**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, 2007****OR****o**
            **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 incorporation or
                  organization)
            
            (IRS
                  Employer Identification No.)










**300
      S. Harbor Blvd.,Anaheim,California92805**


(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 x  No o




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





**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 33,484,372 shares of common stock
      outstanding as of August 10, 2007.


Transitional
      Small Business Disclosure Format (check one) Yes o  No x











Table
          of Contents




**NEXTPHASE
      WIRELESS, INC.**





Quarterly
      Report on Form 10-QSB for the


Quarterly
      Period Ending June 30, 2007




**EXPLANATORY
        NOTE**
  The
        interim consolidated financial statements included in this Quarterly Report
        on
        Form 10-QSB as of June 30, 2007 and for the three and six months ended June
        30,
        2007 were not reviewed by the Company’s independent registered public accounting
        firm as required under Statement of Auditing Standards No. 100 pursuant to
        Item
        310(b) of the Securities and Exchange Commission’s Regulation S-B.  As
        of the date of this filing, the Company’s independent registered public
        accounting firm is still in the process of their review of the interim financial
        information included herein.






**TABLE
      OF CONTENTS**




**Page
                    no.****PART
                    I - FINANCIAL
                    INFORMATION**
              
              1Financial
                    Statements (Unaudited)
              
              1Item
                    2. Management's Discussion and Analysis or Plan of
                         Operation
              
              14Item
                    3. Controls and Procedures
              
              22**PART
                    II - OTHER INFORMATION**
              
              22Item
                    1. Legal Proceedings
              
              22Item
                    2. Unregistered Sales of Equity Securities and Use of
                    Proceeds
              
              22Item
                    3. Defaults Upon Senior
                    Securities
              
              23Item
                    4. Submission of Matters to a Vote of Security
                    Holders
              
              23Item
                    5. Other Information
              
              23Item
                    6. Exhibits
              
              23**SIGNATURES**
              
              24








Table
          of Contents





**PART I.
      FINANCIALINFORMATION**








**NextPhase
      Wireless, Inc.**


Condensed
      Consolidated Balance Sheet


(Unaudited)






**June
                  30,****2007****ASSETS**Current
                  assets:Cash
              $
              6,960Accounts
                  receivable
              
              88,350Other
                  current assets
              
              39,403Total
                  current assets
              
              134,713Property
                  and equipment -net
              
              287,250Customer
                  lists - net
              
              735,000Trademarks
              
              100,000Supply
                  contracts -net
              
              45,000Goodwill
              
              260,000Deposits
              
              8,636Total
                  assets
              $
              1,570,599**LIABILITIES
                  AND STOCKHOLDERS' DEFICIT**Current
                  liabilities:Accounts
                  payable
              $
              1,350,813Accrued
                  expenses
              
              139,711Deferred
                  revenue
              
              60,000Cash
                  advance payable
              
              100,000Notes
                  payable and capital leases,  current portion
              
              2,826,287Total
                  current liabilities
              
              4,476,811Notes
                  payable and capital leases, net of current portion
              
              33,265Total
                  liabilities
              
              4,510,076Commitments
                  and contingenciesStockholders'
                  deficit:Preferred
                  stock, $0.001 par value, 20,000,000 sharesauthorized;
                  no shares issued and outstandingCommon
                  stock, $0.001 par value, 200,000,000 sharesauthorized;  31,838,955
                  issued and outstanding
              
              31,839Additional
                  paid-in capital
              
              6,167,213Accumulated
                  deficit
              
              (9,138,529
              )Total
                  stockholders' deficit
              
              (2,939,477
              )Total
                  liabilities and stockholders' deficit
              $
              1,570,599







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





3
 Table
          of Contents





**NextPhase
      Wireless, Inc.**


Condensed
      Consolidated Statements of Operations


(Unaudited)






**For
                  the Quarter Ended June 30,****2007**
              
              
              **2006**Revenue
              
              $
              480,989
              
              
              $
              521,278Cost
                  of revenue
              
              
              236,920
              
              
              
              310,276Gross
                  profit
              
              
              244,069
              
              
              
              211,002Operating
                  expenses:Selling,
                  general and administrative
              
              
              551,034
              
              
              
              490,196Stock-based
                  compensation
              
              
              130,000
              
              
              
              100,199Depreciation
                  and amortization
              
              
              86,171
              
              
              
              65,769Total
                  operating expenses
              
              
              767,205
              
              
              
              656,164Operating
                  loss
              
              
              (523,136
              )
              
              
              (445,162
              )Other
                  income (expense):Legal
                  settlements- net
              
              
              74,069
              
              
              
              -Interest  expense
              
              
              (57,752
              )
              
              
              (57,934
              )Other
              
              
              -
              
              
              
              4,250Total
                  other income (expense)
              
              
              16,317
              
              
              
              (53,684
              )Loss
                  before income taxes
              
              
              (506,819
              )
              
              
              (498,846
              )Provision
                  for income taxes
              
              
              -
              
              
              
              -Net
                  loss
              
              $
              (506,819
              )
              
              $
              (498,846
              )Basic
                  and diluted net loss per share
              
              $
              (0.02
              )
              
              $
              (0.02
              )Weighted
                  average shares outstanding
              
              
              30,503,995
              
              
              
              23,955,662


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







4
 Table
          of Contents





**NextPhase
      Wireless, Inc.**


Condensed
      Consolidated Statements of Cash Flows


(Unaudited)




**For
                  the Three Months Ended****June
                  30,****2007**
              
              
              **2006****Cash
                  flows from operating activities:**Net
                  loss
              
              $
              (506,819
              )
              
              $
              (498,846
              )Adjustments
                  to reconcile net loss to netcash
                  used in operating activities:Forgiveness
                  of notes payables, accrued interest and accrued expenses
              
              
              (96,291
              )Issuance
                  of common stock for services
              
              
              130,000
              
              
              
              100,199Amortization
                  of discount on notes payable
              
              
              8,844
              
              
              
              8,075Interest
                  expense
              
              
              -
              
              
              
              49,859Depreciation
                  and amortization
              
              
              86,171
              
              
              
              65,769Changes
                  in assets and liabilities:(Increase)
                  decrease in assets:Accounts
                  receivable
              
              
              27,804
              
              
              
              139,995Other
                  current assets
              
              
              -
              
              
              
              367Other
                  receivables
              
              
              -
              
              
              
              (91,891
              )Increase
                  (decrease) in liabilities:Accounts
                  payable and accrued liabilities
              
              
              183,228
              
              
              
              84,959Deferred
                  revenue
              
              
              (18,000
              )
              
              
              43,749Net
                  cash used in operating activities
              
              
              (185,063
              )
              
