Synkronus, Inc. (d/b/a SpeedFactory)

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.


                                      -7-
<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: August 14, 2006


                                      -8-