**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-KSB**


**[Mark
      One]**




x  
ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
      the
      fiscal year ended June 30, 2006




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 no.: 0-22848




**U.S.
      WIRELESS DATA, INC.**


(Name
      of
      small business issuer in its charter)




Delaware
            
            84
                -1178691(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer Identification No.)




2121
        Avenue of the Stars, Suite 1650, Los Angeles, CA 90067
 (Address
        of principal executive offices) (Zip Code)
  Registrant’s
        telephone number, including area code: (310)
        601-2500
  Securities
        registered pursuant to Section 12(b) of the Act: None
 Securities
        registered under Section 12(g) of the Exchange Act
  $.01
        Par Value Common Stock
 (Title
        of
        Class)




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




Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B contained in this form, and no disclosure will be contained,
      to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. x




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




The
      issuer’s revenues for the fiscal year ended June 30, 2006 were $0. The aggregate
      market value of the issuer’s voting common equity held as of October 10, 2006 by
      non-affiliates of the Issuer was approximately $18,118,920 based on the market
      mean price of $4.00 as of October 10, 2006.




As
      of
      October 10, 2006, the issuer had 9,499,730 shares of its $0.01 par value common
      stock outstanding.




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







**U.S.
      Wireless Data, Inc.**




**ANNUAL
      REPORT ON FORM 10-KSB**


**FOR
      THE YEAR ENDED JUNE 30, 2006**




**INDEX**





PagePART
                IItem 1.
            
            DESCRIPTION
                OF BUSINESS
            
            3Item 2.
            
            DESCRIPTION
                OF PROPERTY
            
            8Item 3.
            
            LEGAL
                PROCEEDINGS
            
            8Item 4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            8PART
                IIItem 5.
            
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            
            9Item 6.
            
            MANAGEMENT’S
                PLAN OF OPERATION
            
            10Item 7.
            
            FINANCIAL
                STATEMENTS
            
            17Item 8.
            
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ONACCOUNTING
                AND FINANCIAL DISCLOSURE
            
            39Item 8A.
            
            CONTROLS
                AND PROCEDURES
            
            39Item 8B.
            
            OTHER
                INFORMATION
            
            39PART
                IIIItem 9.
            
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS AND CONTROLPERSONS,
                COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
            
            39Item 10.
            
            EXECUTIVE
                COMPENSATION
            
            42Item 11.
            
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANGEMENT
                AND RELATED STOCKHOLDER MATTERS
            
            44Item 12.
            
            CERTAIN
                RELATIONS AND RELATED TRANSACTIONS
            
            46Item 13.
            
            EXHIBITS
            
            46Item 14.
            
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            48




2





**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**





U.S.
      Wireless Data, Inc. (“USWD”, the “Company”, “we”, “us”, “our” or similar terms)
      was incorporated in the state of Colorado on July 30, 1991 and was
      reincorporated in the state of Delaware on October 6, 2000. We are currently
      a
“shell” company with no operations and controlled by Trinad Capital LP
      (“Trinad”), our majority stockholder.





The
      Company may be referred to as the “Predecessor Company” for all periods through
      the Reorganization (as defined below) and as the “Successor Company” for all
      periods after the recognition of the Reorganization. The Reorganization was
      effectuated as of the close of business on March 18, 2005; however, there was
      virtually no activity between March 19, 2005 through March 31, 2005. Therefore,
      for accounting purposes, we used March 31, 2005 as the date the Reorganization
      was effectuated. Accordingly, the financial statements we have presented for
      the
      fiscal year ended June 30, 2005 are presented in 2 periods (the Predecessor
      Company for the nine month period July 1, 2004 through March 31, 2005, and
      the
      Successor Company for the three month period April 1, 2005 through June 30,
      2005).





As
      a
      result of (i) the sale of virtually all of our operating assets in the Auction
      Sales (as defined below), and (ii) the Reorganization, very little of what
      is
      included in this Report on Form 10-KSB is relevant to any assessment of the
      Company on an ongoing basis. Accordingly, readers are advised not to rely on
      any
      historical information in considering an investment in or disposition of our
      stock.





**Management’s
      Plan of Operation**





The
      Company has raised additional capital with a view to making us an attractive
      vehicle with which to acquire a business. On June 14, 2006, the Company entered
      into an Agreement and Plan of Merger (“Merger Agreement”) StarVox
      Communications, Inc. Upon closing, the loans receivable will be converted into
      capital of the newly merged entity, and the shares of StarVox common and
      preferred stock outstanding immediately prior to the effective time of the
      merger shall be converted on a pro rata basis automatically into the right
      to
      receive 451.004079 shares of fully paid and non-assessable shares of the
      Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of Preferred Stock and Common Stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of Company’s Preferred Stock, which such number of
      shares of Company’s Preferred Stock to be based on the exchange ratio used in
      the merger, to existing warrant holders of StarVox such that the holder of
      such
      warrants upon exercise will receive that number of shares of the Company’s
      Common Stock as such holder would have been entitled to receive pursuant to
      the
      merger had such holder exercised such warrants immediately prior to the
      effective time of the merger, with the same expiration date as currently exists
      and at a per share exercise price proportionately adjusted for the exchange
      ratio.





3




There
      can
      be no assurance that the merger will be consummated or, if consummated, that
      it
      will be consummated on the terms set forth in the Merger Agreement. We are
      therefore subject to a number of risks, including: this or any other acquisition
      consummated by us may turn out to be unsuccessful;, and whether financing that
      could have a dilutive effect on our present stockholders will be required in
      connection therewith; the historical operations of a specific business
      opportunity may not necessarily be indicative of the potential for the future;
      we may acquire a company in the early stage of development causing us to incur
      further risks; we may be dependent upon the management of an acquired business
      which has not proven its abilities or effectiveness; we will be controlled
      by a
      small number of stockholders and such control could prevent the taking of
      certain actions that may be beneficial to other stockholders; our Common Stock
      will likely be thinly traded, and the public market may provide little or no
      liquidity for holders of our Common Stock.





On
      March
      10, 2006, the Company and Trinad Management, LLC ("Trinad Management") entered
      into a Management Agreement, pursuant to which Trinad Management agrees to
      provide the Company with certain management services (the "Management
      Services"), including without limitation, the sourcing, structuring and
      negotiation of a potential business combination involving the Company became
      effective. As compensation for such Management Services the Company shall pay
      Trinad Management a monthly management fee of $30,000 for a period of five
      years. The Company may terminate the agreement by paying a termination fee
      of
      $1,000,000. Trinad and its affiliates collectively own approximately 40% of
      the Company's issued and outstanding Common Stock. The Company paid $90,000
      in
      fees to Trinad Management during the year ended June 30, 2006.





**Reorganization
      and the Liquidation Trust**





On
      March
      18, 2005, in accordance with the Plan (as defined below under the section titled
      Chapter 11 Proceedings), Trinad, our Plan sponsor, became the holder of 93%
      of
      our newly issued Common Stock as further discussed in the paragraphs below
      (the
“Reorganization”).





Additionally,
      on March 18, 2005, Robert Ellin became a director and our Chief Executive
      Officer, Jay Wolf became a director and our Chief Operating Officer and Chief
      Financial Officer and Barry Regenstein became a director. Robert Ellin and
      Jay
      Wolf are the Managing Member and Managing Director of Trinad, respectively,
      and
      Barry Regenstein is an outside consultant to Trinad.





In
      accordance with the Plan, Trinad contributed $400,000 in cash to the Predecessor
      Company and as of the close of business on March 18, 2005 (immediately before
      the Reorganization), all of the assets and liabilities of the Predecessor
      Company, with the exception of the public entity shell company, along with
      all
      contingent assets and liabilities, were transferred to the USWD Liquidation
      Trust (the “Liquidation Trust”). In addition, Trinad contributed $100,000 in
      cash to the Successor Company in exchange for 93% of the new Common Stock issued
      under the Plan, with the remaining 7% of the new Common Stock issued to the
      holders of record of our Series C Preferred Stock and our Common Stock as of
      February 7, 2005, with 3.5% going to each class. Simultaneously, all of our
      originally outstanding Series C Preferred Stock and our Common Stock were
      cancelled. In accordance with the Plan, the cash in the Liquidation Trust was
      used to pay administrative costs and creditors of the Chapter 11 Proceedings.
      There was no remaining cash in the Liquidation Trust, available to settle any
      portion of the aggregate $32,302,000 liquidation preference to which the holders
      of our Series C Preferred Stock as of February 7, 2005 are
      entitled.





4




**Chapter
      11 Proceedings**





On
      March
      26, 2004 (the “Petition Date”), we filed a voluntary petition for relief under
      Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the
      United States Bankruptcy Court for the Southern District of New York (the
“Court”), in re U.S. Wireless Data, Inc., Case Number 04-12075. Prior to the
      filing of the chapter 11 proceeding, we were principally engaged in providing
      wireless transaction delivery and gateway services to the payment processing
      industry. Since our inception, we had incurred significant losses and negative
      cash flow from operations.





We
      were
      operating as a debtor-in-possession (“DIP”) under the jurisdiction of the Court
      and in accordance with the applicable provisions of the Bankruptcy Code and
      orders of the Court (the “Chapter 11 Proceedings”) until the
      Reorganization.





On
      December 27, 2004, the Court confirmed our Amended Plan of Reorganization (the
      “Plan”). Additional details concerning the Plan are in the Amended Disclosure
      Statement filed with the Court in November 2004 in support of the Plan, the
      Amended Plan of Reorganization and Order Confirming Amended Plan of
      Reorganization, each of which is filed as an exhibit to Form 8-K filed with
      the
      SEC on January 18, 2005.





On
      January 19, 2005, we paid approximately $889,000 as an initial payment to
      creditors for prepetition liabilities representing approximately 50% of “Allowed
      Claims”.