              
              (97,765
              )**Cash
                  flows from investing activities:**Purchase
                  of furniture and equipment
              
              
              (26,410
              )
              
              
              (14,554
              )Net
                  cash used in investing activities
              
              
              (26,410
              )
              
              
              (14,554
              )**Cash
                  flows from financing activities:**
              
              
              
              
              
              
              0Proceeds
                  from notes payable
              
              
              150,000
              
              
              
              61,000Proceeds
                  from cash advances payable
              
              
              -
              
              
              
              100,000Principal
                  payments on notes payable and capital leases
              
              
              (3,250
              )
              
              
              (10,915
              )Proceeds
                  from sale of common stock
              
              
              -Net
                  cash provided by financing activities
              
              
              146,750
              
              
              
              150,085Change
                  in cash
              
              
              (64,723
              )
              
              
              37,766Cash
                  at beginning of period
              
              
              71,683
              
              
              
              35,847Cash
                  and at end of period
              
              $
              6,960
              
              
              $
              73,613**Supplemental
                  disclosure of cash flow information:**Cash
                  paid during the year for:Interest
              
              $
              -
              
              
              $
              519Income
                  taxes
              
              $
              -
              
              
              $
              -Non-cash
                  investing and financing transactions:Issuance
                  of previously subscribed common stock
              
              $
              -
              
              
              $
              25,000Cancellation
                  of stock from legal settlements
              
              $
              -
              
              
              $
              250,000Cancellation
                  of stock originally issued in reverse merger
              
              $
              -
              
              
              $
              121Beneficial
                  conversion feature of notes payable
              
              $
              -
              
              
              $
              69,697Acquisition
                  of equipment under capital lease agreements and notes
                  payable
              
              $
              -
              
              
              $
              50,650Amortization
                  of deferred compensation
              
              $
              -
              
              
              $
              26,142Common
                  stock issued for services and legal settlement
              
              $
              -
              
              
              $
              20,000Common
                  stock issued for accounts payable and accrued expenses
              
              $
              108,100
              
              
              $
              37,639Note
                  payable issued in connection with acquisition
              
              $
              -
              
              
              $
              1,500,000








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








5
 Table
          of Contents




**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**





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




*Nature
        of Operations*
 NextPhase
        Wireless, Inc. (“NextPhase” or the “Company”) was incorporated on August 28,
        1995 in Nevada under the name of Professional Mining Consultants,
        Inc.
 
 On
        August
        3, 2004, NextPhase  consummated  a share  exchange
        in which it issued
        12,943,000  shares  of  common  stock,  or  approximately  76%
        of it'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
        NextPhase.  NTI was formed on September 14, 2000. For accounting
        purposes, this transaction is considered a "reverse merger,” and the historical
        financial statements of NextPhase reflect the operations of
        NTI.  Effective on the merger date, all financial activity became
        generated by NextPhase and NTI became an inactive subsidiary.  On
        January 21, 2005 the Company changed its name to NextPhase Wireless,
        Inc.
 
 Effective
        April 5, 2006, through its wholly-owned subsidiary SpeedFactory, Inc.
        (“SpeedFactory”), NextPhase acquired the Internet service and connectivity
        business assets previously operated by Synkronus, Inc. (“Synkronus”) under the
        name "SpeedFactory." Management's plans are discussed further in the Going
        Concern portion of Note 1.
 
 Prior
        to
        the acquisition of SpeedFactory, NextPhase had a limited operating history
        with
        revenue-generating products and services only recently entering the
        market.
 
 With
        the
        acquisition of SpeedFactory, NextPhase enhanced its position as a nationwide
        provider of scalable, reliable and cost effective connectivity solutions,
        expanding its portfolio of products and services to include DSL, T1s,
        co-location and web hosting. NextPhase continues to extend its wireless
“footprint” in Southern California, through a combination of organic growth and
        acquisition, NextPhase has continued to add small to medium business
        subscribers, small office/home office (SOHO) subscribers, and residential
        subscribers in underserved markets to its network.
 
 *Interim
        Financial Information*
 The
          accompanying unaudited condensed consolidated financial statements have
          been
          prepared by the Company in accordance with accounting principles generally
          accepted in the United States of America for interim financial information.
          These principles are consistent in all material respects with those applied
          in
          the Company's consolidated financial statements contained in the Company's
          annual report on Form 10-KSB for the year ended March 31, 2007, and pursuant
          to
          the instructions to Form 10-QSB and Item 310(b) of Regulation S-B promulgated
          by
          the United States Securities and Exchange Commission ("SEC"). Interim financial
          statements do not include all of the information and footnotes required
          by
          accounting principles generally accepted in the United States of America
          for
          complete financial statements. In the opinion of management, the accompanying
          unaudited condensed consolidated financial statements contain all adjustments
          (all of which are of a normal recurring nature, including the elimination
          of
          intercompany accounts) necessary to present fairly the financial position,
          results of operations and cash flows of the Company for the periods indicated.
          Interim results of operations are not necessarily indicative of the results
          to
          be expected for the full year or any other interim periods. These unaudited
          condensed consolidated financial statements should be read in conjunction
          with
          the consolidated financial statements and footnotes thereto contained in
          the
          Company's annual report on Form 10-KSB for the year ended March 31,
          2007.
 
 *Reclassification* Certain
        reclassifications have been made to conform prior periods' data to the current
        presentation. These reclassifications had no effect on reported
        loss.
 
 *Basis
        of Presentation*
 The
        accompanying consolidated financial statements include the accounts of NextPhase
        and its wholly-owned subsidiaries NTI, a California corporation formed on
        September 14, 2000, and SpeedFactory, 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
        and the SpeedFactory location in Marietta, Georgia.
 
 The
        condensed consolidated financial statements presented include only the accounts
        of NTI, from its inception (September 14, 2000) through June 30, 2007, of
        NextPhase from August 3, 2004 through June 30, 2007, and of SpeedFactory
        from
        April 6, 2006 (date of acquisition) through June 30, 2007.




6
 Table
          of Contents





**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**





**NOTE
      1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
      continued**




*Going
        Concern and Management’s Plan*
 The
        accompanying financial statements have been prepared in conformity with
        accounting principles generally accepted in the United States of America,
        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 $9,138,529 since inception.
 
 The
        Company has a working capital deficit of $4,342,098 at June 30, 2007. 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.
 
 In
        the
        three months ended June 30, 2007, the Company executed short-term notes for
        $150,000. In July 2007, the Company issued convertible notes totaling $260,000
        with interest at 7%, and all due in one year from the date of
        issuance.  In addition, the Company received a $275,000 advance from
        its secured note holder in July 2007 to assist in the acquisition of Interactive
        Network Services, Inc. (“INS”) which was finalized on July 22,
        2007.
 
