**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**




**___________________________**





**FORM
      10-QSB**


**__________________**







(Mark
                One)**x**
            **QUARTERLY
                REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
                1934****For
                the Quarterly Period Ended September 30, 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 x





**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 3,686,070 shares of common stock
      outstanding as of November 12, 2007.


Transitional
      Small Business Disclosure
      Format (check one) Yesx Noo


Table
          of Contents




**NEXTPHASEWIRELESS,
      INC.**





Quarterly
      Report on Form 10-QSB for the


Quarterly
      Period Ending September 30, 2007





**TABLE
      OF CONTENTS**




**EXPLANATORY
          NOTE**
  The
          interim consolidated financial statements included in this Quarterly Report
          on
          Form 10-QSB as of September 30, 2007 and for the three and six months ended
          September 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.


**Page
                no.****PART
                I - FINANCIAL
                INFORMATION**
            
            1Financial
                Statements (Unaudited)
            
            1Item
                2.
                Management's Discussion and Analysis or Plan of
                Operation
            
            13Item
                3. Controls
                and Procedures
            
            21**PART
                II - OTHER
                INFORMATION**
            
            21Item
                1. Legal
                Proceedings
            
            21Item
                2.
                Unregistered Sales of Equity Securities and Use of
                Proceeds
            
            21Item
                3. Defaults
                Upon Senior Securities
            
            22Item
                4. Submission
                of Matters to a Vote of Security Holders
            
            22Item
                5. Other
                Information
            
            22Item
                6.
                Exhibits
            
            22**SIGNATURES**
            
            23








Table
          of Contents





**PART I.
      FINANCIALINFORMATION**








**NextPhase
      Wireless, Inc.**


**Condensed
      Consolidated Balance Sheet**


**(Unaudited)**




**September
                      30,****2007****ASSETS**Current
                      assets:Cash
                  
                  $
                  8,177Accounts
                      receivable
                  
                  
                  58,919Prepaid
                      expenses
                  
                  
                  269,253Total
                      current assets
                  
                  
                  336,349Property
                      and equipment -net
                  
                  
                  394,619Customer
                      lists - net
                  
                  
                  802,000Trademarks
                  
                  
                  100,000Supply
                      contracts -net
                  
                  
                  42,000Goodwill
                  
                  
                  340,000Deposits
                  
                  
                  8,637Total
                      assets
                  
                  $
                  2,023,605**LIABILITIES
                      AND STOCKHOLDERS' DEFICIT**Current
                      liabilities:Accounts
                      payable
                  
                  $
                  1,008,429Accrued
                      expenses
                  
                  
                  150,665Deferred
                      revenue
                  
                  
                  195,077Cash
                      advance payable
                  
                  
                  375,000Due
                      to officer shareholders
                  
                  
                  70,723Notes
                      payable and capital leases,  current portion
                  
                  
                  3,231,602Total
                      current liabilities
                  
                  
                  5,031,496Notes
                      payable and capital leases, net of current portion
                  
                  
                  29,233Total
                      liabilities
                  
                  
                  5,060,729Commitments
                      and contingenciesStockholders'
                      deficit:Preferred
                      stock, $0.001 par value, 20,000,000 sharesauthorized;
                      no shares issued and outstandingCommon
                      stock, $0.001 par value, 10,000,000 sharesauthorized;  1,755,820
                      issued and outstanding
                  
                  
                  1,756Additional
                      paid-in capital
                  
                  
                  6,804,661Accumulated
                      deficit
                  
                  
                  (9,843,541
                  )Total
                      stockholders' deficit
                  
                  
                  (3,037,124
                  )Total
                      liabilities and stockholders' deficit
                  
                  $
                  2,023,605




The
        accompanying notes are an integral part of these unaudited condensed
        consolidated financial statements.
   1
 Table
            of Contents
  **NextPhase
          Wireless, Inc.**
 **Condensed
          Consolidated Statements of Operations**
 **(Unaudited)**
 **For
                        the Three Months Ended**
                    
                    
                    **For
                        the Six Months Ended****September
                        30,**
                    
                    
                    **September
                        30,****2007**
                    
                    
                    **2006**
                    
                    
                    **2007**
                    
                    
                    **2006**RevenueBroadband
                        and internet
                    
                    $
                    450,910
                    
                    
                    $
                    462,420
                    
                    
                    $
                    931,900
                    
                    
                    $
                    889,348Products
                        and consulting services
                    
                    
                    60,544
                    
                    
                    
                    174,006
                    
                    
                    
                    60,543
                    
                    
                    
                    268,356Total
                        revenue
                    
                    
                    511,454
                    
                    
                    
                    636,426
                    
                    
                    
                    992,443
                    
                    
                    
                    1,157,704Cost
                        of revenue
                    
                    
                    245,923
                    
                    
                    
                    300,739
                    
                    
                    
                    482,842
                    
                    
                    
                    611,015Gross
                        profit
                    
                    
                    265,531
                    
                    
                    
                    335,687
                    
                    
                    
                    509,601
                    
                    
                    
                    546,689Operating
                        expenses:Selling,
                        general and administrative
                    
                    
                    712,736
                    
                    
                    
                    558,866
                    
                    
                    
                    1,263,770
                    
                    
                    
                    1,049,062Stock-based
                        compensation
                    
                    
                    162,552
                    
                    
                    
                    51,329
                    
                    
                    
                    292,552
                    
                    
                    
                    151,528Depreciation
                        and amortization
                    
                    
                    98,631
                    
                    
                    
                    67,554
                    
                    
                    
                    184,802
                    
                    
                    
                    133,323Total
                        operating expenses
                    
                    
                    973,919
                    
                    
                    
                    677,749
                    
                    
                    
                    1,741,124
                    
                    
                    
                    1,333,913Operating
                        loss
                    
                    
                    (708,388
                    )
                    
                    
                    (342,062
                    )
                    
                    
                    (1,231,523
                    )
                    
                    
                    (787,224
                    )Other
                        income (expense):Gain
                        on settlements of liabilities, net
                    
                    
                    70,282
                    
                    
                    
                    -
                    
                    
                    
                    144,351
                    
                    
                    
                    -Interest
                        expense
                    
                    
                    (66,906
                    )
                    
                    
                    (69,906
                    )
                    
                    
                    (124,659
                    )
                    
                    
                    (127,840
                    )Other
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    4,251Total
                        other income (expense), net
                    
                    
                    3,376
                    
                    
                    
                    (69,906
                    )
                    
                    
                    19,692
                    
                    
                    
                    (123,589
                    )Loss
                        before income taxes
                    
                    
                    (705,012
                    )
                    
                    
                    (411,968
                    )
                    
                    
                    (1,211,831
                    )
                    
                    
                    (910,813
                    )Provision
                        for income taxes
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Net
                        loss
                    