The
      following assets and liabilities from our Balance Sheet as of the close of
      business on March 18, 2005 immediately before the Reorganization, along with
      all
      contingent assets and liabilities, were transferred to the Liquidation Trust
      (as
      provided for under the terms of the Plan) and the Company effectuated the
      completion of the Reorganization, thereby emerging from the Chapter 11
      Proceedings:





ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            100,000Cash
                and cash equivalents in escrow
            
            
            2,225,000Due
                from Plan Sponsor
            
            
            400,000Due
                from winning auction sale bidder
            
            
            64,000Prepaid
                and other current assets
            
            
            13,000$
            2,802,000LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            212,000Accrued
                liabilities
            
            
            73,000Total
                liabilities not subject to compromise
            
            
            285,000Prepetition
                liabilities subject to compromise
            
            
            1,572,000Total
                liabilities
            
            
            1,857,000





5




“Prepetition
      liabilities subject to compromise” were as follows:





Accounts
                payable
            
            $
            1,154,000Accrued
                liabilities
            
            
            206,000Obligation
                for rejected real property lease
            
            
            212,000$
            1,572,000





**Stock
      Sales and Liquidity**





On
      December 30, 2005, the Company sold 1,000,000 units, on January 18, 2006, the
      Company sold 950,000 units, on March 10, 2006, the Company sold 800,000 units
      and on March 31, 2006, the Company sold 2,750,000 units. Each unit sold
      consisted of one share of common stock and one warrant, and the sales price
      of
      each unit was $1.00 per unit. The Company’s stock prices on the dates of closing
      were $1.65, $1.50, $1.65 and $2.30, respectively. The Company realized net
      proceeds of $5,413,000 after the costs of the offering. The warrants have an
      exercise price of $2 per share and expire 1,000,000 in December 2007, 950,000
      in
      January 2008 and 3,550,000 in March 2008. The total fair value of the units
      totaled approximately $21,000,000 upon issuance.





As
      of
      June 30, 2006, the Company had approximately $1,321,000 of cash, which
      management believes is sufficient to satisfy our monetary needs for the next
      fiscal year.





We
      do not
      currently have an operating business and therefore have no ability to generate
      cash flow from operations in order to fund our ongoing financial needs past
      the
      next fiscal year.





**Loans
      Receivable and Merger Agreement**





On
      April
      20, 2006, the Company provided a bridge loan of $300,000 to StarVox
      Communications, Inc. (“StarVox”). The loan is due on demand 120 days after April
      20, 2006. The loan provides for an interest rate of 10% per annum and is secured
      by a lien on all of the assets of StarVox.





On
      June
      14, 2006, the Company provided a senior secured loan in the amount of $3,200,000
      to StarVox. The loan is due on demand after September 30, 2006. The loan
      provides for an interest rate of 10% per annum and is secured by all the assets
      of StarVox.





On
      June
      14, 2006, the Company entered into an Agreement and Plan of Merger (“Merger
      Agreement”) StarVox Communications, Inc. Upon closing, the loans receivable will
      be converted into capital of the newly merged entity, and the shares of StarVox
      common and preferred stock outstanding immediately prior to the effective time
      of the merger shall be converted on a pro rata basis automatically into the
      right to receive 451.004079 shares of fully paid and non-assessable shares
      of
      the Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of Preferred Stock and Common Stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of Company’s Preferred Stock, which such number of
      shares of Company’s Preferred Stock to be based on the exchange ratio used in
      the merger, to existing warrant holders of StarVox such that the holder of
      such
      warrants upon exercise will receive that number of shares of the Company’s
      Common Stock as such holder would have been entitled to receive pursuant to
      the
      merger had such holder exercised such warrants immediately prior to the
      effective time of the merger, with the same expiration date as currently exists
      and at a per share exercise price proportionately adjusted for the exchange
      ratio.





6




StarVox
      is a facilities-based next generation Infrastructure and Applications service
      provider, that offers wholesale and retail traditional voice services and
      enhanced Voice-Over-Internet Protocol (”VoIP”) services over its domestic VoIP
      network and its international wholesale network. Starvox’s domestic VoIP network
      provides over 300 Points of Presence (POPs) which allows access from about
      80%
      of business sites. StarVox also provides local services to about 65% of business
      sites. A full suite of traditional and enhanced products is available to
      wholesale and retail customers. The international wholesale network offers
      reliable cost effective worldwide connectivity to both established and emerging
      carriers. StarVox owns both its application technologies and domestic and
      international VoIP networks, which gives it a competitive advantage. StarVox
      works with a variety of channels (such as, ISPs, CLECs, Telecom Agents,
      Carriers, Affinity Groups, Property Management Groups, etc.) that are interested
      in migrating customers from traditional separate voice and data communications
      connections to a converged voice/data connection. StarVox offers a complete
      “turnkey” package of services to its channels with individual branding. StarVox
      services target small, medium and larger sized businesses (both single site
      and
      multi-site) that are interested in lowering their communications monthly costs
      by 20% to 40% by migrating to a converged service. In June 2006, StarVox
      acquired all of the outstanding stock of Capital Telecommunications Inc. (“CTI”)
      for $12,000,000 in cash and assumption of all outstanding liabilities. CTI
      is a
      registered competitive local exchange carrier with the Federal Communications
      Commission and is headquartered in York, Pennsylvania.





The
      closing of the transaction is subject to certain conditions, including execution
      of a definitive merger agreement and the completion of due diligence. There
      can
      be no assurance that the merger will be consummated or, if consummated, that
      it
      will be consummated on the terms set forth in the Merger Agreement.





**MANAGEMENT
      CHANGES**





On
      January 18, 2006, upon the appointment of Mr. David Chazen as President and
      a
      member of the board of directors (the Board of Directors”) of the Company (as
      discussed below), the Company agreed to compensate Mr. Chazen for his services
      as President at a rate of $10,000 per month. This compensation arrangement
      can
      be terminated at any time by either the Company or Mr. Chazen upon written
      notice to the other party. In addition, for agreeing to serve as a member of
      the
      Company’s Board of Directors, Mr. Chazen was granted a warrant to purchase
      150,000 shares of the Company’s Common Stock, having an exercise price of $1.00
      and an expiration date of January 18, 2008. Furthermore, on January 18, 2006,
      Mr. Barry Regenstein, a member of the Company’s Board of Directors, was granted,
      for his services as a member, a warrant to purchase 50,000 shares of the
      Company’s Common Stock, having an exercise price of $1.00 and an expiration date
      of January 18, 2008. The warrants granted to Messrs. Chazen and Regenstein
      contain standard piggyback registration rights, provided, however, that the
      shares of Common Stock issued upon exercise will be subject to restrictions
      on
      resale for a period of one year from the date of exercise.




7




On
      February 13, 2006, upon the appointment of Mr. David Goddard as a member of
      our
      Board of Directors, he was granted a warrant to purchase 50,000 shares of the
      Company’s Common Stock, having an exercise price of $1.00 and an expiration date
      of February 13, 2008. The warrant contains standard piggyback registration
      rights, provided, however, that the shares of Common Stock issued upon exercise
      will be subject to restrictions on resale for a period of one year from the
      date
      of exercise.





The
      Company has valued the warrants issued at approximately $381,000, using the
      Black-Scholes Model, which was charged to compensation expense in the third
      quarter.





**ITEM
      2. DESCRIPTION OF PROPERTY**




Until
      May
      28, 2004, the Predecessor Company occupied office space located at 750 Lexington
      Avenue, 20 th Floor,
      New York, NY 10022 and was party to a lease for such space with International
      Associates, L.P. As a result of the Reorganization, the Predecessor Company,
      and
      the Liquidation Trust had vacated such space and occupies a much smaller space
      at 420 Lexington Avenue, Suite 2450, New York, NY 10170 for approximately 216
      sq. feet plus use of common area at a cost of $2,295.00 per month, on a month
      to
      month basis until all winding down operations conclude. The Liquidation Trust
      provides certain transition services to the Successor Company from this office
      such as the sorting of applicable mail between the Liquidation Trust and the
      Successor Company. In addition, Trinad, with an address at 2121 Avenue of the
      Stars, Suite 1650, Los Angeles, CA 90067, provides certain office space and
      other services to Successor Company without remuneration.




**ITEM
      3. LEGAL PROCEEDINGS**





None.





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




Not
      applicable.


8


**PART
      II**





**ITEM
      5. MARKET FOR COMMON EQUITY, AND RELATED STOCKHOLDER MATTERS**





**Market
      Information**





As
      of the
      Reorganization, holders of record of the Predecessor Company’s common and
      preferred stock as of February 7, 2005 received an aggregate of 7% of our Common
      Stock, with 3.5% going to each class. The remaining 93% was issued to
      Trinad.





Effective
      September 15, 2006, our Common Stock, par value $.01 per share, is listed on
      the
      Over-the-Counter Bulletin Board under the symbol, “USWI.OB” and trades
      sporadically, if at all.  Previously,
      our Common Stock was on the Over-the-Counter Bulletin Board under the symbol,
      “USWE.OB” and then traded in the “pink sheets” under the symbol
“USWE.PK”.





Any
      investor who purchases our Common Stock is not likely to find any liquid trading
      market for our Common Stock, and there can be no assurance that any liquid
      trading market will develop.





The
      following table reflects the high and low closing quotations of our Common
      Stock
      for the two years ended June 30, 2006:





Fiscal
                2006
            
            High
            
            LowFirst
                quarter
            
            $
            0.12
            
            $
            0.01Second
                quarter
            
            $
            1.65
            
            $
            0.95Third
                quarter
            
            $
            2.30
            
            $
            1.30Fourth
                quarter
            
            $
            4.00
            
            $
            2.25





Fiscal
                2005
            
            High
            
            LowFirst
                quarter
            
            $
            0.003
            
            $
            0.0004Second
                quarter
            
            $
            0.002
            
            $
            0.0005Third
                quarter
            
            $
            0.0025
            
            $
            0.0008Fourth
                quarter
            
            $
            0.004
            
            $
            0.0009





There
      has
      never been a public trading market for Predecessor Company’s Series C Preferred
      Stock or any of its securities other than its common stock. All securities
      of
      the Predecessor Company were terminated in accordance with the
      Plan.





During
      December 2005, the Company sold one million units consisting of one share of
      Common Stock and one warrant at a price of $1.00 per unit in a private
      placement. The warrants have an exercise price of $2.00 per share and expire
      in
      December 2007.





In
      the
      three months ended March 31, 2006, the Company sold 4.5 million units consisting
      of one share of Common Stock and one warrant at a price of $1.00 per unit in
      a
      private placement for net proceeds of $4,500,000. The warrants have an exercise
      price of $2.00 per share and expire as follows: 950,000 in January 2008 and
      3,550,000 in March 2008.




9




**Holders**





As
      of
      October 10, 2006, there were 382 holders of record of our Common Stock. There
      were also an undetermined number of holders who hold their stock in nominee
      or
      "street" name.





**Dividends**





We
      have
      not declared cash dividends on our Common stock since our inception and we
      do
      not anticipate paying any cash dividends in the foreseeable future.