 The
        Company has developed a plan to integrate additional Internet Service Providers
        (“ISPs”) in a scalable roll-up strategy.  The Company will acquire
        only profitable operations, both wireless and landline based, which are
        synergistic to the Company’s current operations in California and Georgia. The
        Company acquired the business of INS in July 2007 and has entered into a
        letter
        of intent to acquire another company whose acquisitions will greatly reduce
        the
        negative cash flow on a monthly basis. The Company expects the second
        acquisition to be completed in early fall 2007. Under its plans, management
        expects to generate positive operating cash flow during the fourth calendar
        quarter of 2007. There is no assurance that management will achieve its plan.
        There is further no assurance that the proceeds from operating cash flows
        or
        future financings will be sufficient to obtain profitable
        operations.
 
 The
        Company anticipates its current cash reserves, plus its expected generation
        of
        cash from existing operations, will only be sufficient to fund its anticipated
        operations through the second quarter of fiscal 2008. Consequently, the Company
        will need to raise additional debt and/or equity capital in order to finance
        its
        business plan and needs for working capital. Such financing(s), if available,
        may increase the risk of the Company not being able to service its debt
        obligations, and/or cause dilution to existing equity holders. The
        accompanying condensed consolidated financial statements do not include any
        adjustments to reflect the possible future effects on the recoverability
        and
        classification of assets and liabilities that might result from the outcome
        of
        this uncertainty.
 
 *Use
        of Estimates*
 The
        preparation of financial statements in conformity with accounting principles
        generally accepted in the United States of America requires management to
        make
        estimates and assumptions that affect the reported amounts of assets and
        liabilities, 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 these estimates and
        could
        change in the near term. Significant estimates include the realizability
        of
        accounts receivable, recoverability of long-lived assets, and valuation of
        common stock, warrants and deferred taxes.




7
 Table
          of Contents







**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**










**NOTE
      1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
      continued**





*Segment
        Information*
 The
        Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 131,
“Disclosures about Segments of an Enterprise and Related Information” upon the
        first date of required adoption. SFAS No. 131 establishes standards for
        reporting information regarding operating segments in annual financial
        statements and requires selected information for those segments to be presented
        in interim financial reports issued to stockholders. SFAS No. 131 also
        establishes standards for related disclosures about products and services
        and
        geographic areas. Operating segments are identified as components of an
        enterprise about which separate discrete financial information is available
        for
        evaluation by the chief operating decision maker, or decision-making group,
        in
        making decisions regarding the allocation of resources and asset performance.
        The information disclosed herein materially represents all of the financial
        information related to the Company's principal operating segment.
 
 *Revenue
        Recognition and Deferred Revenue*
 Revenues
        are
        recognized in the period that services are provided.  For revenue from
        product sales, the Company recognizes revenue in accordance with Staff
        Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” ("SAB No. 104"),
        which superseded SAB No. 101, "Revenue Recognition in Financial Statements"
        ("SAB No. 101"). SAB No. 104 requires that four basic criteria must be met
        before revenue can be recognized: (1) persuasive evidence of an arrangement
        exists; (2) delivery has occurred; (3) the selling price is fixed and
        determinable; and (4) collectibility is reasonably assured. Determination
        of
        criteria (3) and (4) are based on management's judgments regarding the fixed
        nature of the selling prices of the products delivered and the collectibility
        of
        those amounts. Provisions for discounts and rebates to customers, estimated
        returns and allowances, and other adjustments are provided for in the same
        period the related sales are recorded. The Company defers any revenue for
        which
        the product has not been delivered or for which services have not been rendered
        or are subject to refund until such time that the Company and the customer
        jointly determine that the product has been delivered or services have been
        rendered or no refund will be required.
 
 SAB
        No.
        104 incorporates Emerging Issues Task Force (“EITF”) Issue
        No.00-21 ("EITF No. 00-21"), “Deliverable Revenue Arrangements.” EITF No.
        00-21 addresses accounting for arrangements that may involve the delivery
        or
        performance of multiple products, services and/or rights to use assets. The
        effect of implementing EITF No. 00-21 on the Company's condensed consolidated
        financial position and results of operations was not significant.
 
 The
        Company considers amounts to be earned once evidence of an arrangement has
        been
        obtained, services are delivered, fees are fixed or determinable, and
        collectibility is reasonably assured.  The Company generates and
        recognizes revenue as follows:
 
 Revenue
        from operating as a wireless Internet service provider of tiered wireless
        Internet services to business and residential subscribers:  Internet
        services are billed at the beginning of each month's activity at a fixed
        rate
        for each customer.  Customers sign an annual agreement or utilize the
        service on a month-to-month basis.  Revenue not yet earned is recorded
        as deferred revenue.
 
 Revenue
        from the sale and configuration of wireless equipment:  NextPhase acts
        as a reseller of certain components and equipment related to its products
        and
        services.  Equipment revenue is recognized at the time of shipment FOB
        to the customer.  Configuration is billed at an hourly rate and
        recognized after completion. Costs associated with the equipment are expensed
        at
        the time of shipment.  In order to maximize the Company’s cash flows,
        revenue from the sale and configuration of wireless equipment is sometimes
        billed in advance of shipment. In such cases, these invoices are recorded
        as
        deferred revenue.
 
 Revenue
        from professional and consulting services provided by its
        staff:  These services include wireless network consulting,
        interference surveys, network management and telephone
        consulting.  Revenue is recognized after the professional or
        consulting service has been provided. In order to maximize the Company’s cash
        flows, revenue from professional services is sometimes billed in advance
        of
        project completion. In such cases, these invoices are recorded as deferred
        revenue.




*Business
        Combinations*
 In
        accordance with SFAS No. 141,  “Business Combinations,” the Company
        allocates the purchase price of acquired entities to the tangible and intangible
        assets acquired and liabilities assumed, based on their estimated fair values.
        The Company engaged an independent third-party appraisal firm to assist
        management in determining the fair values of certain assets acquired and
        liabilities assumed. Such a valuation requires management to make significant
        estimates and assumptions, especially with respect to intangible
        assets.
 
 Management
        makes estimates of fair values based upon assumptions believed to be reasonable.
        These estimates are based on historical experience and information obtained
        from
        the management of the acquired companies. Critical estimates in valuing certain
        of the intangible assets include but are not limited to: future expected
        cash
        flows from revenues, customer relationships, key management and market position,
        assumptions about the period of time the acquired trade names will continue
        to
        be used in the Company's combined product portfolio, and discount rates used
        to
        establish fair value. These estimates are inherently uncertain and
        unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated
        events and circumstances may occur which may affect the accuracy or validity
        of
        such assumptions, estimates or actual results.
 