                    $
                    (705,012
                    )
                    
                    $
                    (411,968
                    )
                    
                    $
                    (1,211,831
                    )
                    
                    $
                    (910,813
                    )Basic
                        and diluted net loss per share
                    
                    $
                    (0.42
                    )
                    
                    $
                    (0.34
                    )
                    
                    $
                    (0.76
                    )
                    
                    $
                    (0.76
                    )Weighted
                        average shares outstanding
                    
                    
                    1,681,927
                    
                    
                    
                    1,210,866
                    
                    
                    
                    1,602,864
                    
                    
                    
                    1,204,060




The
        accompanying notes are an integral part of these unaudited condensed
        consolidated financial statements.
   2
 Table
            of Contents
  **NextPhase
          Wireless, Inc.**
 **Condensed
          Consolidated Statements of Cash Flows**
 **(Unaudited)**
 **For
                        the Six Months Ended****September
                        30, 2007****2007**
                    
                    
                    **2006****Cash
                        flows from operating activities:**Net
                        loss
                    
                    $
                    (1,211,831
                    )
                    
                    $
                    (910,813
                    )Adjustments
                        to reconcile net loss to netcash
                        used in operating activities:Gain
                        on settlement of liabikities, net
                    
                    
                    (144,351
                    )
                    
                    
                    -Issuance
                        of common stock for consulting services
                    
                    
                    130,000
                    
                    
                    
                    151,528Issuance
                        of warrants and options for consulting services
                    
                    
                    75,152
                    
                    
                    
                    -Amortization
                        of discount on notes payable
                    
                    
                    17,688
                    
                    
                    
                    16,920Amortization
                        of prepaid consulting services
                    
                    
                    83,200
                    
                    
                    
                    -Interest
                        expense
                    
                    
                    -
                    
                    
                    
                    49,859Bad
                        debt expense
                    
                    
                    20,000Depreciation
                        and amortization
                    
                    
                    184,802
                    
                    
                    
                    133,323Changes
                        in assets and liabilities:(Increase)
                        decrease in assets:Accounts
                        receivable
                    
                    
                    239,717
                    
                    
                    
                    133,501Other
                        current assets
                    
                    
                    (22,050
                    )
                    
                    
                    2,018Other
                        receivables
                    
                    
                    -
                    
                    
                    
                    (91,890
                    )Deposits
                    
                    
                    -
                    
                    
                    
                    (600
                    )Increase
                        (decrease) in liabilities:Accounts
                        payable and accrued liabilities
                    
                    
                    141,070
                    
                    
                    
                    341,172Due
                        to officers-shareholders
                    
                    
                    70,723
                    
                    
                    
                    -Deferred
                        revenue
                    
                    
                    (92,793
                    )
                    
                    
                    46,663Net
                        cash used in operating activities
                    
                    
                    (508,673
                    )
                    
                    
                    (128,319
                    )**Cash
                        flows from investing activities:**Purchase
                        of furniture and equipment
                    
                    
                    (26,410
                    )
                    
                    
                    (38,989
                    )Purchase
                        of Interactive Network Services, Inc.
                    
                    
                    (342,612
                    )
                    
                    
                    -Purchase
                        of company stock
                    
                    
                    -
                    
                    
                    
                    (9,979
                    )Net
                        cash used in investing activities
                    
                    
                    (369,022
                    )
                    
                    
                    (48,968
                    )**Cash
                        flows from financing activities:**Proceeds
                        from notes payable
                    
                    
                    545,000
                    
                    
                    
                    61,000Proceeds
                        from cash advances payable
                    
                    
                    275,000
                    
                    
                    
                    100,000Principal
                        payments on notes payable and capital leases
                    
                    
                    (5,811
                    )
                    
                    
                    (13,953
                    )Proceeds
                        from sale of common stock
                    
                    
                    -
                    
                    
                    
                    -Net
                        cash provided by financing activities
                    
                    
                    814,189
                    
                    
                    
                    147,047Change
                        in cash
                    
                    
                    (63,506
                    )
                    
                    
                    (30,240
                    )Cash
                        at beginning of period
                    
                    
                    71,683
                    
                    
                    
                    35,847Cash  end
                        of period
                    
                    $
                    8,177
                    
                    
                    $
                    5,607**Supplemental
                        disclosure of cash flow information:**Cash
                        paid during the period 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
                    
                    $
                    -
                    
                    
                    $
                    52,572Common
                        stock issued for services and legal settlement
                    
                    $
                    -
                    
                    
                    $
                    118,957Common
                        stock issued for accounts payable and accrued expenses
                    
                    $
                    187,008
                    
                    
                    $
                    37,639Note
                        payable issued in connection with acquisition
                    
                    $
                    -
                    
                    
                    $
                    1,500,000Common
                        stock issued in payment of debt
                    
                    $
                    162,305
                    
                    
                    $
                    -Common
                        stock issued for prepaid consulting services
                    
                    $
                    291,000
                    
                    
                    $
                    -
  The
            accompanying notes are an integral part of these unaudited condensed
            consolidated financial statements.
   3
 Table
              of Contents
  **NEXTPHASE
            WIRELESS, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September
            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 its outstanding common stock, to the shareholders of NextPhase Technologies,
            Inc. ("NTI")  in  exchange  for all of the shares
            of NTI.  As a result, NTI became a wholly owned subsidiary of
            NextPhase.  NTI was formed on September 14, 2000. For accounting
            purposes, this transaction is considered a "reverse merger,” and the historical
            financial statements of NextPhase reflect the operations of
            NTI.  Effective on the merger date, all financial activity became
            generated by NextPhase and NTI became an inactive subsidiary.  On
            January 21, 2005 the Company changed its name to NextPhase Wireless,
            Inc.
 
 Effective
            April 5, 2006, through its wholly-owned subsidiary SpeedFactory, Inc.
            (“SpeedFactory”), NextPhase acquired the Internet service and connectivity
            business assets previously operated by Synkronus, Inc. (“Synkronus”) under the
            name "SpeedFactory." Effective July 23, 2007 SpeedFactory acquired the
            Internet
            service and connectivity business assets previously operated by Interactive
            Network Systems, Inc.  (“INS”) 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
              condensed consolidated financial statements presented include only
              the accounts
              of NTI, from its inception (September 14, 2000) through September 30,
              2007, of
              NextPhase from August 3, 2004 September 30, 2007, of SpeedFactory from
              April 6,
              2006 (date of acquisition) through September 30, 2007 and Interactive
              Network
              Systems, a division of SpeedFactory from July 23, 2007 (date of acquisition)
              through September 30, 2007. The
              acquisition of INS was accounted for using the purchase method in accordance
              with SFAS No. 141. The results of operations for INS have been included
              in the
              condensed consolidated Statements of Operations since the date of acquisition.
              All significant inter-company accounts and transactions have been eliminated
              in
              consolidation.
 