**Securities
      Authorized for Issuance Under Equity Compensation Plans**




The
      Predecessor Company had stockholder approved equity compensation plans
      consisting of the 2002 Stock Option Plan, the 2000 Stock Option Plan and the
      1992 Stock Option Plan.  Predecessor Company also had a number of options
      and warrants, which were granted pursuant to equity compensation plans not
      approved by security holders. All equity compensation plans, options and
      warrants were terminated as a result of the Plan approved by the Court.
      Accordingly, no such securities were outstanding as of June 30,
      2006.




**ITEM
      6. MANAGEMENT’S PLAN OF OPERATION**





**MANAGEMENT’S
      PLAN OF OPERATION**





The
      Company has raised additional capital with a view to making us an attractive
      vehicle with which to acquire a business. On June 14, 2006, the Company entered
      into an Agreement and Plan of Merger (“Merger Agreement”) StarVox
      Communications, Inc. Upon closing, the loans receivable will be converted into
      capital of the newly merged entity, and the shares of StarVox common and
      preferred stock outstanding immediately prior to the effective time of the
      merger shall be converted on a pro rata basis automatically into the right
      to
      receive 451.004079 shares of fully paid and non-assessable shares of the
      Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of Preferred Stock and Common Stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of Company’s Preferred Stock, which such number of
      shares of Company’s Preferred Stock to be based on the exchange ratio used in
      the merger, to existing warrant holders of StarVox such that the holder of
      such
      warrants upon exercise will receive that number of shares of the Company’s
      Common Stock as such holder would have been entitled to receive pursuant to
      the
      merger had such holder exercised such warrants immediately prior to the
      effective time of the merger, with the same expiration date as currently exists
      and at a per share exercise price proportionately adjusted for the exchange
      ratio.




10




On
      March
      10, 2006, a Management Agreement with Trinad Management, LLC ("Trinad
      Management") and the Company, pursuant to which Trinad Management agrees to
      provide the Company with certain management services (the "Management
      Services"), including without limitation, the sourcing, structuring and
      negotiation of a potential business combination involving the Company became
      effective. As compensation for such Management Services the Company shall pay
      Trinad Management a monthly management fee of $30,000 for a period of five
      years. The Company may terminate the agreement by paying a termination fee
      of
      $1,000,000. The Company paid $90,000 in fees for Management Services to Trinad
      Management during the year ended June 30, 2006. Trinad and its affiliates
      (including Trinad Management) collectively own approximately 40% of the
      Company’s issued and outstanding Common Stock at June 30, 2006.





On
      December 30, 2005, the Company sold 1,000,000 units, on January 18, 2006, the
      Company sold 950,000 units, on March 10, 2006, the Company sold 800,000 units
      and on March 31, 2006, the Company sold 2,750,000 units. Each unit sold
      consisted of one share of common stock and one warrant, and the sales price
      of
      each unit was $1.00 per unit. The Company’s stock prices on the dates of closing
      were $1.65, $1.50, $1.65 and $2.30, respectively. The Company realized net
      proceeds of $5,413,000 after the costs of the offering. The warrants have an
      exercise price of $2 per share and expire 1,000,000 in December 2007, 950,000
      in
      January 2008 and 3,550,000 in March 2008. The total fair value of the units
      totaled approximately $21,000,000 upon issuance





We
      do not
      currently have an operating business and therefore have no ability to generate
      cash flow from operations in order to fund our ongoing financial needs past
      the
      next fiscal year.





As
      described more fully above, our plan of operation is to merge or effect a
      business combination with a domestic or foreign private operating entity. In
      the
      event we are unable to complete the StarVox transaction, we may seek to raise
      additional capital first to make ourselves more attractive to acquisition
      candidates. We believe that there are perceived benefits to being a “reporting
      company” with a class of publicly-traded securities which may be attractive to
      private entities. Other than activities relating to such financing attempting
      to
      locate such a candidate, we do not currently anticipate conducting any
      operations.





As
      discussed above, on June 14, 2006, the Company entered into an Agreement and
      Plan of Merger (“Merger Agreement”) StarVox Communications, Inc.





**CRITICAL
      ACCOUNTING POLICIES**





Critical
      accounting policies reflect significant judgments and uncertainties and
      potentially result in materially different results under different assumptions
      and conditions. We have prepared the accompanying financial statements in
      conformity with generally accepted accounting principles, which require
      management to make estimates and assumptions that affect the reported amounts
      in
      the accompanying financial statements and notes thereto. Actual results could
      differ from those estimates under different assumptions or conditions. We have
      identified the following critical accounting policies utilized in the
      preparation of such financial statements.





11




**Basis
      of Presentation and Use of Estimates**





The
      accompanying financial statements have been prepared in accordance with
      accounting principles generally accepted in the United States of America.





The
      preparation of consolidated financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the dates of the financial statements and the reported amounts of revenue and
      expenses during the reporting period. Actual results could differ from those
      estimates.





**Financial
      Reporting by Entities in Reorganization under the Bankruptcy
      Code**





The
      accompanying consolidated financial statements have been prepared in accordance
      with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities
      in Reorganization under the Bankruptcy Code”. SOP 90-7 requires that the
      financial statements for periods subsequent to the Chapter 11 filing petition
      distinguish transactions and events that are directly associated with the
      reorganization from the ongoing operations of the business. All pre-petition
      claims were transferred to the Liquidation Trust on March 18, 2005 in accordance
      with the Reorganization. Revenues, expenses, realized gains and losses and
      provision for losses resulting from the reorganization are reported separately
      as “Reorganization items” in the accompanying consolidated statements of
      operations.





All
      of
      our Common Stock that was outstanding prior to the Petition Date (March 26,
      2004) was cancelled and new shares of our Common Stock were issued in accordance
      with the Plan. The reorganization value of the assets of the emerging entity
      immediately prior to the date of confirmation exceeded the total of all
      post-petition liabilities and allowed claims, and, therefore, the Company did
      not qualify for fresh start accounting under SOP 90-7 and continued its basis
      of
      accounting.





**Stock-Based
      Compensation**




On
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”)
      which requires the measurement and recognition of compensation expense for
      all
      share-based payment awards made to employees and directors based on estimated
      fair values. SFAS 123(R) supersedes the Company’s previous accounting under
      Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees” (“APB 25”) for periods beginning in fiscal 2006. In March 2005, the
      Securities and Exchange Commission issued Staff Accounting Bulletin No. 107
      (“SAB 107”) relating to SFAS 123(R). The Company has applied the provisions of
      SAB 107 in its adoption of SFAS 123(R).





The
      Company adopted SFAS 123(R) using the modified prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of the Company’s third quarter in fiscal year 2006. The
      Company’s Consolidated Financial Statements as of June 30, 2006 reflect the
      impact of SFAS 123(R). In accordance with the modified prospective transition
      method, the Company’s Consolidated Financial Statements for prior periods have
      not been restated to reflect, and do not include, the impact of SFAS 123(R).
      Stock-based compensation expense recognized under SFAS 123(R) for the year
      ended
      June 30, 2006 was approximately $381,000 which consisted of warrants granted
      to
      Board Members and an Officer (See Note 8). There was no stock-based compensation
      expense related to employee equity awards during the year ended March 31,
      2005 under APB 25.





12




SFAS
      123(R) requires companies to estimate the fair value of share-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service period in the Company’s Consolidated
      Statement of Operations. Prior to the adoption of SFAS 123(R), the Company
      accounted for employee equity awards and employee stock purchases using the
      intrinsic value method in accordance with APB 25 as allowed under Statement
      of
      Financial Accounting Standards No. 123, “Accounting for Stock-Based
      Compensation”  (“SFAS 123”). Under the intrinsic value method, no
      stock-based compensation expense had been recognized in the Company’s
      Consolidated Statement of Operations, other than as related to acquisitions,
      because the exercise price of the Company’s stock options granted to employees
      and directors equaled the fair market value of the underlying stock at the
      date
      of grant.





**Revenue
      Recognition from Discontinued Operations**





The
      following discussion relates to our operations prior to the Reorganization
      at
      the close of business on March 18, 2005. We currently have no business
      operations and when we acquire or start a business, our revenue recognition
      policy will be determined at that time.





We
      adopted the provisions of Staff Accounting Bulletin No. 101, Revenue Recognition
      in Financial Statements (“SAB 101”), which provides guidance on the recognition,
      presentation and disclosure of revenue in financial statements filed with the
      Securities and Exchange Commission. In addition, we follow the guidance
      contained in Emerging Issues Task Force position No. 00-21 “Revenue Arrangements
      with Multiple Deliverables” with respect to sales arrangements with multiple
      deliverables.





We
      derived revenue from two primary sources from our discontinued operations:
      service fees and product (equipment) sales.





**Services.** Service
      fees consisted of: (a) one-time, non-refundable service activation fees; (b)
      monthly minimum subscription fees for the availability of service; (c) fees
      for
      transactions delivered on wireless or other methods through the Company’s hosts;
      and (d) other fees, including administration and other fees for certain wireless
      services, certain charges for telecommunications connections between the Company
      and a party, and installation fees and expenses. Service fees are generated
      from
      the Company’s Synapse Service. Service activation fees are recognized ratably
      over the estimated average life of a customer contract. There was no revenue
      from service fees for the year ended June 30, 2006, the nine months ended March
      31, 2005 (Predecessor Company) and the three months ended June 30, 2005
      (Successor Company).




13




**Product
      Sales.** Product
      sales (i.e., sales of equipment) are primarily derived from the sale of the
      Company’s proprietary Synapse Adapter and Synapse Enabler products. Revenues
      from product sales are recognized upon shipment and acceptance. There was no
      revenue from product sales for the year ended June 30, 2006, the nine months
      ended March 31, 2005 (Predecessor Company) and the three months ended June
      30,
      2005 (Successor Company).





**Valuation
      of Long-Lived and Intangible Assets**




The
      carrying values of our assets are reviewed when events or changes in
      circumstances indicate that the carrying amount of an asset may not be
      recoverable. Asset impairment is determined to exist if estimated future cash
      flows, undiscounted and without interest charges, are less than the carrying
      amount. If it is determined that an impairment loss has occurred, then an
      impairment loss is recognized in the statement of operations. The resulting
      impairment loss is measured as the amount by which the carrying amount of the
      asset exceeds its fair value, estimated using quoted market prices, if
      available, or other acceptable valuation methodologies, including discounted
      cash flows or comparable sales.





**Loss
      Contingencies, Impairment of an Asset or Incurrence of a
      Liability**





We
      are
      subject to the possibility of various loss contingencies arising in the ordinary
      course of business. We consider the likelihood of loss or impairment of an
      asset
      or the incurrence of a liability, as well as our ability to reasonably estimate
      the amount of loss in determining loss contingencies. An estimated loss
      contingency is accrued when it is probable that an asset has been impaired
      or a
      liability has been incurred and the amount of loss can be reasonably estimated.
      We regularly evaluate current information available to us to determine whether
      such accruals should be adjusted.