 *Goodwill
        and Other Intangible Assets*
 The
        Company has adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS
        No. 142 requires that goodwill and intangible assets deemed to have indefinite
        lives are no longer amortized but are subject to an annual impairment test
        which
        has two steps to determine whether an asset impairment exists. The first
        step of
        the impairment test identifies potential impairment by comparing the fair
        value
        with the carrying amount of the reporting unit, including goodwill. If the
        carrying amount of the reporting unit exceeds its fair value, the second
        step of
        the impairment test shall be performed to measure the amount of the impairment
        loss, if any. Intangibles with indefinite useful lives are measured for
        impairment by the amount that the carrying value exceeds the estimated fair
        value of the intangible. The fair value is calculated using the income approach.
        Intangible assets with definite useful lives will continue to be amortized
        over
        their estimated useful lives. Any impairment is recorded at the date of
        determination.






8




**NEXTPHASE
            WIRELESS, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **June
            30, 2007**
 **(Unaudited)**
  **NOTE
        1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
        continued**
 
 The
        Company’s policy provides for annual evaluation of goodwill on the first day of
        the fourth fiscal quarter and whenever events and changes in circumstances
        suggest that the carrying amount may not be recoverable. Impairment of goodwill
        is tested at the reporting unit level by comparing the reporting unit's net
        carrying value, including goodwill, to the fair value of the reporting unit.
        The
        fair values of the Company’s reporting units are estimated using a
        combination of the income or discounted cash flows approach and the market
        approach, which uses comparable market data. If the carrying amount of the
        reporting unit exceeds its fair value, goodwill is potentially impaired and
        a
        second test would be performed to measure the amount of impairment loss,
        if
        any.
  *Beneficial
        Conversion Feature*
 The
        convertible feature of one of the Company’s convertible notes provided for a
        rate of conversion that was below market value (see Note 5). Such feature
        is normally characterized as a “beneficial conversion feature” (“BCF”). Pursuant
        to EITF No. 98-5, “Accounting for Convertible Securities with Beneficial
        Conversion Features or Contingently Adjustable Conversion Ratio” and EITF
        No. 00-27, “Application of EITF Issue No. 98-5 to Certain Convertible
        Instruments”, the estimated relative fair value of the BCF was recorded as a
        discount from the face amount of the convertible note. The Company amortized
        the
        discount using the effective interest method through the conversion of such
        instrument.
 
 *Income
        Taxes*
 The
        Company utilizes the liability method of accounting for income taxes as set
        forth in SFAS No. 109, “Accounting for Income Taxes” (“SFAS
        No. 109”). Under the liability method, deferred taxes are determined based
        on the temporary differences between the financial statement and tax bases
        of
        assets and liabilities using enacted tax rates. A valuation allowance is
        recorded when it is more likely than not that some of the deferred tax assets
        will not be realized. The Company also determines its tax contingencies in
        accordance with SFAS No. 5, “Accounting for Contingencies.” The
        Company records estimated tax liabilities to the extent the contingencies
        are
        probable and can be reasonably estimated.
 
 *Recent
        Accounting Pronouncements*
 In
        July
        2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in
        Income Taxes” (“FIN No. 48”) which clarifies the accounting for uncertainty in
        income taxes recognized in the financial statements in accordance with SFAS
        No. 109, “Accounting for Income Taxes.” This pronouncement recommends a
        recognition threshold and measurement process for recording in the consolidated
        financial statements uncertain tax positions taken or expected to be taken
        in
        the Company’s tax return. FIN No. 48 also provides guidance on derecognition,
        classification, interest and penalties, accounting in interim periods and
        disclosure requirements for uncertain tax positions. The accounting provisions
        of FIN No. 48 will be effective for the Company beginning April 1, 2007.
        The
        Company is in the process of evaluating the effect, if any, the adoption
        of FIN
        No. 48 will have on its consolidated financial statements.








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          of Contents




**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**





**NOTE
      1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
      continued**





*Basic
      and Diluted Loss per Common Share*


Basic
      loss per share is calculated by dividing net loss by the weighted average common
      shares outstanding during the period. Diluted net loss per share reflects the
      potential dilution to basic EPS that could occur upon conversion or exercise
      of
      securities, options or other such items to common shares using the treasury
      stock method, based upon the weighted average fair value of our common shares
      during the period.  During the three months ended June 30, 2007 and
      2006, the Company did not have any potentially dilutive securities and no common
      stock equivalents were considered in the calculation of the weighted average
      number of shares outstanding because they would be anti-dilutive.




**NOTE
      2 - ACQUISITION**





On
        April
        5, 2006, the Company, through its wholly-owned subsidiary
        SpeedFactory,  acquired all of the assets of Synkronus 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."
 
 The
        Company 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,
        which
        were resolved in May 2007.  There were no acquisition related expenses
        incurred.  The closing was effective as of April 5, 2006.
 
 NextPhase
        borrowed $1,500,000 to fund the purchase price from a private lender (see
        Note
        4). This borrowing was secured by substantially all the assets of the
        Company.
  The
        acquisition of Synkronus was accounted for using the purchase method in
        accordance with SFAS No. 141. The results of operations for Synkronus have
        been
        included in the condensed consolidated Statements of Operations since the
        date
        of acquisition.
  In
        accordance with SFAS No. 141, 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 and independent
        third party appraisal. The Company has made an allocation of the purchase
        price
        to the Synkronus assets at estimated fair values.  The purchase price
        was allocated to the fair value of assets acquired as
        follows:




**Amount**
            
            **Estimated
                Lives**Computers
                  and related equipment
            $
            100,000
            
            3
                  yearsCustomer
                lists
            
            980,000
            
            5
                yearsTrademarks
            
            100,000
            
            indefiniteSupply
                contracts
            
            60,000
            
            5
                yearsGoodwill
            
            260,000
            
            indefinite$
            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. The customer lists and supply contracts
        will be
        amortized based on estimated weighted cash flows over their lives. Amortization
        expense for the three months ended June 30, 2007 and 2006 was $52,000 and
        $69,000, respectively.







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          of Contents




**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**







**NOTE
            3 - RELATED PARTY TRANSACTIONS**
  **For
            the Three Months Ended June 30, 2006**
 
 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 remained
            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.
 
 **For
            the Three Months Ended June 30, 2007**
  In
            June
            2007, the Company’s and its former chairman, entered into a settlement agreement
            whereby the former chairman forgave notes payable, accrued interest advances
            and
            accrued expenses in the aggregate amount of $96,291, which was recorded
            in legal
            settlements in the accompanying condensed consolidated statements of
            operations.