 4
 Table
                of Contents
 
 **NEXTPHASE
            WIRELESS, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September
            30, 2007**
 **(Unaudited)**
 
 **NOTE
            1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
            continued**
  The
            Company conducts its operations from its office located in Anaheim, California,
            the SpeedFactory location in Marietta, Georgia and the INS operation
            in
            Blackwood, New Jersey.
  *Reverse
            Stock Split*
 On
              November 5, 2007, the Company effected a one for twenty reverse stock
              split. As
              a result of the reverse stock split, each 20 shares of issued and outstanding
              common stock as of close of trading on November 2, 2007 were automatically
              converted into one share of split-adjusted common stock.  No
              fractional shares of common stock were issued in connection with the
              reverse
              split. The accompanying condensed consolidated financial statements
              have given
              effect to the reverse split effective at the beginning of the periods
              reported
              herein.
 *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
              losses of $9,843,541 since inception.
 
 The
              Company has a working capital deficit of $4,695,147 at September 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 unaudited condensed
              consolidated financial statements do not include any adjustments relating
              to the
              recoverability and classification of recorded asset amounts, or amounts
              and
              classification of liabilities that might result from this
              uncertainty.
 
 In
              the
              six months ended September 30, 2007, the Company executed short-term
              notes for
              $545,000 see Note 4. In October and November 2007, the Company issued
              convertible notes totaling $120,000 with interest at 7%, and all due
              in one year
              from the date of issuance and notes for $100,000 and $30,000  due in
              ninety days and one hundred and eighty days from date of issuance,
              respectively
              see Note 7. 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 23,
              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, Georgia and
            New Jersey. The Company acquired the business of INS in July 2007 and
            has
            entered into a letter of intent to acquire two additional companies whose
            acquisitions will greatly reduce the negative cash flow on a monthly
            basis. The
            Company expects these acquisitions to be completed in December 2007.
            Under its
            plans, management expects to generate positive operating cash flow during
            the
            3rd calendar
            quarter of 2008. 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 4thquarter
            of 2007. 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 unaudited 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.
  *Segment
            Information*
 Statement
            of Financial Accounting Standards (“SFAS”), No. 131, “Disclosures about Segments
            of an Enterprise and Related Information” 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.
   5
 Table
                of Contents
 
 **NEXTPHASE
            WIRELESS, INC.**
 **NOTES
            TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September30,
            2007**
 **(Unaudited)**
   **NOTE
            1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
            continued**
 
 SAB
            No.
            104 incorporates Emerging Issues Task Force Issue (“EITF”) No.00-21,
“Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for
            arrangements that may involve the delivery or performance of multiple
            products,
            services and/or rights to use assets. The effect of implementing EITF
            No. 00-21,
            on the Company's unaudited condensed consolidated financial position
            and results
            of operations was not significant.
 
 The
            Company considers amounts to be earned once evidence of an arrangement
            has been
            obtained, services are delivered, fees are fixed or determinable, and
            collectibility is reasonably assured.  The Company generates and
            recognizes revenue as follows:
 
 Revenue
            from operating as a wireless Internet service provider of tiered wireless
            Internet services to business and residential subscribers:  Internet
            services are billed at the beginning of each month's activity at a fixed
            rate
            for each customer.  Customers sign an annual agreement or utilize the
            service on a month-to-month basis.  Revenue not yet earned is recorded
            as deferred revenue.
 
 Revenue
            from the sale and configuration of wireless equipment:  NextPhase acts
            as a reseller of certain components and equipment related to its products
            and
            services.  Equipment revenue is recognized at the time of shipment FOB
            to the customer.  Configuration is billed at an hourly rate and
            recognized after completion. Costs associated with the equipment are
            expensed at
            the time of shipment.  In order to maximize the Company’s cash flows,
            revenue from the sale and configuration of wireless equipment is sometimes
            billed in advance of shipment. In such cases, these invoices are recorded
            as
            deferred revenue.
 
 Revenue
            from professional and consulting services provided by its
            staff:  These services include wireless network consulting,
            interference surveys, network management and telephone
            consulting.  Revenue is recognized after the professional or
            consulting service has been provided. In order to maximize the Company’s cash
            flows, revenue from professional services is sometimes billed in advance
            of
            project completion. In such cases, these invoices are recorded as deferred
            revenue.
 
 *Business
            Combinations*
 In
            accordance with SFAS No. 141,  “Business Combinations,” the Company
            allocates the purchase price of acquired entities to the tangible and
            intangible
            assets acquired and liabilities assumed, based on their estimated fair
            values.  Such a valuation requires management to make significant
            estimates and assumptions, especially with respect to intangible
            assets.
 
 Management
            makes estimates of fair values based upon assumptions believed to be
            reasonable.
            These estimates are based on historical experience and information obtained
            from
            the management of the acquired companies. Critical estimates in valuing
            certain
            of the intangible assets include but are not limited to: future expected
            cash
            flows from revenues, customer relationships, key management and market
            position,
            assumptions about the period of time the acquired trade names will continue
            to
            be used in the Company's combined product portfolio, and discount rates
            used to
            establish fair value. These estimates are inherently uncertain and
            unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated
            events and circumstances may occur which may affect the accuracy or validity
            of
            such assumptions, estimates or actual results.
 
 *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 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.
   6
 Table
                of Contents
 **NEXTPHASE
              WIRELESS, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **September
              30, 2007**
 **(Unaudited)**
  **NOTE
              1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
              continued**
 
 *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 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.
  *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 were effective for the Company beginning April 1,
              2007.
  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. 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.
 *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 and six months ended September
                30, 2007 and 2006, the Company had 348,604 and -0-   potentially
                dilutive securities  which were excluded in the calculation of the
                weighted average number of shares outstanding because they would
                be
                anti-dilutive.
 **NOTE
              2 - ACQUISITIONS**
 
 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.
 7
 Table
                  of Contents
  **NEXTPHASE
              WIRELESS, INC. AND SUBSIDIARIES**
 **NOTES
              TO CONSOLIDATED FINANCIAL STATEMENTS**
 **September
              30, 2007**
 **(Unaudited)**
 
 
 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 and six months ended September 30, 2007 and
              2006 was $52,000, $69,000, $104,000 and $138,000 respectively.
 
 On
              July
              23, 2007, the Company, through its wholly-owned subsidiary SpeedFactory,
              acquired all of the assets of INS excluding cash, pursuant to an asset
              purchase
              agreement between SpeedFactory and INS. The assets acquired by SpeedFactory
              comprise INS Internet service and connectivity business operated by
              INS.
 