**RISK
      FACTORS**





***Cautionary
      Statements Regarding Forward-Looking Statements***




Statements
      in this Annual Report on Form 10-KSB under the captions “Description of
      Business,” “Management's Discussion and Analysis or Plan of Operation,” and
      elsewhere in this Form 10-KSB, as well as statements made in press releases
      and
      oral statements that may be made by us or any of our officers, directors or
      employees acting on our behalf that are not statements of historical fact,
      constitute forward-looking statements within the meaning of the Private
      Securities Litigation Reform Act of 1995. Such forward-looking statements
      involve known and unknown risks, uncertainties and other factors, including
      those described in this Form 10-KSB under the caption “Risk Factors,” that could
      cause our actual results to be materially different from the historical results
      or from any future results expressed or implied by such forward-looking
      statements. In addition to statements which explicitly describe such risks
      and
      uncertainties, readers are urged to consider statements with the terms
“believes,” “belief,” “expects,” “plans,” “anticipates,” or “intends,” to be
      uncertain and forward-looking. All cautionary statements made in this Form
      10-KSB should be read as being applicable to all related forward-looking
      statements wherever they appear. Investors should consider the following risk
      factors as well as the risks described elsewhere in this Form 10-KSB.





14




**We
      may not be successful in identifying and evaluating suitable business
      opportunities or in consummating a business combination.**




The
      Company intends to raise capital to make us a more attractive acquisition
      vehicle and then seek a suitable merger candidate. On June 14, 2006, the Company
      entered into an Agreement and Plan of Merger with StarVox Communications, Inc.
      The closing of the transaction is subject to certain conditions, including
      execution of a definitive merger agreement and the completion of due diligence.
      There can be no assurance that the merger will be consummated or, if
      consummated, that it will be consummated on the terms set forth in the Merger
      Agreement. We are therefore subject to a number of risks, including: this or
      any
      other acquisition consummated by us may turn out to be unsuccessful; and whether
      financing that could have a dilutive effect on our present stockholders will
      be
      required in connection therewith; the historical operations of a specific
      business opportunity may not necessarily be indicative of the potential for
      the
      future; we may acquire a company in the early stage of development causing
      us to
      incur further risks; we may be dependent upon the management of an acquired
      business which has not proven its abilities or effectiveness; we will be
      controlled by a small number of stockholders and such control could prevent
      the
      taking of certain actions that may be beneficial to other stockholders; our
      common stock will likely be thinly traded, and the public market may provide
      little or no liquidity for holders of our common stock.





**Failure
      to complete the proposed acquisition of StarVox Communications, Inc, could
      negatively impact the market price of our Common Stock and may make it more
      difficult for us to attract another acquisition candidate, causing investors
      to
      experience a loss on their investment**




If
      the
      StarVox acquisition is not completed for any reason, we may be subject to a
      number of material risks, including:




·
            
            the
                market price of our Common Stock may decline to the extent that the
                current market price of our Common Stock reflects a market assumption
                that
                the acquisition will be consummated;·
            
            costs
                related to the acquisition, such as legal and accounting fees, must
                be
                paid even if the acquisition is not completed; and·
            
            charges
                against earnings for transaction-related expenses which could be
                higher
                than expected.




Such
      decreased market price and added costs and charges of the failed acquisition,
      together with the history of failure in consummating an acquisition, may make
      it
      more difficult for us to attract another acquisition candidate, causing
      investors to experience a loss on their investment.





**We
      may be unable to meet our future capital requirements.**




We
      will
      need to raise additional funds in order to make ourselves a more attractive
      acquisition vehicle. There is no assurance that we will be able to consummate
      the financing on favorable terms or at all. Any such financing will dilute
      the
      percentage ownership of existing stockholders.





15




**We
      currently have one full-time employee and are dependent on Trinad, independent
      contractors and consultants for the operation of our business.**




We
      are
      currently a “shell” company with no operations and have one employee.
      We are controlled by Trinad, our majority stockholder, and our officers and
      directors are affiliated with Trinad. Trinad provides certain services to us
      without remuneration and we hire independent contractors or consultants for
      certain services. There is no assurance that we will be able to hire employees
      qualified for the work required, or that such qualified employees could be
      hired
      and retained at a reasonable level of compensation.





**We
      may be subject to regulation under the Investment Company Act of 1940 if we
      were
      to engage in certain activities or business combinations.**




In
      the
      event that we engage in a business combination or engage in other activities
      that result in our holding passive investment interests in a number of entities,
      we could be subject to regulation under the Investment Company Act of 1940.
      In
      such event, we would be required to register as an investment company and could
      be expected to incur significant registration and compliance costs.





**We
      do not anticipate paying dividends.**




We
      have
      never paid cash or other dividends on our common stock. Payment of dividends
      on
      our common stock is within the discretion of our Board of Directors and will
      depend upon our earnings, our capital requirements and financial condition,
      and
      other factors deemed relevant by the Board. However, the earliest the Board
      would likely consider a dividend is after the acquisition has occurred if the
      acquired entity generated excess cash flow.





**We
      are controlled by one stockholder.**





Trinad
      currently owns 40% of our common stock and controls our Board. Such control
      could prevent the taking of certain actions that may be beneficial to other
      stockholders.





**The
      trading of our Common Stock is limited and sporadic.**





The
      trading volume of our Common Stock is limited and sporadic, may likely remain
      thinly traded, and the public market may provide little or no liquidity for
      holders of our Common Stock. One stockholder owns 40% of our Common Stock.
      There
      is no assurance that any liquid trading market will emerge. The price at which
      our Common Stock will trade in the future may be highly volatile and may
      fluctuate as a result of a number of factors, including, without limitation,
      announcements concerning potential acquisitions, quarterly variations in our
      operating results, other business partners and opportunities, as well as the
      number of shares available for sale in the market.





**“Penny
      stock” rules may restrict the market for our Common Stock.**




Our
      Common Stock is subject to rules promulgated by the SEC relating to “penny
      stocks,” which apply to companies whose shares are not traded on a national
      stock exchange or on the Nasdaq SmallCap or National Market Systems, trade
      at
      less than $5.00 per share, or who do not meet certain other financial
      requirements specified by the SEC. These rules require brokers who sell “penny
      stocks” to persons other than established customers and “accredited investors”
to complete certain documentation, make suitability inquiries of investors,
      and
      provide investors with certain information concerning the risks of trading
      in
      such penny stocks. These rules may discourage or restrict the ability of brokers
      to sell our common stock and may affect the secondary market for our common
      stock. These rules could also hamper our ability to raise funds in the primary
      market for our common stock.


16





**ITEM
      7. FINANCIAL STATEMENTS**





Report
                of Independent Registered Public Accounting Firm
            
            18Consolidated
                Balance Sheet as of June 30, 2006
            
            19Consolidated
                Statements of Operations for
                the year ended June 30, 2006, the
                three months ended June 30, 2005 and nine
                months ended March 31, 2005
            
            20Consolidated
                Statements of Cash Flows for
                the year ended June 30, 2006, three
                months ended June 30, 2005 and nine
                months ended March 31, 2005
            
            22Consolidated
                Statements of Stockholders’ Equity for
                the year ended June 30, 2006, three
                months ended June 30, 2005 and nine
                months ended March 31, 2005
            
            21Notes
                to Consolidated Financial Statements
            
            23


17




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders


U.S.
      Wireless Data, Inc.





We
      have
      audited the accompanying consolidated balance sheet of U.S. Wireless Data,
      Inc.
      as of June 30, 2006, and the related consolidated statements of operations,
      stockholders’ equity, and cash flows for the year ended June 30, 2006 and the
      three months ended June 30, 2005 (Successor Company) and the nine months ended
      March 31, 2005 (Predecessor Company). These consolidated financial statements
      are the responsibility of U.S. Wireless Data, Inc.’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. The Company is not required to
      have, nor were we engaged to perfom, an audit of the internal control over
      financial reporting. An audit includes consideration of internal control over
      financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purpose of expressing an
      opinion on the effectiveness of the Company’s internal control over financial
      reporting. Accordingly, we express no such opinion. An audit also includes
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the financial statements, assessing the accounting principles used and
      significant estimates made by management, as well as evaluation the overall
      financial statement presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the financial position of U.S. Wireless Data, Inc.
      as
      of June 30, 2006, and the results of its operations and cash flows for the
      year
      ended June 30, 2006 and the three months ended June 30, 2005 (Successor Company)
      and the nine months ended March 31, 2005 (Predecessor Company), in conformity
      with accounting principles generally accepted in the United States of
      America.




/s/
      Friedman LLP


New
      York,
      New York





September
      15, 2006


18


**US
            WIRELESS DATA, INC.**
 CONSOLIDATED
            BALANCE SHEET
 JUNE
            30,
            2006


**ASSETS**ASSETS:Cash
                and cash equivalents
            
            $
            1,321,000Loans
                receivable
            
            
            3,500,000Due
                from related parties
            
            
            20,000Prepaid
                and other current assets
            
            
            24,000Total
                Assets
            
            $
            4,865,000**LIABILITIES
                AND STOCKHOLDERS' EQUITY**LIABILITIES:Accrued
                liabilities
            
            $
            161,000Total
                Liabilities
            
            
            161,000STOCKHOLDERS'
                EQUITY:Preferred
                stock, $.01 par value, 1,000,000 shares authorized, none
                issued:
            
            
            -Common
                stock, $.01 par value, 19,000,000 shares authorized,9,499,730
                shares issued and outstanding,
            
            
            95,000Additional
                paid-in capital
            
            
            5,739,000Accumulated
                deficit
            
            
            (1,130,000
            )Total
                Stockholders' Equity
            
            
            4,704,000Total
                Liabilities and Stockholders' Equity
            
            $
            4,865,000




Accompanying
      notes are an integral part of the consolidated financial
      statements


19


**US
          WIRELESS DATA, INC.**
 **CONSOLIDATED
          STATEMENTS OF OPERATIONS**


**SuccessorCompany**
            
            **Predecessor****Company****Year
                  Ended****June
                  30,**
            
            ****Three
                months**ended**
            
            **Nine
                  monthsended****2006**
            
            **June
                    30, 2005**
            
            **March
                31, 2005**CONTINUING
                OPERATIONSGeneral
                and administrative
            
            $
            1,105,000
            
            $
            25,000
            
            $
            783,000Other
                income
            
            
            -
            
            
            -
            
            
            (40,000
            )Loss
                before reorganization items
            
            
            (1,105,000
            )
            