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          of Contents





**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**




**NOTE 4
      – NOTES PAYABLE AND CAPITAL LEASE**




At
                  June 30, 2007 notes payable and capital leases consisted of the
                  following:**Total**
              
              
              **Current**
              
              
              **Long-Term**Secured
                  convertible note payable, interest at 6%, due April 2008
              
              $
              2,300,000
              
              
              $
              2,300,000
              
              
              $
              -Less
                  discount
              
              
              (26,246
              )
              
              
              (26,246
              )
              
              
              -Convertible
                  notes, interest at 7%, due between December 2007 and June
                  2008
              
              
              540,000
              
              
              
              540,000
              
              
              
              -Automobile
                  loan, interest at 5.9%, $924 monthly, due May 2011
              
              
              38,733
              
              
              
              8,963
              
              
              
              29,7702,852,487
              
              
              
              2,822,717
              
              
              
              29,770Capital
                  lease, $360 per month due April 2009
              
              
              7,065
              
              
              
              3,570
              
              
              
              3,495$
              2,859,552
              
              
              $
              2,826,287
              
              
              $
              33,265Advance
                  payable on demand, interest at 9%
              
              $
              100,000
              
              
              $
              100,000
              
              
              $
              -




The
          convertible note payable in the amount of $2,300,000 is dated March 31,
          2006 and
          is fully secured by all the assets of the Company. It was deemed effective
          at
          the date upon when the cash was received by Synkronus on behalf of the
          Company,
          or April 7, 2006. The note bears interest at the rate of 6% per annum,
          and 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. The Company is amortizing the
          discount over the life of the note and charged $8,844 and $8,075 to interest
          expense for the three months ended June 30, 2007 and 2006,
          respectively.
  During
            the year ended March 31, 2007, the Company issued 11 convertible notes
            totaling
            $390,000, with an interest rate of 7%, and all maturing in one year from
            the
            date of issuance. The maturity dates of the notes are between December
            2007 and
            March 2008. As a stipulation, when the Company’s common stock reaches $0.20 or
            above for a period of 10 consecutive days, the principal and accrued
            interest
            due under the note will convert into common stock of the Company at a
            rate of
            $0.15 per share. In accordance with the convertible notes payable agreements,
            if
            the notes were convertible as of June 30, 2007, the Company would have
            recorded
            a debt discount related to the beneficial conversion features of approximately
            $97,000.
 During
          the three months ended June 30, 2007, the Company issued 2 convertible
          notes
          totaling $150,000, with an interest rate of 7%, and all maturing in one
          year
          from the date of issuance with a stipulation when the Company’s common stock
          reaches $0.30 or above for a period of 10 consecutive days, the principal
          and
          accrued interest due under the note will convert into common stock of the
          Company at a rate of $0.15 per share.If
          the notes were
          convertible at June 30, 2007, the Company would have recorded a debt discount
          of
          $75.000.If
          the stock does
          not reach $0.30 or above for ten consective days,the notes are not
          convertible.
 
 In
          June
          2007, the Company’s and its former chairman, entered into a settlement agreement
          whereby the former chairman forgave notes payable in the amount of $63,000
          and,
          accrued interest advances and accrued expenses in the aggregate amount
          of
          $33,291, which was record as a gain on extinguishment
  **NOTE
        5 – EQUITY**
  *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.


12
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**NEXTPHASE
      WIRELESS, INC.**


**NOTES
      TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**


**June
      30, 2007**


**(Unaudited)**






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.
 
 For
        the
        three months ended June 30, 2007 the Company issued 330,000 shares for
        payment of a consulting agreement in the amount of $29,700 which was recorded
        as
        an accrued liability at March 31, 2007; 560,000 shares for a settlement of
        a
        lawsuit in the amount of $78,400 and recorded as an accrued liability at
        March
        31, 2007 and 1,000,000 shares valued at $130,000 for a consulting agreement
        entered into June 30, 2007.
 
 There
        were no warrants issued, exercised or cancelled/expired during the three
        months
        ended June 30, 2007.


**NOTE
          6 – SUBSEQUENT EVENTS**
 
 In
          July
          2007, the Company issued convertible notes totaling $210,000, with interest
          at
          7%, and all due in one year from the date of issuance.  When the
          Company’s common stock reaches $0.30 or above for a period of 10 consecutive
          days, the principal and accrued interest due under the note will convert
          into
          common stock of the Company at a rate of $0.15 per share.
 
 On
          July
          1, 2007, the Company entered into a one year agreement with Elite Financial
          Communications Group, Inc, LLC for market relations support. In connection
          with
          the agreement the Company granted options to purchase common stock of the
          Company at prices ranging from $0.20 to $0.35 per share, the value of which
          was
          $32,000.
 
 On
          July
          13, 2007, the Company issued a convertible promissory note for $85,920
          for
          accrued liabilities of the same amount.  The note is due in one year
          with interest at 7% and is convertible at $0.15 per share into the Company’s
          common stock at the holder’s option.
 
 On
          July
          13, 2007, the Company issued a convertible promissory note for $75,000
          for
          payment of accounts payable of $142,229.  The note is due in one year
          with interest at 7% and is convertible at $0.15 per share into the Company’s
          common stock at the holder’s option.
 
 On
          July
          18, 2007, the Company issued 645,417 shares of its common stock for payment
          of
          accrued interest at June 30, 2007 in the amount of $78,908.
 
 On
          July
          22, 2007, the Company completed the acquisition of the purchase of the
          business
          of Interactive Network Services Inc (“INS”), upon the execution on that date of
          an Asset Purchase Agreement (the “Asset Purchase Agreement”), by and between
          Interactive-III Acquisition Co., Inc. (“INS Acquisition Co.”), a Nevada
          corporation and wholly owned subsidiary of SpeedFactory, Inc., a Nevada
          corporation, a wholly owned subsidiary of the Company, and INS.  The
          Company paid $350,000 for the acquisition. The Company has not made an
          allocation of the purchase price. The Company was advanced $275,000 from
          its
          secured debt holder to complete the transaction.
  On
          July
          23, 2007, the Company entered into a consulting agreement with Nicholas
          J. Yocca
          for business advisory services for a one year period for the issuance of
          1,000,000 shares of common stock valued at $170,000.
 
 In
          July
          2007, a previous legal settlement was adjusted by a stipulated judgment
          increasing agreement by $22, 223 for a total due of $67,223 which was recorded
          in accounts payable at June 30, 2007.





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





The
      Management's Discussion and Analysis is intended to help shareholders and other
      readers understand the dynamics of NextPhase’s business and the key factors
      underlying its financial results. It explains trends in NextPhase's financial
      condition and results of operations for the three months ended June 30, 2007
      compared with the operating results for the three months ended June 30,
      2006.