 The
                Company paid $342,612 in cash for the assets. And the closing was
                effective July
                23, 2007 SpeedFactory did not assume any pre-closing liabilities
                (except
                deferred revenue) from INS.The
                acquisition of INS was accounted for using the purchase method in
                accordance
                with SFAS No. 141. The results of operations for INS 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. The fair value of the assets
              acquired
              was based on management's best estimates. The Company has made an allocation
              of
              the purchase price to the INS assets at estimated fair values.  The
              purchase price was allocated to the fair value of assets acquired as
              follows:
 
 **Amount**
                      
                      **Estimated
                          Lives**Accounts
                          receivable
                      
                      $
                      202,482Computers
                          and related equipment
                      
                      
                      150,000
                      
                      3
                          yearsCustomer
                          lists
                      
                      
                      120,000
                      
                      5
                          yearsGoodwill
                      
                      
                      80,000
                      
                      indefiniteDeferred
                          revenue
                      
                      
                      (209,870
                      )$
                      342,612
   8
 Table
                  of Contents
  **NEXTPHASE
              WIRELESS, INC.**
 **NOTES
              TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September
              30, 2007**
 **(Unaudited)**
  The
              customer lists will be amortized based on estimated weighted cash flows
              over
              their lives. Amortization expense for the three months ended September
              30, 2007
              was $4,000.
  The
                following unaudited condensed combined pro forma results of operations
                reflect
                the pro forma combination of the NextPhase and INS businesses as
                if the
                combination had occurred at the beginning of the periods
                presented.  The unaudited pro forma condensed combined results
                ofoperations do not purport to represent what the companies’ combined results of
                operations would have been if such transaction had occurred at the
                beginning of
                the periods presented, and are not necessarily indicative of the
                Company's
                future results.
 **Three
                          Months Ended**
                      
                      
                      **Six
                          Months Ended****September
                          30,**
                      
                      
                      **September
                          30,****2007**
                      
                      
                      **2006**
                      
                      
                      **2007**
                      
                      
                      **2006**RevenuesINS
                      
                      $
                      -
                      
                      
                      $
                      68,929
                      
                      
                      $
                      93,785
                      
                      
                      $
                      258,842NextPhase
                      
                      
                      511,454
                      
                      
                      
                      636,426
                      
                      
                      
                      992,443
                      
                      
                      
                      992,443Total
                          Revenues
                      
                      $
                      511,454
                      
                      
                      $
                      705,355
                      
                      
                      $
                      1,086,228
                      
                      
                      $
                      1,251,285Net
                          LossINS
                      
                      $
                      -
                      
                      
                      $
                      (39,365
                      )
                      
                      $
                      (15,124
                      )
                      
                      $
                      (49,894.00
                      )NextPhase
                      
                      
                      (705,012
                      )
                      
                      
                      (411,968
                      )
                      
                      
                      (1,211,831
                      )
                      
                      
                      (910,813
                      )$
                      (705,012
                      )
                      
                      $
                      (451,333
                      )
                      
                      $
                      (1,226,955
                      )
                      
                      $
                      (960,707
                      )NextPhase,
                          as reportedLoss
                          per share
                      
                      $
                      (0.42
                      )
                      
                      $
                      (0.34
                      )
                      
                      $
                      (0.76
                      )
                      
                      $
                      (0.76
                      )Pro
                          formaLoss
                          per share
                      
                      $
                      (0.42
                      )
                      
                      $
                      (0.37
                      )
                      
                      $
                      (0.77
                      )
                      
                      $
                      (0.80
                      )




**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 September 30, 2006**
 
 The
        Company has a line of credit with American Express of $4,400.  The
        Company's former chairman  co-signed on this line of
        credit.  During the three months ended September 30, 2006 the
        Company had an outstanding balance on the credit card
        of $3,965.
 
 The
        Company has a line of credit with Bank of America of $25,000.  The
        Company's Former chairman  co-signed  on
        this  line
        of  credit.  During  the  three  months  ended September
        30, 2006 the company had and outstanding balance on the credit card
        of $19,830.
 
 The
        Company's former chairman has made payments in the Company's  behalf
        in the amount of $7,030.
 .
 **For
          the Six Months Ended September 30, 2007**
  In
          June
          2007, the Company and its former chairman entered into a settlement agreement
          whereby the former chairman forgave notes payable and accrued expenses
          in the
          aggregate amount of $96,291, which was recorded in legal settlements-net
          in the
          accompanying unaudited condensed consolidated statements of
          operations.
 9
 Table
            of Contents
  **NEXTPHASE
        WIRELESS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September
        30, 2007**
 **(Unaudited)**
  **NOTE
        4 – NOTES PAYABLE AND CAPITAL LEASE**




At
                  September 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
              
              
              (17,402
              )
              
              
              (17,402
              )
              
              
              -Convertible
                  notes, interest at 7%, due between December 2007 and August
                  2008
              
              
              935,000
              
              
              
              935,000
              
              
              
              -Automobile
                  loan, interest at 5.9%, $924 monthly, due May 2011
              
              
              36,532
              
              
              
              8,964
              
              
              
              27,5683,254,130
              
              
              
              3,226,562
              
              
              
              27,568Capital
                  lease, $360 per month.due April 2009
              
              
              6,705
              
              
              
              5,040
              
              
              
              1,665$
              3,260,835
              
              
              $
              3,231,602
              
              
              $
              29,233Advance
                  payable on demand, interest at 9%
              
              $
              375,000
              
              
              $
              375,000
              
              
              $
              -




The
        convertible note payable in the amount of $2,300,000 is dated March 31, 2006
        and
        is fully secured by all the assets of the Company. It was deemed effective
        at
        the date upon when the cash was received by Synkronus on behalf of the Company,
        or April 7, 2006. The note bears interest at the rate of 6% per annum, and
        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 $6.60 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, $8,075, $17,688 and
        $16,919  to interest expense for the three and  months ended
        September 30, 2007 and 2006, respectively.  On July 18, 2007, the
        Company issued 32,271 shares of its common stock for payment of accrued interest
        at June 30, 2007 in the amount of $78,908.
 
 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 $4.00 or
          above for a period of 10 consecutive days, the principal and accrued interest
          due under the note will convert into common stock of the Company at a rate
          of
          $3.00 per share. In accordance with the convertible notes payable agreements,
          if
          the notes were convertible as of September 30, 2007, the Company would
          have
          recorded a debt discount related to the beneficial conversion feature of
          approximately $130,000.
 
 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 expenses in the aggregate amount of $33,291,
          which was recorded as a gain on legal settlement.
  During
          the three months ended June 30, 2007, the Company issued 2 convertible
          notes
          totaling $150,000, with an interest rate of 7%, and all maturing in one
          year
          from the date of issuance with a stipulation when the Company’s common stock
          reaches $6.00 or above for a period of 10 consecutive days, the principal
          and
          accrued interest due under the note will convert at the Company’s
          option  into common stock of the Company at a rate of $3.00 per
          share.  If  the notes were convertible at September 30,
          2007, the Company would have recorded a debt discount of $150,0000.  If the
          stock does not reach $6.00 or above for ten consecutive days, the notes are
          not convertible.
 