            (25,000
            )
            
            (743,000
            )Reorganization
                itemsGain
                on sale of shell
            
            
            -
            
            
            -
            
            
            400,000Professional
                fess and US Trustee fees
            
            
            -
            
            
            -
            
            
            (226,000
            )Third
                party and breakup fees
            
            
            -
            
            
            -
            
            
            5,000Interest
                income
            
            
            -
            
            
            -
            
            
            33,000-
            
            
            -
            
            
            212,000Loss
                before discontinued operations
            
            
            (1,105,000
            )
            
            (25,000
            )
            
            (531,000
            )DISCONTINUED
                OPERATIONSLoss
                from discontinued operations
            
            
            -
            
            
            -
            
            
            (364,000
            )NET
                LOSS
            
            $
            (1,105,000
            )
            $
            (25,000
            )
            $
            (895,000
            )Basic
                and diluted net loss per share:Loss
                before reorganization items anddiscontinued
                operations
            
            $
            (0.19
            )
            $
            (0.01
            )
            
            (a
            )Loss
                from discontinued operations
            
            
            -
            
            
            -
            
            
            (a
            )Net
                loss per share
            
            $
            (0.19
            )
            $
            (0.01
            )
            
            (a
            )Weighted
                average common shares outstanding,basic
                and diluted
            
            
            5,867,000
            
            
            4,000,000
            
            
            (a
            )


(a)
        See
        Note 4


Accompanying
      notes are an integral part of the consolidated financial
      statements


20




**US
        WIRELESS DATA, INC.** **CONSOLIDATED
          STATEMENTS OF STOCKHOLDERS' EQUITY**


**Series
                C Convertible**
            
            
            
            
            
            **Additional**
            
            
            
            **Total****Preferred
                Stock**
            
            **Common
                Stock**
            
            **Paid-in**
            
            **Accumulated**
            
            **Stockholders'****Shares**
            
            **Amount**
            
            **Shares**
            
            **Amount**
            
            **Capital**
            
            **Deficit**
            
            **Equity****Predecessor
                Company****Balance
                - June 30, 2004**
            
            
            **3,240,200**
            
            **$**
            **32,000**
            
            
            **18,142,889**
            
            **$**
            **181,000**
            
            **$**
            **143,077,000**
            
            **$**
            **(141,450,000**
            **)**
            **$**
            **1,840,000**Conversion
                of Series C Convertiblepreferred
                stock
            
            
            (10,000
            )
            
            -
            
            
            16,667
            
            
            1,000
            
            
            -
            
            
            (1,000
            )
            
            -Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (895,000
            )
            
            (895,000
            )Balance
                immediately beforecancellation
                and transfer toLiquation
                Trust for Reorganization
            
            
            3,230,200
            
            
            32,000
            
            
            18,159,556
            
            
            182,000
            
            
            143,077,000
            
            
            (142,346,000
            )
            
            945,000Cancellation
                and transfer to liquidation trust
            
            
            (3,230,200
            )
            
            (32,000
            )
            
            (18,159,556
            )
            
            (182,000
            )
            
            (143,077,000
            )
            
            142,346,000
            
            
            (945,000
            )Balance
                at March 31, 2005
            
            
            **-**
            
            **$**
            **-**
            
            
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-**
            
            **$**
            **-****Successor
                Company**Capital
                contribution
            
            
            -
            
            
            -
            
            
            3,999,730
            
            
            40,000
            
            
            60,000
            
            
            -
            
            
            100,000Acquisition
                costs
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (60,000
            )
            
            -
            
            
            (60,000
            )Net
                loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (25,000
            )
            
            (25,000
            )**Balance
                -June 30, 2005**
            
            
            **-**
            
            
            **-**
            
            
            **3,999,730**
            
            
            **40,000**
            
            
            **-**
            
            
            **(25,000**
            **)**
            
            **15,000**Issuance
                of common stock, net
            
            
            -
            
            
            -
            
            
            5,500,000
            
            
            55,000
            
            
            5,358,000
            
            
            -
            
            
            5,413,000Stock-based
                compensation
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            381,000
            
            
            -
            
            
            381,000Net
                Loss
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,105,000
            )
            
            (1,105,000
            )**Balance
                - June 30, 2006**
            
            
            **-**
            
            **$**
            **-**
            
            
            **9,499,730**
            
            **$**
            **95,000**
            
            **$**
            **5,739,000**
            
            **$**
            **(1,130,000**
            **)**
            **$**
            **4,704,000**





Accompanying
      notes are an integral part of the consolidated financial
      statements


21


**US
        WIRELESS DATA, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**


**Successor****Company**
            
            **Predecessor****Company****Year
                    Ended**
                  **June
                    30,**
                  **2006**
            
            **Three
                    months**
                  **ended**
                  **June
                    30, 2005**
            
            **Nine
                    months**
                  **ended**
                  **March
                    31, 2005****CASH
                FLOWS FROM OPERATING ACTIVITIES:**Net
                loss
            
            $
            (1,105,000
            )
            $
            (25,000
            )
            $
            (895,000
            )Adjustments
                to reconcile net loss to net cashused
                in operating activities:Provision
                for doubtful accounts
            
            
            -
            
            
            -
            
            
            53,000Stock-based
                compensation
            
            
            381,000
            
            
            -
            
            
            -Changes
                in assets and liabilities:Accounts
                receivable
            
            
            -
            
            
            -
            
            
            (39,000
            )Due
                from factor
            
            
            -
            
            
            -
            
            
            63,000Due
                from Plan Sponsor
            
            
            -
            
            
            -
            
            
            (400,000
            )Due
                from winning auction sale bidder
            
            
            -
            
            
            -
            
            
            107,000Due
                from related parties
            
            
            (20,000
            )
            
            -
            
            
            -Prepaid
                and other current assets
            
            
            (24,000
            )
            
            -
            
            
            357,000Accounts
                payable
            
            
            (8,000
            )
            
            8,000
            
            
            174,000Accrued
                liabilities
            
            
            156,000
            
            
            5,000
            
            
            (486,000
            )Prepetition
                liabilities
            
            
            -
            
            
            -
            
            
            (909,000
            )Net
                cash used in operating activities
            
            
            (620,000
            )
            
            (12,000
            )
            
            (1,975,000
            )**CASH
                FLOWS FROM INVESTING ACTIVITIES:**Decrease
                in restricted cash
            
            
            -
            
            
            -
            
            
            456,000Transfer
                to Chapter 11 escrow accounts
            
            
            -
            
            
            -
            
            
            (668,000
            )Transfer
                from Chapter 11 escrow accounts
            
            
            -
            
            
            -
            
            
            1,831,000Transfer
                to Liquidation Trust
            
            
            -
            
            
            -
            
            
            (100,000
            )Transfer
                to Plan Sponsor escrow account
            
            
            -
            
            
            -
            
            
            (100,000
            )Transfer
                from Plan Sponsor escrow account
            
            
            -
            
            
            -
            
            
            100,000Investment
                in loan receivable
            
            
            (3,500,000
            )
            
            -
            
            
            -Net
                cash (used in) provided by investing activities
            
            
            (3,500,000
            )
            
            -
            
            
            1,519,000**CASH
                FLOWS FROM FINANCING ACTIVITIES:**Net
                proceeds from capital contribution
            
            
            -
            
            
            40,000
            
            
            -Payments
                for real estate lease termination
            
            
            -
            
            
            -
            
            
            (456,000
            )Net
                proceeds from issuance of common stock
            
            
            5,413,000
            
            
            -
            
            
            -Net
                cash provided by (used in) financing activities
            
            
            5,413,000
            
            
            40,000
            
            
            (456,000
            )NET
                INCREASE (DECREASE) IN CASH
            
            
            1,293,000
            
            
            28,000
            
            
            (912,000
            )CASH
                AND CASH EQUIVALENTS, beginning of period
            
            
            28,000
            
            
            -
            
            
            912,000CASH
                AND CASH EQUIVALENTS, end of period
            
            $
            1,321,000
            
            $
            28,000
            
            $
            -




Accompanying
      notes are an integral part of the consolidated financial statements


22


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 — THE COMPANY**





U.S.
      Wireless Data, Inc. (“USWD”, the “Company”, “we”, “us”, “our” or similar terms)
      was incorporated in the state of Colorado on July 30, 1991 and was
      reincorporated in the state of Delaware on October 6, 2000. We are currently
      a
“shell” company with no operations and controlled by Trinad Capital LP
      (“Trinad”), our major shareholder. The Company intends to serve as a vehicle to
      effect an asset acquisition, merger, exchange of capital stock or other business
      combination with a domestic or foreign business.





**Management’s
      Plan of Operation**





The
      Company has raised additional capital with a view to making us an attractive
      vehicle with which to acquire a business. On June 14, 2006, the Company entered
      into an Agreement and Plan of Merger (“Merger Agreement”) StarVox
      Communications, Inc. Upon closing, the loans receivable will be converted into
      capital of the newly merged entity, and the shares of StarVox common and
      preferred stock outstanding immediately prior to the effective time of the
      merger shall be converted on a pro rata basis automatically into the right
      to
      receive 451.004079 shares of fully paid and non-assessable shares of the
      Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of Preferred Stock and Common Stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of Company’s Preferred Stock, which such number of
      shares of Company’s Preferred Stock to be based on the exchange ratio used in
      the merger, to existing warrant holders of StarVox such that the holder of
      such
      warrants upon exercise will receive that number of shares of the Company’s
      Common Stock as such holder would have been entitled to receive pursuant to
      the
      merger had such holder exercised such warrants immediately prior to the
      effective time of the merger, with the same expiration date as currently exists
      and at a per share exercise price proportionately adjusted for the exchange
      ratio.




**Reorganization
      and the Liquidation Trust**





On
      March
      18, 2005, in accordance with the Plan (as defined below under the section titled
      Chapter 11 Proceedings), Trinad, our Plan sponsor, became the holder of 93%
      of
      our newly issued common stock as further discussed in the paragraphs below
      (the
“Reorganization”).


23


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED TO FINANCIAL STATEMENTS**




**NOTE
      1 — THE COMPANY (continued)**





Additionally,
      on March 18, 2005, Robert Ellin became a director and our Chief Executive
      Officer, Jay Wolf became a director and our Chief Operating Officer and Chief
      Financial Officer and Barry Regenstein became a director. Robert Ellin and
      Jay
      Wolf are the Managing Member and Managing Director of Trinad,
      respectively.