**Forward
      Looking Statements**





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





·
              our
                  ability to raise capital necessary to sustain our anticipated operations
                  and implement our proposed business
                  plan,
 
 ·
              our
                  ability to implement our proposed business
                  plan,
 
 ·
              the
                  ability to successfully integrate the operations of businesses
                  we have
                  acquired, or may acquire in the future, into our
                  operations,
 
 ·
              our
                  ability to generate sufficient cash to pay our lenders and other
                  creditors,
 
 ·
              our
                  ability to obtain regulatory permits and approvals to operate in
                  the
                  high-speed wireless network
                  industry,
 
 ·
              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,
 
 ·
              our
                  ability to identify and complete acquisitions and successfully
                  integrate
                  the businesses we acquire, if any,
 
 ·
              our
                  ability to employ and retain qualified management and
                  employees,
 
 ·
              our
                  dependence on the efforts and abilities of our current employees
                  and
                  executive officers,
 
 ·
              changes
                  in government regulations that are applicable to our anticipated
                  business,
 
 ·
              changes
                  in the demand for our services,
 
 ·
              the
                  degree and nature of our
                  competition,
 
 ·
              our
                  lack of diversification of our business
                  plan,
 
 ·
              the
                  general volatility of the capital markets and the establishment
                  of a
                  market for our shares, and
 
 ·
              disruption
                  in the economic and financial conditions primarily from the impact
                  of past
                  terrorist attacks in the United States, threats of future attacks,
                  police
                  and military activities overseas and other disruptive worldwide
                  political
                  events.




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





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





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          of Contents




**Financial
      Statement Overview**





*Nature
      of Operations*


NextPhase
      was incorporated on August 28, 1995 in Nevada under the name of Professional
      Mining Consultants, Inc.





Effective
      April 5, 2006, through its wholly-owned subsidiary SpeedFactory. NextPhase
      acquired the internet service and connectivity business assets previously
      operated by Synkronus. under the name "SpeedFactory". Management's plans are
      discussed further in the Going Concern portion of Note 1.





Prior
      to
      the acquisition of SpeedFactory, the Company has a limited operating history
      with revenue-generating products and services only recently entering the market.
      The consolidated financial statements include the accounts of the Company and
      its wholly-owned subsidiaries, NTI and SpeedFactory.  NTI
      was engaged in the development of a web-based software
      product, the development of which has been abandoned.  The
      costs of the development were paid by its then parent
      company.  NextPhase had no operations prior to the reverse
      acquisition.  Management’s plans are discussed further in the Going
      Concern portion of Note 1 of the consolidated financial statements. On January
      21, 2005 the Company changed its name from Edison Renewables, Inc. to NextPhase
      Wireless, Inc.





Effective
      October 1, 2006, all revenue generating activity was combined with SpeedFactory.
      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. We continue to extend 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.








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**RESULTS
      OF OPERATIONS**





For
          the
          three months ended June 30, 2007, revenue was $480,989 as compared with
          $521,278
          with the same period in the previous year.  The reduction was due to
          no sales of products or consulting services in the three months ended June
          30,
          2007 as compared with $76,615 in the same period for the previous
          year.  Internet fees increased $42,960 or 9.6% for the three months
          ended June 30, 2007 as compared with the same period in the previous
          year.
 
 Cost
          of
          revenue was $236,920 or 49.3% of revenue for the three months ended June
          30,
          2007, compared to $310,276 or 59.5% during the three months ended June 30,
          2006. The 2006 results included a loss on product sales of $29,812 which
          increase the total cost of revenue.As
          a result,gross profit increased to $244,069 or 15.7% for the three months
          ended June 30, 2007 as compared with $211,022 for the same period in the
          previous year.
 
 Selling,
          general, and administrative expenses were $551,034 for the three months
          ended June 30, 2007 as compared with $490,196 for the three months ended
          June
          30, 2006, an increase of  $60,838 or approximately 12.4%. The increase
          was due to increased staffing for growth which resulted in increased salaries
          of
          $84,593 in the three months ended June 30, 2007.  This was offset by
          lower professional fees in the amount $17,576 due to $30,000 legal fees
          incurred
          in the three months ended June 30, 2006 for the acquisition of
          SpeedFactory.  As a result, selling, general and administrative expenses
          represented 114.6% of revenue for the three months ended June 30, 2007
          versus
          94% in the same period in 2006.  The Company’s expenses will
          begin to reduce as a percentage of revenues as the Company follows its
          acquisition strategy.
 
 Stock-based
          compensation expense was $130,000 in the three months ended June 30, 2007
          as
          compared with $100,199 in the same period in the previous
          year.
 
 Depreciation
          expense for the three months ended June 30, 2007 and 2006 was $34,171 and
          $30,769, respectively. Amortization of the intangible assets acquired in
          the
          SpeedFactory acquisition was $52,000 and $69,000 for the three months ended
          June
          30, 2007 and 2006.
 
 The
          purchase price of SpeedFactory was allocated to the fair value of assets
          acquired as follows:





**Amount**
            
            **Estimated
                Lives**Computers
                  and related equipment
            $
            100,000
            
            3
                  yearsCustomer
                lists
            
            980,000
            
            5
                yearsTrademarks
            
            100,000
            
            indefiniteSupply
                contracts
            
            60,000
            
            5
                yearsGoodwill
            
            260,000
            
            indefinite$
            1,500,000






16
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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
          operating loss for the Company for the three months ended June 30, 2007
          was
          $523,136 versus $445,162 for the same period in the prior year.  This
          was an increase of $ 77,973, of which $50,203 of the increase was for non
          cash
          items.  Legal settlement income was $74,069 during the three months
          ended June 30, 2007. The Company received a favorable settlement from its
          former chairman, which resulted in a gain in the amount of $96,291. This
          was partially offset by an increase in a previous settlement due to a stipulated
          judgment for $67,223 resulting in a charge of $22,223.   Net loss
          for the three months ended June 30, 2007 was $506,819 or $0.02 per shares
          as
          compared with a net loss of $498,846 or $0.02 per share for the three months
          ended June 30, 2006. Monthly operating cash losses are now
          approximately $75,000 per month.  Management expects this to
          continue to decline as the Company continues its acquisition strategy,
          with on
          closing in July and two additional companies in the 4th calendar
          quarter of 2007, two of which are expected to close in the quarter ended
          September 30, 2007.
 