 During
        the three months ended September 30, 2007, the Company issued 13 convertible
        notes totaling $395,000, with an interest rate of 7%, and all maturing in
        one
        year from the date of issuance with a stipulation when the Company’s common
        stock reaches $6.00 or above for a period of 10 consecutive days, the principal
        and accrued interest due under the note will convert into common stock of
        the
        Company at a rate of $3.00 per share.  If  the notes were
        convertible at September 30, 2007, the Company would have recorded a debt
        discount of $395,000.  If the stock does not reach $6.00 or above for ten
        consecutive days, the notes are not convertible.
 
 On
            July
            13, 2007, the Company issued a convertible promissory note for $75,000
            for
            payment of accounts payable of $142,229.  The note was  due
            in one year with interest at 7% and was convertible at $3.00 per share
            into the
            Company’s common stock at the holder’s option.  This note and accrued
            interest was converted into 25,233 shares of the Company’s common stock
            effective August 31, 2007.
   10
 Table
            of Contents
  **NOTE
        5 – EQUITY**
  *Common
        Stock*
 The
          Company completed a one for  twenty reverse stock split effective
          November 5, 2007.  All stock issuances below have been given the
          retroactive active effect of the reverse split.
 
 The
          Company had the following common stock transactions during six months ended
          September 30, 2006:
 
 The  Company  issued  17,546  shares  of
          common  stock  valued  at  $82,457  to consultants
          and employees for services.
 
 The  Company  issued  74,561 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  6,273  shares  of
          common  stock  valued  at  $37,639  in satisfaction
          of certain accounts payable.
 
 The  Company  issued  2,500  shares  of
          common  stock  valued  at  $25,000  for subscriptions
          payable.
 
 The
          Company issued 2,000 shares of common stock valued at
          $20,000  pursuant to the terms of a legal
          settlement.
 
 The
          Company cancelled 6,031 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 $6.
 
 The
          Company received for cancellation 2,500 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 during the three months
          ended June 30, 2006
  The
          Company issued 2,500 shares of common stock valued at $4,500 as a bonus
          for
          services performed, during the three months ended September 30,
          2006.
 
 The
          Company issued 12,000 shares of common stock valued at $20,400 pursuant
          to the
          terms of a consulting agreement, during the three months ended September
          30,
          2006.
 
 The  Company   charged  to   operations   the  amount  of  $31,529  of  deferred
          compensation, during the three months ended September 30,
          2006.
 
 11
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**NEXTPHASE
        WIRELESS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September
        30, 2007**
 **(Unaudited)**
  
 The
          Company  purchased  shares of
          the  Company's  common stock valued at $9,979 during the
          three months ended September 30, 2006.
 
 The
          Company had the following common stock transactions during six months ended
          September 30, 2007:
 
 In
          May
          2007, the Company issued 16,500 shares for payment of a consulting
          agreement in the amount of $29,700 which was recorded as an accrued liability
          at
          March 31, 2007; 28,000 shares for a settlement of a lawsuit in the amount
          of
          $78,400 and recorded as an accrued liability at March 31, 2007 and 50,000
          shares
          valued at $130,000 for consulting services.
 
 On
          July
          1, 2007, the Company entered into a one year agreement  for market
          relations support. In connection with the agreement the Company granted
          options
          to purchase 10,000 shares of common stock of the Company at prices ranging
          from
          $4.00 to $7.00 per share, the value of which was $32,000, of which $22,667
          was
          charged to stock-based compensation in the three months ended September
          30,
          2007.
 
 On
          July
          13, 2007, the Company issued a convertible promissory note for $85,920
          for
          accrued liabilities of the same amount.  The note was due in one year
          with interest at 7% and was convertible at $3.00 per share into the Company’s
          common stock at the holder’s option.  This note and accrued interest
          was converted into 28,868 shares of the Company’s common stock on August 22,
          2007.
 
 On
          July
          13, 2007, the Company issued a convertible promissory note for $75,000
          for
          payment of accounts payable of $142,229.  The note was  due
          in one year with interest at 7% and was convertible at $3.00 per share
          into the
          Company’s common stock at the holder’s option.  This note and accrued
          interest was converted into 25,233 shares of the Company’s common stock
          effective August 31, 2007.
 
 On
          July
          18, 2007, the Company issued 32,271 shares of its common stock for payment
          of
          accrued interest at June 30, 2007 in the amount of $78,908.
 
 On
          August
          23, 2007, the Company entered into a consulting agreement for business
          advisory
          services for a one year period for the issuance of 27,500 shares of common
          stock
          valued at $121,000, of which $51,089 was charged to stock-based compensation
          in
          the three months ended September 30, 2007.
 
 On
          July
          23, 2007, the Company entered into a consulting agreement  for
          business advisory services for a one year period for the issuance of 50,000
          shares of common stock valued at $170,000 of which $32,111 was charged
          to stock-
          based compensation in the three months ended September 30, 2007.
 
 On
          September 06, 2007  the Company entered into a consulting agreement
          for investor relationship services whereby the Company agreed to issue
          5,250
          shares of common stock valued at $26,250 of which $4,200 was charged to
          stock
          based compensation.  The stock was issued on November 6,
          2007.  In addition, as part of the agreement, the Company agreed to
          issue a warrant to purchase 10,500 shares of common stock at $8.00 per
          share,
          which was valued at $52,485 and charged to stock-based compensation in
          the three
          months ended September 30, 2007.
  
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  **NEXTPHASE
        WIRELESS, INC.**
 **NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **September
        30, 2007**
 **(Unaudited)**
   **NOTE
          6 – COMMITMENTS AND CONTINGENCIES**
 
 Indemnities
          and Guarantees
 
 The
          Company has made certain indemnities and guarantees, under which it may
          be
          required to make payments to a guaranteed or indemnified party, in relation
          to
          certain actions or transactions. The Company indemnifies its directors,
          officers, employees and agents, as permitted under the laws of the State
          of
          Nevada. The duration of the guarantees and indemnities varies, and is generally
          tied to the life of the agreement. These guarantees and indemnities do
          not
          provide for any limitation of the maximum potential future payments the
          Company
          could be obligated to make. Historically, the Company has not been obligated
          nor
          incurred any payments for these obligations and, therefore, no liabilities
          have
          been recorded for these indemnities and guarantees in the accompanying
          balance
          sheet.
 
 Litigation
 
 The
          Company is, from time to time, involved in various legal and other proceedings
          which arise in the ordinary course of operating its business. In the opinion
          of
          management, the amount of ultimate liability, if any, with respect to these
          actions will not materially affect the financial position or results of
          operations of the Company.
 