In
      accordance with the Plan, Trinad contributed $400,000 in cash to the Predecessor
      Company (as defined in Note 2) and as of the close of business on March 18,
      2005
      (immediately before the Reorganization), all of the assets and liabilities
      of
      the Predecessor Company, with the exception of the public entity shell company,
      along with all contingent assets and liabilities, were transferred to the USWD
      Liquidation Trust (the “Liquidation Trust”). In addition, Trinad contributed
      $100,000 in cash to the Successor Company (as defined in Note 2) in exchange
      for
      93% of the new common stock issued under the Plan, with the remaining 7% of
      the
      new common stock issued to the holders of record of our Series C Preferred
      Stock
      and our Common Stock as of February 7, 2005, with 3.5% going to each class.
      Simultaneously, all of our originally outstanding Series C Preferred Stock
      and
      our Common Stock were cancelled. In accordance with the Plan, the cash in the
      Liquidation Trust was used to pay administrative costs and creditors of the
      Chapter 11 Proceedings. There was no remaining cash in the Liquidation Trust,
      available to settle any portion of the aggregate $32,302,000 liquidation
      preference to which the holders of our Series C Preferred Stock as of February
      7, 2005 are entitled.





**Chapter
      11 Proceedings**





On
      March
      26, 2004 (the “Petition Date”), we filed a voluntary petition for relief under
      Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the
      United States Bankruptcy Court for the Southern District of New York (the
“Court”), in re U.S. Wireless Data, Inc., Case Number 04-12075. Prior to the
      chapter 11 proceeding, we were principally engaged in providing wireless
      transaction delivery and gateway services to the payment processing industry.
      Since our inception, we had incurred significant losses and negative cash flow
      from operations.




We
      operated as a debtor-in-possession (“DIP”) under the jurisdiction of the Court
      and in accordance with the applicable provisions of the Bankruptcy Code and
      orders of the Court (the “Chapter 11 Proceedings”) until the
      Reorganization.




24


**U.S.
      WIRELESS DATA, INC.**





**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      1 — THE COMPANY (continued)**





On
      December 27, 2004, the Court confirmed our Amended Plan of Reorganization (the
      “Plan”). Additional details concerning the Plan are in the Amended Disclosure
      Statement filed with the Court in November 2004 in support of the Plan, the
      Amended Plan of Reorganization and Order Confirming Amended Plan of
      Reorganization, each of which is filed as an exhibit to Form 8-K filed with
      the
      SEC on January 18, 2005.





On
      January 19, 2005 we paid approximately $889,000 as an initial payment to
      creditors for pre-petition liabilities representing approximately 50% of
“Allowed Claims”.





The
      following assets and liabilities from our Balance Sheet as of the close of
      business on March 18, 2005 immediately before the Reorganization, along with
      all
      contingent assets and liabilities, were transferred to the Liquidation Trust
      (as
      provided for under the terms of the Plan) and the Company effectuated the
      completion of the Reorganization, thereby emerging from the Chapter 11
      Proceedings:







ASSETSCurrent
                assets:Cash
                and cash equivalents
            
            $
            100,000Cash
                and cash equivalents in escrow
            
            
            2,225,000Due
                from Plan Sponsor
            
            
            400,000Due
                from winning auction sale bidder
            
            
            64,000Prepaid
                and other current assets
            
            
            13,000$
            2,802,000LIABILITIESCurrent
                liabilities:Accounts
                payable
            
            $
            212,000Accrued
                liabilities
            
            
            73,000Total
                liabilities not subject to compromise
            
            
            285,000Pre-petition
                liabilities subject to compromise
            
            
            1,572,000Total
                liabilities
            
            
            1,857,000




“Pre-petition
      liabilities subject to compromise” were as follows:




Accounts
                payable
            
            $
            1,154,000Accrued
                liabilities
            
            
            206,000Obligation
                for rejected real property lease
            
            
            212,000$
            1,572,000




25


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      1 — THE COMPANY (continued)**





We
      do not
      currently have an operating business and therefore have no ability to generate
      cash flow from operations in order to fund our ongoing financial needs past
      the
      next fiscal year.





**NOTE
      2 - BASIS OF PRESENTATION**





The
      Company may be referred to as the “Predecessor Company” for all periods through
      the Reorganization and as the “Successor Company” for all periods after the
      recognition of the Reorganization. The Reorganization was effectuated as of
      the
      close of business on March 18, 2005; however, there was virtually no activity
      between March 19, 2005 and March 31, 2005. Therefore, for accounting purposes,
      we used March 31, 2005 as the date the Reorganization was effectuated.
      Accordingly, the financial statements we have presented for the fiscal year
      ended June 30, 2005 are presented in 2 periods (the Predecessor Company for
      the
      nine month period July 1, 2004 through March 31, 2005, and the Successor Company
      for the three month period April 1, 2005 through June 30, 2005).





As
      a
      result of the sale of virtually all of our operating assets, and the
      Reorganization, the historical financial statements are irrelevant to any
      assessment of the Company on an ongoing basis. Accordingly, readers are advised
      not to rely on any historical financial information in considering an investment
      in or disposition of our stock.





**Principles
      of Consolidation**





The
      consolidated financial statements include the accounts of U.S. Wireless Data,
      Inc. and its wholly owned subsidiary, StarVox Acquisition, a California
      corporation, which was formed as a shell company on June 6, 2006 to merge with
      StarVox Communications, Inc. (collectively the "Company"). All significant
      inter-company accounts and transactions have been eliminated in consolidation.
      The Company had no subsidiaries as of June 30, 2005 and for the year then
      ended.


26


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      2 - BASIS OF PRESENTATION (continued)**





**Basis
      of Presentation and Use of Estimates**





The
      accompanying consolidated financial statements included herein have been
      prepared in accordance with accounting principles generally accepted in the
      United States of America.





The
      accompanying consolidated financial statements have been prepared in accordance
      with Statement of Position 90-7 (“SOP 90-7”), “Financial Reporting by Entities
      in Reorganization under the Bankruptcy Code”. SOP 90-7 requires that the
      financial statements for periods subsequent to the Chapter 11 filing petition
      distinguish transactions and events that are directly associated with the
      reorganization from the ongoing operations of the business. All pre-petition
      claims were transferred to the Liquidation Trust on March 18, 2005 in accordance
      with the Reorganization. Revenues, expenses, realized gains and losses and
      provision for losses resulting from the reorganization are reported separately
      as “Reorganization items” in the accompanying consolidated statements of
      operations.





The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires management to make
      estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the dates
      of
      the financial statements and the reported amounts of revenue and expenses during
      the reporting period. Actual results could differ from those estimates.





All
      of
      the common stock that was outstanding prior to the Petition Date was cancelled
      and new shares of common stock were issued in accordance with the Plan. The
      reorganization value of the assets of the emerging entity immediately before
      the
      date of confirmation exceeded the total of all post-petition liabilities and
      allowed claims, therefore, the Company did not qualify for fresh start
      accounting under SOP 90-7 and continued its basis of accounting.





The
      Company is subject to a number of risks including dependence on key individuals,
      dependence on outside sources of capital, completion of an asset acquisition,
      merger, and exchange of capital stock or other business combination with a
      domestic or foreign business. There are no assurances, however, that the Company
      will be able to obtain additional financing or achieve the completion of an
      asset acquisition, merger or other business combination on favorable
      terms


27


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      2 - BASIS OF PRESENTATION (continued)**





**Cash
      and Cash Equivalents**





Investments
      in money market funds and highly liquid investments purchased with an original
      maturity of three months or less are classified as cash equivalents. Cash
      equivalents are carried at cost, which approximates fair value. We maintain
      all
      of our cash balances with major financial institutions, which, at times may
      exceed the Federal Deposit Insurance Corporation limit of up to $100,000. The
      Company has not experienced any losses as a result of this policy, and
      management believes there is little risk of loss.





**Revenue
      Recognition from Discontinued Operations**





The
      following discussion relates to our operations prior to the Reorganization
      at
      the close of business on March 31, 2005. We currently have no business
      operations and when we acquire or start a business, our revenue recognition
      policy will be determined at that time.





We
      adopted the provisions of Staff Accounting Bulletin No. 101, Revenue Recognition
      in Financial Statements (“SAB 101”), which provides guidance on the recognition,
      presentation and disclosure of revenue in financial statements filed with the
      Securities and Exchange Commission. In addition, we follow the guidance
      contained in Emerging Issues Task Force position No. 00-21 with respect to
      sales
      arrangements with multiple deliverables.





We
      derived revenue from two primary sources from our discontinued operations:
      service fees and product (equipment) sales.





**Services.** Service
      fees consist of: (a) one-time, non-refundable service activation fees; (b)
      monthly minimum subscription fees for the availability of service; (c) fees
      for
      transactions delivered on wireless or other methods through the Company’s hosts;
      and (d) other fees, including administration and other fees for certain wireless
      services, certain charges for telecommunications connections between the Company
      and a party, and installation fees and expenses. Service fees are generated
      from
      the Company’s Synapse Service. Service activation fees are recognized ratably
      over the estimated average life of a customer contract. There was no revenue
      from service fees for the year ended June 30, 2006, the nine months ended March
      31, 2005 (Predecessor Company) and the three months ended June 30, 2005
      (Successor Company).


28


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      2 - BASIS OF PRESENTATION (continued)**




**Income
      Taxes**




We
      follow
      Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for
      Income Taxes” issued by the Financial Accounting Standards Board (“FASB”). Under
      the asset and liability method of SFAS No. 109, deferred tax assets and
      liabilities are recognized for the future tax consequences attributable to
      differences between the financial statement carrying amounts of existing assets
      and liabilities and their respective tax bases. Since the Company has no prior
      history of profits, management has recorded a full valuation allowance as it
      is
      more likely than not that the deferred tax assets will not be
      realized.




**Stock-based
      Compensation**




On
      January 1, 2006, the Company adopted Statement of Financial Accounting
      Standards No. 123 (revised 2004), “Share-Based Payment,” (“SFAS 123(R)”)
      which requires the measurement and recognition of compensation expense for
      all
      share-based payment awards made to employees and directors based on estimated
      fair values. SFAS 123(R) supersedes the Company’s previous accounting under
      Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
      Employees” (“APB 25”) for periods beginning in fiscal 2006. In March 2005, the
      Securities and Exchange Commission issued Staff Accounting Bulletin No. 107
      (“SAB 107”) relating to SFAS 123(R). The Company has applied the provisions of
      SAB 107 in its adoption of SFAS 123(R).