 **Liquidity
          and Capital Resources**
 
 As
          of
          June 30, 2007, the Company had a cash balance of $$6,960 and the Company's
          accumulated deficit was $9,138,529. The Company had negative working capital
          of
          $4,342,098.  Total liabilities were $4,510,076 which included accounts
          payable of $1,350,813, accrued expenses of $139,711, deferred revenue of
          $60,000
          and notes and advances payable of $2,959,552.  The Company’s cash
          operating loss for the three months ended June 30, 2007 was $306,965 and
          the Company currently is using $75,000 cash per month in
          operations.
 
 The
          Company has developed a plan to integrate additional ISPs in a scalable
          roll-up
          strategy.  The Company will acquire only profitable operations, both
          wireless and land based, which are synergistic to the Company’s current
          operations. The Company has entered into letters of intent to acquire two
          companies which would greatly reduce the negative cash flow on a monthly
          basis.
          The Company completed the first acquisition in July 2007 and the additional
          companies are scheduled for early fall 2007. Under its plans, management
          expects
          to generate positive operating cash flow during the fourth quarter of calendar
          2007. There is no assurance that management will achieve its plan. There
          is
          further no assurance that the proceeds from operating cash flows or future
          financings will be sufficient to obtain profitable operations. The acquisitions
          will be made by a cash purchase and there is no assurance that the Company
          will
          be able to raise the required capital through equity or debt
          offerings.
 
 The
          accompanying condensed financial statements were prepared on a going concern
          basis, which contemplates the realization of assets and the settlement
          of
          liabilities in the normal course of business. The Company has incurred
          losses
          from operations and negative cash flows from operating activities from
          inception
          and has a working capital deficiency as of June 30, 2007 of $4,476,811.
          These
          factors raise substantial doubt about the Company’s ability to continue as a
          going concern. The Company has continued to issue short-term convertible
          notes
          with $210,000 being issued in July and have an aggregate total of $750,000
          which
          have a mandatory conversion at a rate of $0.15 per share when the Company’s
          stock price exceeds $0.20 to $0.30 per share or for a period of 10
          consecutive days, at which time the principal and accrued interest due
          under the
          note will convert into common stock of the Company at for a ten-day
          period.  These notes would convert to 5,000,000 shares of stock. In
          April 2006, the Company obtained long-term financing of $1,500,000 in connection
          with the acquisition of SpeedFactory and has received additional advances
          including $275,000 in July 2007 to complete the acquisition of
          INS.
  The
          Company has a convertible note payable in the amount of $2,300,000 which
          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.


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NextPhase
      plans on continuing to fund 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.





The
      Company expects 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.





By
      adjusting its operations and development to the level of capitalization,
      management believes it has sufficient capital resources to meet projected cash
      flow deficits through the next year. 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
        report of our independent registered public accounting firm on our March
        31, 2007 consolidated financial statements states that our recurring losses
        raise substantial doubt about our ability to continue as a going
        concern.





**Off-Balance
      Sheet Arrangements**





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





**Inflation**





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





**Critical
      Accounting Policies**





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






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*Revenue
      Recognition and Deferred Revenue*


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





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





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





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




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





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





*Long-Lived
      Assets*


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




As
        of  June 30 , 2007, The Company’s management believes there is no
        impairment of its long-lived assets.  There can be no assurance,
        however, that market conditions will not change which could result in impairment
        of long-lived assets in the future.





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*Goodwill
      and Other Intangible Assets*


The
      Company has adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS
      No. 142 requires that goodwill and intangible assets deemed to have indefinite
      lives are no longer amortized but are subject to an annual impairment test
      which
      has two steps to determine whether asset impairment exists. The first step
      of
      the impairment test identifies potential impairment by comparing the fair value
      with the carrying amount of the reporting unit, including goodwill. If the
      carrying amount of the reporting unit exceeds its fair value, the second step
      of
      the impairment test shall be performed to measure the amount of the impairment
      loss, if any. Intangibles with indefinite useful lives are measured for
      impairment by the amount that the carrying value exceeds the estimated fair
      value of the intangible. The fair value is calculated using the income approach.
      Intangible assets with definite useful lives will continue to be amortized
      over
      their estimated useful lives. Any impairment is recorded at the date of
      determination.





The
      Company’s policy provides for annual evaluation of goodwill on the first day of
      the fourth fiscal quarter and whenever events and changes in circumstances
      suggest that the carrying amount may not be recoverable. Impairment of goodwill
      is tested at the operating segment level by comparing the segments' net carrying
      value, including goodwill, to the fair value of the segment. The fair values
      of
      our segments are estimated using a combination of the income or discounted
      cash
      flows approach and the market approach, which uses comparable market data.
      If
      the carrying amount of the segment exceeds its fair value, goodwill is
      potentially impaired and a second test would be performed to measure the amount
      of impairment loss, if any.





*Business
      Combinations*


In
      accordance with SFAS No. 141,  “Business Combinations,” the Company
      allocates the purchase price of acquired entities to the tangible and intangible
      assets acquired and, liabilities assumed, based on their estimated fair values.
      The Company engaged an independent third-party appraisal firm to assist
      management in determining the fair values of certain assets acquired and
      liabilities assumed. Such a valuation requires management to make significant
      estimates and assumptions, especially with respect to intangible
      assets.





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




*Beneficial
        Conversion Feature*
 The
        convertible feature of one of the Company’s convertible notes provided for a
        rate of conversion that was below market value (see Note 4). Such feature
        is normally characterized as a “beneficial conversion feature” (“BCF”). Pursuant
        to Emerging Issues Task Force (“EITF”) Issue No. 98-5, “Accounting for
        Convertible Securities with Beneficial Conversion Features or Contingently
        Adjustable Conversion Ratio” and EITF No. 00-27, “Application of EITF Issue
        No. 98-5 to Certain Convertible Instruments”, the estimated relative fair
        value of the BCF was recorded as a discount from the face amount of the
        convertible note. The Company amortized the discount using the effective
        interest method through the conversion of such instrument.
 
 *Income
        Taxes*
 The
        Company utilizes the liability method of accounting for income taxes as set
        forth in SFAS No. 109, “Accounting for Income Taxes” (“SFAS
        No. 109”). Under the liability method, deferred taxes are determined based
        on the temporary differences between the financial statement and tax bases
        of
        assets and liabilities using enacted tax rates. A valuation allowance is
        recorded when it is more likely than not that some of the deferred tax assets
        will not be realized. The Company also determines its tax contingencies in
        accordance with SFAS No. 5, “Accounting for Contingencies.” The
        Company records estimated tax liabilities to the extent the contingencies
        are
        probable and can be reasonably estimated.
 