 During
          the year ended March 31, 2007 the Company entered into a settlement agreement
          in
          which the Company was to pay $45,000.  During the six months ended
          September 30, 2007, the Company recorded an additional $22,222 related
          to the
          settlement agreement.
 **NOTE
        7 – SUBSEQUENTEVENTS**
 
 In
          October and November 2007, the Company issued convertible notes totaling
          $120,000 with interest at 7%, and  due in one year from the date of
          issuance and notes for $100,000 and $30,000due in ninety and one hundred
          and
          eighty days from date of issuance, respectively.
 
 On
          October 23, 2007, the Company entered into a consulting agreement for financial
          and business planning for $40,000 which will be paid in the Company’s common
          stock on November 20, 2007.
 
 On
          November 5, 2007, the Company effected a one for  twenty reverse stock
          split. As a result of the reverse stock split, each 20 shares of issued and
          outstanding common stock as that days close of trading was automatically
          converted into one share of split-adjusted common stock.  No
          fractional shares of common stock were issued in connection with the reverse
          split.
 
 On
          November 6, 2007 the Company executed employment agreements with Messrs.
          Ford,
          Hemingway and Noyes.  In connection with the agreements, the Company
          granted 600,000, 600,000 and 250,000 shares to Messrs. Ford, Hemingway
          and Noyes
          respectively.  These issuances were valued at $4,550,000 and the
          shares are subject to lock-up provisions.  Also, in connection with
          the agreements, The Company granted options to purchase 600,000, 600,000
          and
          250,000 shares of the Company’s common stock at $3.25 per share to Messrs. Ford,
          Hemingway and Noyes respectively. The options are fully vested on March
          31, 2008
          and are exercisable for a five-year period. These options were valued
          at $4,267,190
 
 On
          November 6, 2007, we issued 25,000 shares to Michael Jones, Director, valued
          at
          $81,250.
 
 On
          November 6, 2007 we issued 100,000 shares in total  to five employees
          and one consultant. These shares were valued at $325,000.
 
 On
          November 6, 2007, the Company entered into a consulting agreement for business
          advisory services for a one year period for the issuance of 350,000 shares
          of
          common stock valued at $1,787,500.
 
 On
          November 6, 2007, The Company issued 5,250 shares of common stock for an
          accrued
          liability under a consulting contract in the amount of $26,250.
 
 On
          November 9, 2007, the Company entered into a consulting agreement for marketing
          services for $12,000 which will be paid in the Company’s common stock on
          November 20, 2007.
  **ITEM
          2, MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
          OPERATIONS**
 
 **Forward
        Looking Statements**
 
 Certain
          information contained in this report may include "forward-looking statements"
          within the meaning of the Private Securities Litigation Reform Act of 1995,
          and
          is subject to the safe harbor created by that act. The safe harbor created
          by
          the Securities Litigation Reform Act will not apply to certain "forward
          looking
          statements" because we issued "penny stock" (as defined in Section 3(a)
          (51) of
          the Securities Exchange Act of 1934 and Rule 3a51-1 under the Exchange
          Act)
          during the three year period preceding the date(s) on which those forward
          looking statements were first made, except to the extent otherwise specifically
          provided by rule, regulation or order of the Securities and Exchange
          Commission(“SEC”). We caution readers that certain important factors may affect
          our actual results and could cause such results to differ materially from
          any
          forward-looking statements which may be deemed to have been made in this
          Report
          or which are otherwise made by or on behalf of us. For this purpose, any
          statements contained in this report that are not statements of historical
          fact
          may be deemed to be forward-looking statements. Without limiting the generality
          of the foregoing, words such as "may", "will", "expect", "believe", "explore",
          "consider", "anticipate", "intend", "could", "estimate", "plan", "propose",
          "seem", "hope" or "continue" or the negative variations of those words
          or
          comparable terminology are intended to identify forward-looking statements.
          Factors that may affect our results include, but are not limited to, the
          risks
          and uncertainties associated with:
  13
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  ·        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.
   14
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  **Financial
          Statement Overview**
 
 *Nature
          of Operations*
 NextPhase
            Wireless, Inc. (“NextPhase” or the “Company”) was incorporated on August 28,
            1995 in Nevada under the name of Professional Mining Consultants,
            Inc.
 
 On
            August
            3, 2004, NextPhase  consummated  a share  exchange
            in which it issued
            12,943,000  shares  of  common  stock,  or  approximately  76%
            of its outstanding common stock, to the shareholders of NextPhase Technologies,
            Inc. ("NTI")  in  exchange  for all of the shares
            of NTI.  As a result, NTI became a wholly owned subsidiary of
            NextPhase.  NTI was formed on September 14, 2000. For accounting
            purposes, this transaction is considered a "reverse merger,” and the historical
            financial statements of NextPhase reflect the operations of
            NTI.  Effective on the merger date, all financial activity became
            generated by NextPhase and NTI became an inactive subsidiary.  On
            January 21, 2005 the Company changed its name to NextPhase Wireless,
            Inc.
 
 Effective
            April 5, 2006, through its wholly-owned subsidiary SpeedFactory, Inc.
            (“SpeedFactory”), NextPhase acquired the Internet service and connectivity
            business assets previously operated by Synkronus, Inc. (“Synkronus”) under the
            name "SpeedFactory." Effective July 23, 2007 SpeedFactory acquired the
            Internet
            service and connectivity business assets previously operated by Interactive
            Network Systems, Inc.  (“INS”) 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.
 
 Effective
              October 1, 2006, all revenue generating activity was combined with
              SpeedFactory.  INS is a division of SpeedFactory.
 
 The
              Company conducts its operations from its office located in Anaheim,
              California,
              the SpeedFactory location in Marietta, Georgia and the INS operation
              in
              Blackwood, New Jersey.
 
 The
              condensed consolidated financial statements presented include only
              the accounts
              of NTI, from its inception (September 14, 2000) through September 30,
              2007, of
              NextPhase from August 3, 2004 through September  30, 2007, of
              SpeedFactory from April 6, 2006 (date of acquisition) through June
              30, 2007 and
              INS, a division of SpeedFactory, from July 23, 2007  date of
              acquisition) through September 30, 2007
 
 **RESULTS
              OF OPERATIONS**
 
 Three
              Months ended September 30, 2007 and 2006:
 
 For
              the
              three months ended September 30, 2007, revenue was $511,454 as compared
              with
              $636,426 with the same period in the previous year.  The reduction was
              due to decreased emphasis on consulting activities resulting in lower
              sales of
              products and consulting services of $60,544 in the three months ended
              September
              30, 2007 as compared with $174,006 in the same period for the previous
              year.  Internet fees were $450,910 for the three months ended
              September 30, 2007 as compared with $462,420 for the same period in
              the previous
              year. This decrease was due  to a reduction of Internet fees at
              SpeedFactory and NextPhase of $95,520 and was partially offset by Internet
              fees
              for INS in the amount of $84,011.
 