The
      Company adopted SFAS 123(R) using the modified prospective transition method,
      which requires the application of the accounting standard as of January 1,
      2006, the first day of the Company’s third quarter in fiscal year 2006. The
      Company’s consolidated financial statements as of and for the year ended
      June 30, 2006 reflect the impact of SFAS 123(R). In accordance with the
      modified prospective transition method, the Company’s consolidated financial
      statements for prior periods have not been restated to reflect, and do not
      include, the impact of SFAS 123(R). Stock-based compensation expense recognized
      under SFAS 123(R) for the year ended June 30, 2006 was approximately $381,000
      which consisted of warrants granted to Board Members and an Officer  (See
      Note
      8). There was no stock-based compensation expense related to employee equity
      awards for the year ended June 30, 2005 under APB 25.


29


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**








**NOTE
      2 - BASIS OF PRESENTATION (continued)**





SFAS
      123(R) requires companies to estimate the fair value of share-based payment
      awards on the date of grant using an option-pricing model. The value of the
      portion of the award that is ultimately expected to vest is recognized as
      expense over the requisite service period in the Company’s consolidated
      statement of operations. SFAS 123(R) requires forfeitures to be estimated at
      the
      time of grant and revised, if necessary, in subsequent periods if actual
      forfeitures differ from those estimates. Prior to the adoption of SFAS 123(R),
      the Company accounted for employee equity awards and employee stock purchases
      using the intrinsic value method in accordance with APB 25 as allowed under
      Statement of Financial Accounting Standards No. 123, “Accounting for
      Stock-Based Compensation”  (“SFAS 123”). Under the intrinsic value
      method, no stock-based compensation expense had been recognized in the Company’s
      consolidated statement of operations, other than as related to acquisitions,
      because the exercise price of the Company’s stock options granted to employees
      and directors equaled the fair market value of the underlying stock at the
      date
      of grant.





The
      fair
      value of share-based payment awards is estimated at the grant date using the
      Black-Scholes option valuation model. The Company’s determination of fair value
      of share-based payment awards on the date of grant using an option-pricing
      model
      is affected by the Company’s stock price as well as assumptions regarding a
      number of highly complex and subjective variables. These variables include,
      but
      are not limited to, the Company’s expected stock price volatility over the term
      of the awards, and actual and projected employee stock option exercise
      behaviors.





On
      November 10, 2005, FASB issued FASB Staff Position No. FAS 123(R)-3
“Transition Election Related to Accounting for Tax Effects of Share-Based
      Payment Awards.” The Company has elected to adopt the modified prospective
      transition method provided in the FASB Staff Position for calculating the tax
      effects of stock-based compensation pursuant to SFAS 123(R). The alternative
      transition method includes simplified methods to establish the beginning balance
      of the additional paid-in capital pool (“APIC pool”) related to the tax effects
      of employee stock-based compensation, and to determine the subsequent impact
      on
      the APIC pool and consolidated statements of cash flows of the tax effects
      of
      employee stock-based compensation awards that are outstanding upon adoption
      of
      SFAS 123(R).




**Fair
      Value of Financial Instruments**




The
      carrying value of the Company’s financial instruments, including loans
      receivable and accrued liabilities approximate their fair values due to their
      relatively short-term nature.





30




**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      3 - LOANS RECEIVABLE AND MERGER AGREEMENT**





On
      April
      20, 2006, the Company, provided a bridge loan of $300,000 to StarVox
      Communications, Inc. (“StarVox”). The loan is due on demand 120 days after April
      20, 2006. The loan provides for an interest rate of 10% per annum and is secured
      by a lien on all of the assets of StarVox.





On
      June
      14, 2006, the Company, provided a senior secured loan in the amount of
      $3,200,000 to StarVox. The loan is due on demand after September 30, 2006.
      The
      loan provides for an interest rate of 10% per annum and is secured by all the
      assets of StarVox.





On
      June
      14, 2006, the Company entered into an Agreement and Plan of Merger (“Merger
      Agreement”) StarVox Communications, Inc. Upon closing, the loans receivable will
      be converted into capital of the newly merged entity, and the shares of StarVox
      common and preferred stock outstanding immediately prior to the effective time
      of the merger shall be converted on a pro rata basis automatically into the
      right to receive 451.004079 shares of fully paid and non-assessable shares
      of
      the Company’s preferred stock which, when converted, will equal 18,494,534 fully
      paid and non-assessable shares of the Company’s common stock. At the closing of
      the merger, the shareholders of the Company will, by shareholder consent,
      increase the authorized number of shares of Preferred Stock and Common Stock
      to
      ensure that there are sufficient authorized shares available. Additionally,
      at
      the effective time of the merger, each outstanding option to acquire StarVox
      capital stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s common stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of Company’s Preferred Stock, which such number of
      shares of Company’s Preferred Stock to be based on the exchange ratio used in
      the merger, to existing warrant holders of StarVox such that the holder of
      such
      warrants upon exercise will receive that number of shares of the Company’s
      Common Stock as such holder would have been entitled to receive pursuant to
      the
      merger had such holder exercised such warrants immediately prior to the
      effective time of the merger, with the same expiration date as currently exists
      and at a per share exercise price proportionately adjusted for the exchange
      ratio.





StarVox
      is a facilities-based next generation Infrastructure and Applications service
      provider, that offers wholesale and retail traditional voice services and
      enhanced Voice-Over-Internet Protocol (”VoIP”) services over its domestic VoIP
      network and its international wholesale network. StarVox’s domestic VoIP network
      provides over 300 Points of Presence (POPs) which allows access from about
      80%
      of business sites. StarVox also provides local services to about 65% of business
      sites. A full suite of traditional and enhanced products is available to
      wholesale and retail customers. The international wholesale network offers
      reliable cost effective worldwide connectivity to both established and emerging
      carriers. StarVox owns both its application technologies and domestic and
      international VoIP networks, which gives it a competitive advantage. StarVox
      works with a variety of channels (such as, ISPs, CLECs,




31




**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      3 - LOANS RECEIVABLE AND MERGER AGREEMENT (continued)**





Telecom
      Agents, Carriers, Affinity Groups, Property Management Groups, etc.) that are
      interested in migrating customers from traditional separate voice and data
      communications connections to a converged voice/data connection. StarVox offers
      a complete “turnkey” package of services to its channels with individual
      branding. StarVox services target small, medium and larger sized businesses
      (both single site and multi-site) that are interested in lowering their
      communications monthly costs by 20% to 40% by migrating to a converged service.
      In June 2006, StarVox acquired all of the outstanding stock of Capital
      Telecommunications Inc. (“CTI”) for $12,000,000 in cash and assumption of all
      outstanding liabilities. CTI is a registered competitive local exchange carrier
      with the Federal Communications Commission and is headquartered in York,
      Pennsylvania.





The
      closing of the transaction is subject to certain conditions, including execution
      of a definitive merger agreement and the completion of due diligence. There
      can
      be no assurance that the merger will be consummated or, if consummated, that
      it
      will be consummated on the terms set forth in the Merger Agreement.





**-NOTE
      4 — NET LOSS PER SHARE**





Net
      loss
      per common share is computed in accordance with the provisions of SFAS No.
      128,
“Earnings per Share”. SFAS No. 128 establishes standards for the computation,
      presentation, and disclosure of earnings per share. Basic per share amounts
      are
      computed by dividing the net loss available to common stockholders by the
      weighted average number of common shares outstanding during the year. Diluted
      per share amounts incorporate the incremental shares issuable upon the assumed
      exercise of the Company’s stock options and warrants and assumed conversion of
      convertible securities. During the periods presented in the statements of
      operations, 5,750,000 warrants to purchase common stock have been excluded
      from
      the calculation since their effect would be anti-dilutive.





As
      of the
      close of business on March 18, 2005, our assets, liabilities and contingencies
      were transferred to the Liquidation Trust (as provided for under the terms
      of
      the Plan) and the Company effectuated the completion of the Reorganization.
      In
      addition, all issued and outstanding shares of the Company’s capital stock were
      cancelled and new shares were issued.





The
      Company’s current operations are not representative or comparable to that of the
      Company prior to March 18, 2005 and, accordingly, net loss per share is not
      presented for periods prior to March 18, 2005.


32


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      5 — SUPPLEMENTAL CASH FLOW INFORMATION**





Supplemental
      disclosure of non-cash financing and investing activities:





Year
      ended June 30, 2006





1.
            
            A
                warrant to purchase 250,000 shares of common stock was granted to
                three
                members of the Board of Directors.





Year
      ended June 30, 2005





1.
            
            Conversion
                of 10,000 shares of Series C Convertible Preferred Stock into 16,667
                shares of Common Stock.





2.
            
            As
                of the effective date of the Plan and as provided for under the provisions
                of the Plan, all outstanding warrants and options expired
                worthless.





3.
            
            All
                originally outstanding Series C preferred stock and common stock
                were
                cancelled upon the effectuation of the Reorganization.





4.
            
            All
                Chapter 11 related assets, liabilities, commitments and contingencies
                were
                transferred to the Liquidation Trust.





5.
            
            New
                common stock aggregating 3,999,730 shares were issued as
                follows:





·
            
            3,720,000
                shares of common stock to Trinad Capital LP





·
            
            139,865
                shares of common stock pro rata to the holders of Series C preferred
                shares held as of February 7, 2005.





·
            
            139,865
                shares of common stock pro rata to the holders of common shares held
                as of
                February 7, 2005.




33


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      6 - EQUITY TRANSACTIONS**





On
      December 30, 2005, the Company sold 1,000,000 units, on January 18, 2006, the
      Company sold 950,000 units, on March 10, 2006, the Company sold 800,000 units
      and on March 31, 2006, the Company sold 2,750,000 units. Each unit sold
      consisted of one share of common stock and one warrant, and the sales price
      of
      each unit was $1.00 per unit. The Company’s stock prices on the dates of closing
      were $1.65, $1.50, $1.65 and $2.30, respectively. The Company realized net
      proceeds of $5,413,000 after the costs of the offering. The warrants have an
      exercise price of $2 per share and expire 1,000,000 in December 2007, 950,000
      in
      January 2008 and 3,550,000 in March 2008. The total fair value of the units
      totaled approximately $21,000,000 upon issuance.