 *Basic
        and Diluted Loss per Common Share*
 Basic
        loss per share is calculated by dividing net loss by the weighted average
        common
        shares outstanding during the period. Diluted net loss per share reflects
        the
        potential dilution to basic EPS that could occur upon conversion or exercise
        of
        securities, options or other such items to common shares using the treasury
        stock method, based upon the weighted average fair value of our common shares
        during the period. During the three months  ended June 30,
        2007 and 2006, the Company did not have any potentially dilutive securities
        and no common stock equivalents were considered in the calculation of the
        weighted average number of shares outstanding because they would be
        anti-dilutive.




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*Recent
        Accounting Pronouncements*
 In
        September 2006, the FASB issued SFAS No. 157 “Fair Value
        Measurements,”  to eliminate the diversity in practice that exists due
        to the different definitions of fair value and the limited guidance for applying
        those definitions in accounting principals generally accepted in the United
        States of America that are dispersed among the many accounting pronouncements
        that require fair value measurements. SFAS No. 157 retains the exchange price
        notion in earlier definitions of fair value, but clarifies that the exchange
        price is the price in an orderly transaction between market participants
        to sell
        an asset or liability in the principal or most advantageous market for the
        asset
        or liability. Moreover, SFAS No. 157 states that the transaction is
        hypothetical at the measurement date, considered from the perspective of
        the
        market participant who holds the asset or liability. Consequently, fair value
        is
        defined as the price that would be received to sell an asset or paid to transfer
        a liability in an orderly transaction between market participants at the
        measurement date (an exit price), as opposed to the price that would be paid
        to
        acquire the asset or received to assume the liability at the measurement
        date
        (an entry price).


In
      September 2006, the FASB issued SFAS No. 157 “Fair Value
      Measurements,”  to eliminate the diversity in practice that exists due
      to the different definitions of fair value and the limited guidance for applying
      those definitions in accounting principals generally accepted in the United
      States of America that are dispersed among the many accounting pronouncements
      that require fair value measurements. SFAS No. 157 retains the exchange price
      notion in earlier definitions of fair value, but clarifies that the exchange
      price is the price in an orderly transaction between market participants to
      sell
      an asset or liability in the principal or most advantageous market for the
      asset
      or liability. Moreover, SFAS No. 157 states that the transaction is
      hypothetical at the measurement date, considered from the perspective of the
      market participant who holds the asset or liability. Consequently, fair value
      is
      defined as the price that would be received to sell an asset or paid to transfer
      a liability in an orderly transaction between market participants at the
      measurement date (an exit price), as opposed to the price that would be paid
      to
      acquire the asset or received to assume the liability at the measurement date
      (an entry price).





SFAS
      No.
      157 also stipulates that, as a market-based measurement, fair value measurement
      should be determined based on the assumptions that market participants would
      use
      in pricing the asset or liability, and establishes a fair value hierarchy that
      distinguishes between (a) market participant assumptions developed based on
      market data obtained from sources independent of the reporting entity
      (observable inputs) and (b) the reporting entity's own assumptions about market
      participant assumptions developed based on the best information available in
      the
      circumstances (unobservable inputs). Finally, SFAS No. 157 expands disclosures
      about the use of fair value to measure assets and liabilities in interim and
      annual periods subsequent to initial recognition. Entities are encouraged to
      combine the fair value information disclosed under SFAS No. 157 with the fair
      value information disclosed under other accounting pronouncements, including
      SFAS No. 107, “Disclosures about Fair Value of Financial Instruments,” where
      practicable. The guidance in this Statement applies for derivatives and other
      financial instruments measured at fair value under SFAS No. 133, “Accounting for
      Derivative Instruments and Hedging Activities,” at initial recognition and in
      all subsequent periods.





SFAS
      No.
      157 is effective for financial statements issued for fiscal years beginning
      after November 15, 2007, and interim periods within those fiscal years, although
      earlier application is encouraged. Additionally, prospective application of
      the
      provisions of SFAS No. 157 is required as of the beginning of the fiscal year
      in
      which it is initially applied, except when certain circumstances require
      retrospective application. The Company is currently evaluating the effect of
      adopting SFAS No. 157 on its consolidated financial statements.





SFAS
      No. 159 permits all entities to choose to measure eligible items at fair value
      at specified election dates. A business entity will report unrealized gains
      and
      losses on items for which the fair value option has been elected in earnings
      (or
      another performance indicator if the business entity does not report earnings)
      at each subsequent reporting date. A not-for-profit organization will report
      unrealized gains and losses in its statement of activities or similar statement.
      The fair value option: ( *a* ) may be applied instrument by instrument,
      with a few exceptions, such as investments otherwise accounted for by the equity
      method; ( *b* ) is irrevocable (unless a new election date occurs); and (
*c* ) is applied only to entire instruments and not to portions
      of
      instruments. SFAS No. 159 is effective as of the beginning of an entity’s first
      fiscal year that begins after November 15, 2007.  Early adoption is
      permitted as of the beginning of the previous fiscal year provided that the
      entity makes that choice in the first 120 days of that fiscal year and also
      elects to apply the provisions of FASB Statement No. 157, “Fair Value
      Measurements.” The adoption of this pronouncement is not expected to have
      material effect on the Company’s consolidated financial statements.





*Risks
      and Uncertainties*


The
      Company's operations are subject to new innovations in product design and
      function. Significant technological changes can have an adverse effect on the
      Company's future operating results. Design and development of new marketing
      strategies are important elements to achieve profitability in the Company's
      industries.




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**ITEM3.
      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 principal financial officer, of our disclosure controls and procedures
      (as
      defined in Rule 13a-15(e) of the Exchange Act). Based on his evaluation, our
      Chief Executive Officer and principal financial officer concluded that our
      current system of disclosure controls and procedures was effective.




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





**PART
      II - OTHER INFORMATION**




**ITEM
      1**: LEGAL PROCEEDINGS.





None





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





None








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**ITEM3**:
      DEFAULTS UPON SENIOR SECURITIES.





None.





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





None.





**ITEM
      5**: OTHER INFORMATION.







**ITEM
      6**. EXHIBITS





**Exhibit****Number**
            
            **Description
              of Exhibit**31.1
            
            Certification
                of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                200231.2
            
            Certification
                of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 302 of the Sarbanes-Oxley Act of
                200232
            
            Certification
                of Chief Executive Officer and Chief Financial Officer pursuant to
                18
                U.S.C. Section 1350, as adopted pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002





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**SIGNATURES**





In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant has duly caused this report to be signed on its behalf by the
      undersigned, thereunto duly authorized.






**NextPhase
                Wireless, Inc.******
            ****
            ****August
                  20, 2007
            By**:**
            /s/ Robert
              Ford
            ********
            ****
            Robert
              Ford
            ********
            ****
            President
              and Chief Executive
              Officer







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