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  Cost
              of
              revenue was $245,923 or 48.1% of revenue for the three months ended
              September
              30, 2007, compared to $300,739 or 47.3% during the three months ended
              September 30, 2006.  As a result, gross profit decreased to $265,531
              or 20.9% for the three months ended September 30, 2007 as compared
              with $335,687
              for the same period in the previous year.
 
 Selling,
              general, and administrative expenses were $712,736 for the three months
              ended September 30, 2007 as compared with $558,866 for the three months
              ended
              September 30, 2006, an increase of $153,870 or approximately 27.5%. The
              increase was due more business and accounting  advisory services
              resulting in increased professional fees of $99,553 in the three months
              ended
              September 30, 2007 and the expense for INS of $41,334.  As a result,
              selling, general and administrative expenses represented 139.4% of
              revenue for
              the three months ended September 30, 2007 versus 87.8% 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 $162,552 in the three months ended September
              30, 2007
              as compared with $51,329 in the same period in the previous
              year.
 
 Depreciation
              expense for the three months ended September 30, 2007 and 2006 was
              $42,631 and
              $32,554, respectively. Amortization of the intangible assets acquired
              in the
              SpeedFactory and INS acquisitions was $56,000 and $69,000 for the three
              months
              ended September 30, 2007 and 2006.
  The
              operating loss for the Company for the three months ended September
              30, 2007 was
              $703,388 versus $342,062 for the same period in the prior year.  This was
              an increase of $ 366,326 of which $205,152 of the increase was for
              non-cash
              items.  Gain on settlement of liabilities was $70,282 during the three
              months ended September 30, 2007.
 
 Interest expense
              ,net of interest  income, for the three months ended September 30,
              2007 was $66,906,  as  compared with $69,906 for the same
              period in the previous year.
 
 Net
              loss for the three months ended September 30, 2007 was $705,012 or
              $0.42 per
              shares as compared with a net loss of $411,968 or $0.34 per share for
              the three
              months ended September 30, 2006. Monthly operating cash losses are
              now
              approximately $150,000 per month.  Management expects this to
              continue to decline as the Company continues its acquisition strategy,
              with two
              closingsa expected in December 2007.
 
 Six
              Months ended September 30, 2007 and 2006:
 
 For
              the
              six months ended September 30, 2007, revenue was $992,443 as compared
              with
              $1,157,704  for the same period in the previous year.  The
              reduction was due to decreased emphasis on consulting activities resulting
              in  lower sales of products and consulting services which were $60,544
              in the six months ended September 30, 2007 as compared with $268,356
              in the same
              period for the previous year.  Internet fees were $931,900 for the six
              months ended September 30, 2007 as compared with $889,348 for the same
              period in
              the previous year. This increase was due to the INS revenues of $84,011
              and
              offset by a reduction of Internet fees at SpeedFactory and NextPhase
              of
              $41,459.
 
 Cost
              of
              revenue was $482,842 or 48.6% (or a 4.2% reduction due to lower margin
              product
              sales0 of revenue for the six months ended September 30, 2007, compared
              to
              $611,015 or 52.8% during the six months ended September 30,
              2006.  As a result, gross profit decreased to $509,601 or 16.6% for
              the six months ended September 30, 2007 as compared with $546,689 for
              the same
              period in the previous year.
 
 Selling,
              general, and administrative expenses were $1,263,770 for the six months
              ended September 30, 2007 as compared with $1,049,062 for the six months
              ended
              September 30, 2006, an increase of $214,708 or approximately 20.5%. The
              increase was due to increased staffing for growth, $188,331 and increased
              business advisory and accounting  professional fees of $81,978 in the
              six  months ended September 30, 2007 and the expense for
              INS  of  $41,334.    As a result, selling,
              general and administrative expenses represented 127.3% of revenue for
              the six
              months ended September 30, 2007 versus 90.7% 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 $292,552 in the six months ended September
              30, 2007 as
              compared with $151,528 in the same period in the previous
              year.
 
 Depreciation
              expense for the six months ended September 30, 2007 and 2006 was $76,649
              and
              $63,323, respectively. Amortization of the intangible assets acquired
              in the
              SpeedFactory and INS acquisitions was $108,333 and $79,000 for the
              six months
              ended September 30, 2007 and 2006.
  The
              operating loss for the Company for the six months ended September 30,
              2007 was
              $1,2231.531 versus $787,224 for the same period in the prior year.
 This
              was an increase of $444,299 of which $192,503 of the increase was for
              non-cash
              items.  The net gain for settlement of liabilities was $144,351 during
              the six months ended September 30, 2007.
 Interest
              expense, net of interest  income, for the six months ended September
              30, 2007 was  $124,659 as compared with $127,840 for the same period
              in the previous year.
 
 Net
              loss
              for the six months ended September 30, 2007 was $1,211,831 or $0.76
              per shares
              as compared with a net loss of $910,813 or $0.76 per share for the
              six months
              ended September 30, 2006. Monthly operating cash losses are now
              approximately $150,000 per month.  Management expects this to
              continue to decline as the Company continues its acquisition strategy,
              with one
              closing in July and two additional companies in the 4th
              calendar quarter
              of 2007.
 
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  **Liquidity
          and Capital Resources**
 
 As
              of
              September 30, 2007, the Company had a cash balance of $8,177 and the
              Company's
              accumulated deficit was $9,843,541. The Company had negative working
              capital of
              $4,695,147.  Total liabilities were $5,060,729 which included accounts
              payable of $1,008,429, accrued expenses of $150,665, deferred revenue
              of
              $195,077 and notes and advances payable of $3,635,835.  The Company’s
              cash used in operations  for the six months ended September 30, 2007
              was $508,673 and the Company currently is using $150,000 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 INS acquisition in July 2007 and  two
              additional companies are scheduled in December 2007. Under its plans,
              management
              expects to generate positive operating cash flow during the 3rd quarter
              of
              calendar 2008. 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 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
              losses of $9,843,541 since inception.
 
 The
              Company has a working capital deficit of $4,695,147 at September 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 unaudited condensed
              consolidated financial statements do not include any adjustments relating
              to the
              recoverability and classification of recorded asset amounts, or amounts
              and
              classification of liabilities that might result from this
              uncertainty.
 .
 In
              the
              six months ended September 30, 2007, the Company executed short-term
              notes for
              $545,000. In October and November 2007, the Company issued convertible
              notes
              totaling $120,000 with interest at 7%, and all due in one year from
              the date of
              issuance and notes for $100,000 and $30,000  due in ninety days and
              one hundred and eighty days from date of issuance, respectively. In
              addition, the Company received a $275,000 advance from its secured
              note holder
              in July 2007 to assist in the acquisition of INS which was finalized
              on July 23,
              2007.
 
 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 4th
              quarter of 2007.
              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 unaudited 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.
  The
              accompanying unaudited  condensed consolidated 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
              September 30, 2007 of $4,695,147. 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 $345,000 being issued in
              July and
              August 2007 and has an aggregate total of $935,000 which have a mandatory
              conversion at a rate of $3.00 per share when the Company’s stock price
              exceeds $4.00to $6.00 per share or for a period of 10 consecutive days, at
              which time the principal and accrued interest due under the note will
              convert at
              the Company’s  into common stock of the Company at for a ten-day
              period.  These notes would convert to 3,116,667 shares of stock, if
              they were converted. 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 $6.60
              per
              share. The minimum price at which the note and accrued interest may
              convert is
              $3.00 per share.
 17
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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
          unaudited condensed consolidated financial statements, areas that are
          particularly significant include:
  *Revenue
          Recognition and Deferred Revenue*
 Revenues
          are recognized in the period that services are provided.  For revenue
          from product sales, the Company recognizes revenue in accordance with Staff
          Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” ("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 Issue (“EITF”)  No.00-21,
“Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for
          arrangements that may involve the delivery or performance of multiple products,
          services and/or rights to use assets. The effect of implementing EITF No.
          00-21
          on the Company's consolidated financial position and results of operations
          was
          not significant.
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 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
          September 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.
 
 *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.
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  *Business
          Combinations*
 In
          accordance with SFAS No. 141,  “Business Combinations,” the Company
          allocates the purchase price of acquired entities to the tangible and intangible
          assets acquired and, liabilities assumed, based on their estimated fair
          values.  Such a valuation requires management to make significant
          estimates and assumptions, especially with respect to intangible
          assets.
 
 Management
          makes estimates of fair values based upon assumptions believed to be reasonable.
          These estimates are based on historical experience and information obtained
          from
          the management of the acquired companies. Critical estimates in valuing
          certain
          of the intangible assets include but are not limited to: future expected
          cash
          flows from revenues, customer relationships, key management and market
          position,
          assumptions about the period of time the acquired trade names will continue
          to
          be used in the Company's combined product portfolio, and discount rates
          used to
          establish fair value. These estimates are inherently uncertain and
          unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated
          events and circumstances may occur which may affect the accuracy or
          validity of such assumptions, estimates or actual results.
  *Beneficial
          Conversion Feature*
 The
          convertible feature of one of the Company’s convertible notes provided for a
          rate of conversion that was below market value (see Note 4). Such feature
          is normally characterized as a “beneficial conversion feature” (“BCF”). Pursuant
          to Emerging Issues Task Force (“EITF”) Issue No. 98-5, “Accounting for
          Convertible Securities with Beneficial Conversion Features or Contingently
          Adjustable Conversion Ratio” and EITF No. 00-27, “Application of EITF Issue
          No. 98-5 to Certain Convertible Instruments”, the estimated relative fair
          value of the BCF was recorded as a discount from the face amount of the
          convertible note. The Company amortized the discount using the effective
          interest method through the conversion of such instrument.
 
 *Income
          Taxes*
 The
          Company utilizes the liability method of accounting for income taxes as
          set
          forth in SFAS No. 109, “Accounting for Income Taxes” (“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 and six months ended September
          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.
  *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).
  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.
 
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  SFAS
          No.
          157 is effective for financial statements issued for fiscal years beginning
          after November 15, 2007, and interim periods within those fiscal years,
          although
          earlier application is encouraged. Additionally, prospective application
          of the
          provisions of SFAS No. 157 is required as of the beginning of the fiscal
          year in
          which it is initially applied, except when certain circumstances require
          retrospective application. The Company is currently evaluating the effect
          of
          adopting SFAS No. 157 on its consolidated financial statements.
 
 SFAS
          No. 159 permits all entities to choose to measure eligible items at fair
          value
          at specified election dates. A business entity will report unrealized gains
          and
          losses on items for which the fair value option has been elected in earnings
          (or
          another performance indicator if the business entity does not report earnings)
          at each subsequent reporting date. The fair value option: ( *a* ) may be
          applied instrument by instrument, with a few exceptions, such as investments
          otherwise accounted for by the equity method; ( *b* ) is irrevocable
          (unless a new election date occurs); and ( *c* ) is applied only to
          entire instruments and not to portions of instruments. SFAS No. 159 is
          effective
          as of the beginning of an entity’s first fiscal year that begins after November
          15, 2007.  Early adoption is permitted as of the beginning of the previous
          fiscal year provided that the entity makes that choice in the first 120
          days of
          that fiscal year and also elects to apply the provisions of 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.
  **ITEM
          3. CONTROLSAND 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**
  **ITEM1**:
          LEGAL PROCEEDINGS.
 
 None
 
 **ITEM2**:
          UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
          PROCEEDS.
 
 On
          July
          18, 2007 we issued 36,271 shares of our common stock valued at $78,908
          to a note
          holder for payment of interest. The issuance was exempt from registration
          under
          Section 4(2) of the Securities Act of 1933.
 
 On
          July
          18, 2007 we issued 25,234 shares of our common stock valued at $75,700
          to a note
          holder for payment of a note and accrued interest. The issuance was exempt
          from
          registration under Section 4(2) of the Securities Act of 1933.
 
 None
          of
          the sales of securities described above have been registered with the Securities
          and Exchange Commission because they are believed to be exempt from registration
          under the Securities Act of 1933 pursuant to Regulation D, Rule 506, promulgated
          thereunder or generally section 4(2) of the Act. Each purchaser represented
          his,
          her or its intention to acquire the securities for investment only and
          not with
          a view toward distribution. Each investor was given adequate information
          about
          us to make an informed investment decision. We did not engage in any general
          solicitation or advertising. The stock certificates issued in each case
          contain
          an appropriate legend identifying each as restricted stock.
 
 
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 **ITEM3**:
          DEFAULTS UPON SENIOR SECURITIES.
 
 None.
 
 **ITEM4**.
          SUBMISSION OF MATTERS TO A VOTE OF SECURITY
          HOLDERS
 
 None.
 
 **ITEM5**:
          OTHER INFORMATION.
 
 None.
 
 **ITEM6**. EXHIBITS
 
 **Exhibit
                    Number**
                
                **Description
                    of Exhibit**10.1
                
                Employment
                    Contract Robert Ford10.2
                
                Employment
                    Thomas Hemingway10.3
                
                Employment
                    Contract David Noyes31.1
                
                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.**November
                    19, 2007
                By**:**
                /s/ Robert
                    FordRobert
                    FordPresident
                    and Chief Executive Officer
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