On
      June
      9, 2006, the Board of Directors approved the designation of 1,000 shares of
      Series A Preferred Stock, par value $0.01 The Company has not amended its
      certificate of Incorporation and anticipates that it will receive shareholder
      consent and will amend the Certificate of Incorporation at the closing of the
      proposed merger agreement. The Series A Preferred Stock will be automatically
      converted into 451.004079 shares of the Company’s Common Stock upon the
      effectiveness of the filing of an amendment to the Company’s Certificate of
      Incorporation authorizing a sufficient number of shares of Common
      Stock.





**NOTE
      7 —RECENT ACCOUNTING PRONOUNCEMENTS**





The
      FASB
      issued Interpretation No. 48, *Accounting
      for Uncertainty in Income Taxes—an interpretation of FASB Statement No.
      109* (FIN 48)
      in June 2006. This Interpretation primarily relates to tax positions taken
      or
      expected to be taken in a tax return and clarifies the accounting for
      uncertainty in income taxes recognized in an enterprise’s financial statements.
      Under this Interpretation the effects of a tax position would be recognized
      or
      derecognized depending on what outcome is more likely than not to occur with
      respect to the position. This Interpretation is effective for fiscal years
      beginning after December 15, 2006. The Company does not believe that the
      adoption of this pronouncement would have a material effect on the Company’s
      consolidated financial statements.




Management
      does not believe that any other recently issued, but not yet effective
      accounting pronouncements, if adopted, would have a material effect on the
      accompanying financial statements.


34


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      8 - EXECUTIVE COMPENSATION**





On
      January 18, 2006, upon the appointment of Mr. David Chazen as President and
      a
      member of the Board of Directors, the Company has agreed to compensate Mr.
      Chazen for his services as President at a rate of $10,000 per month. This
      compensation arrangement can be terminated by either the Company or Mr. Chazen
      upon written notice to the other party. In addition, for agreeing to serve
      as a
      member of the Company’s Board of Directors, Mr. Chazen was granted a warrant to
      purchase 150,000 shares of the Company’s common stock, having an exercise price
      of $1.00 and an expiration date of January 18, 2008. Furthermore, on January
      18,
      2006, Mr. Barry Regenstein, a member of the Company’s Board of Directors, was
      granted, for his services as a member, a warrant to purchase 50,000 shares
      of
      the Company’s common stock, having an exercise price of $1.00 and an expiration
      date of January 18, 2008. The warrants granted to Messrs. Chazen and Regenstein
      contain standard piggyback registration rights, provided, however, the shares
      of
      common stock issued upon exercise will be subject to restrictions on resale
      for
      a period of one year from the date of exercise. The Company recognized
      approximately $300,000 of stock-based compensation expense related to the
      issuance of the warrants.





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following assumptions:





Expected
                Life (years)
            
            
            2Interest
                Rate
            
            
            4.35
            %Volatility
            
            
            446
            %Dividend
                Yield
            
            
            0





On
      February 13, 2006, upon the appointment of Mr. David Goddard as a member of
      the
      Board of Directors, he was granted a warrant to purchase 50,000 shares of the
      Company’s common stock, having an exercise price of $1.00 and an expiration date
      of February 13, 2008. The warrant contains standard piggyback registration
      rights, provided, however, the shares of common stock issued upon exercise will
      be subject to restrictions on resale for a period of one year from the date
      of
      exercise. The Company recognized approximately $81,000 of stock-based
      compensation expense related to the issuance of the warrants.





The
      fair
      value of each option grant is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following assumptions:





Expected
                Life (years)
            
            
            2Interest
                Rate
            
            
            4.68
            %Volatility
            
            
            321
            %Dividend
                Yield
            
            
            0





35


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      9 - RELATED PARTY TRANSACTIONS**





On
      March
      10, 2006, a Management Agreement with Trinad Management, LLC ("Trinad") and
      the
      Company, pursuant to which Trinad agrees to provide the Company with certain
      management services (the "Management Services"), including without limitation,
      the sourcing, structuring and negotiation of a potential business combination
      involving the Company became effective. As compensation for such Management
      Services the Company shall pay Trinad a monthly management fee of $30,000 for
      a
      period of five years. The Company may terminate the agreement by paying a
      termination fee of $1,000,000. As of June 30, 2006, Trinad and its affiliates
      collectively own approximately 40% of the Company's issued and outstanding
      common stock. The Company incurred $90,000 in management fees to Trinad during
      the year ended June 30, 2006.





During
      the year ended June 30, 2006, certain officers of the Company incurred expenses
      on behalf of affiliated entities that were paid by the Company and charged
      to
      the affiliates. At June 30, 2006, the amount of reimbursements receivable from
      related parties totaled $20,000.




**NOTE
      10 — ACCRUED LIABILITIES**




Accrued
                liabilities consists of:Accrued
                professional fees
            
            $
            133,000Accrued
                travel and entertainment expenses
            
            
            28,000$
            161,000




**NOTE
      11 — EMPLOYEE BENEFIT PLAN**




At
      June
      30, 2006, we did not maintain any employee benefit plans.




Prior
      to
      the Reorganization, we maintained a qualified Section 401(k) Savings Plan.
      The
      401(k) Savings Plan allowed eligible employees to contribute up to 15% of their
      salaries on a pre-tax basis, subject to certain limitations imposed by current
      tax law and regulations.


36


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**




**NOTE
      12 — INCOME TAXES**




At
      June
      30, 2006 and 2005, we had net operating loss carry-forwards for federal and
      state income tax purposes of approximately $77 and $76 million, respectively.
      Annual utilization of the loss carry-forwards is subject to significant
      limitations due to changes in our ownership and its unlikely that any benefit
      other than a de minimus amount will be recognized. Future changes in ownership
      could further limit the utilization of any available net operating loss
      carry-forwards. If unused, the carry-forwards will expire between 2009 and
      2025.




We
      incurred Delaware and other state and local taxes of $1,000 expense and $38,000
      benefit for the years ended June 30, 2006 and 2005, respectively.




As
      of
      June 30, 2006, realization of the Company's net deferred tax asset of
      approximately $32,390,000 related to the NOL carryforwards was not considered
      more likely than not and, accordingly, a valuation allowance of $32,390,000
      has
      been provided. During the year ended June 30, 2006, the valuation allowance
      increased by $464,000




As
      of
      June 30, 2006, the components of the net deferred tax asset consisted of the
      following:





Deferred
                tax assets:Net
                operating loss carryforwards
            
            $
            32,390,000Valuation
                allowance
            
            
            (32,390,000
            )$
            -




A
      reconciliation between the statutory tax rate and the effective tax rate for
      the
      periods indicated is presented below:




**Years
                ended June 30,****2006**
            
            **2005**Federal
                statutory tax rate
            
            
            35
            %
            
            35
            %State
                taxes
            
            
            7
            
            
            7Valuation
                allowance
            
            
            (42
            )
            
            (42
            )Effective
                tax rate
            
            
            -
            
            
            -


37


**U.S.
      WIRELESS DATA, INC.**


**NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS**





**NOTE
      13 COMMITMENTS AND CONTINGENCIES**




In
      accordance with the Plan, all commitments and contingencies prior to the
      Reorganization were transferred to the Liquidation Trust.




We
      have
      provided a former officer with an indemnity for such person’s assistance with
      the preparation of this report and other matters.




We
      are
      not currently subject to any material legal proceedings. However, we may from
      time to time become a party to legal proceedings arising in the ordinary course
      of our business.




**NOTE
      14 SETTLEMENT AND RELEASE AGREEMENT REGARDING THE AT&T
      ACTION**




On
      February 23, 2005, we entered into a Settlement and Release Agreement (the
      “Settlement Agreement”) with Cingular Wireless, LLC (successor in interest to
      AT&T Wireless Services, Inc.) in order to settle the previously disclosed
      arbitration relating to the “AT&T Action” between the parties. The Court
      approved the Settlement Agreement at a hearing held on March 31, 2005. In
      accordance with the Plan, all rights related to, and all obligations arising
      from, this matter and the Settlement Agreement were transferred to the
      Liquidation Trust at the close of business on March 18, 2005.


38




**ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING FINANCIAL
      DISCLOSURE**




**None.**




**ITEM
      8A. CONTROLS AND PROCEDURES**





**(a)
      Evaluation of Disclosure Controls and Procedures.** Our
      principal executive officer and principal financial officer, after evaluating
      the effectiveness of our disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered
      by this Annual Report on Form 10-KSB, have concluded that, based on such
      evaluation, our disclosure controls and procedures were adequate and effective
      to ensure that material information relating to us, was made known to them
      by
      others within those entities, particularly during the period in which this
      Annual Report on Form 10-KSB was being prepared.





**(b)
      Changes in Internal Controls.** There
      were no significant changes in our internal control over financial reporting,
      identified in connection with the evaluation of such internal control that
      occurred during our last fiscal quarter that have materially affected, or are
      reasonably likely to materially affect, our internal control over financial
      reporting.





**ITEM
      8B. OTHER INFORMATION**





None





**PART
      III**




**ITEM
      9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
      WITH
      SECTION 16(a) OF THE EXCHANGE ACT**




**Board
      of Directors and Executive Officers**




On
      March
      26, 2004, we filed a voluntary petition for relief under Chapter 11 of the
      United States Bankruptcy Code (the “Bankruptcy Code”) in the United States
      Bankruptcy Court for the Southern District of New York (the “Court”), in re U.S.
      Wireless Data, Inc., Case Number 04-12075.




We
      were
      operating as a debtor-in-possession (“DIP”) under the jurisdiction of the Court
      and in accordance with the applicable provisions of the Bankruptcy Code and
      orders of the Court (the “Chapter 11 Proceedings”) until the Reorganization (as
      defined below).




On
      December 27, 2004, the Court confirmed our Amended Plan of Reorganization (the
      “Plan”). Additional details concerning the Plan are in the Amended Disclosure
      Statement filed with the Court in November 2004 in support of the Plan, the
      Amended Plan of Reorganization and Order Confirming Amended Plan of
      Reorganization, each of which is filed as an exhibit to Form 8-K filed with
      the
      Securities and Exchange Commission (“SEC”) on January 18, 2005.




39




On
      March
      18, 2005, in accordance with the Plan, Trinad Capital LP (“Trinad”), our Plan
      sponsor, became the holder of 93% of our newly issued common stock (the
“Reorganization”). Additionally, on March 18, 2005, Robert Ellin became a
      director and our Chief Executive Officer, Jay Wolf became a director and our
      Chief Operating Officer and Chief Financial Officer and Barry Regenstein became
      a director. Robert Ellin and Jay Wolf are the Managing Member and Managing
      Director of Trinad, respectively, and Barry Regenstein is affiliated with
      Trinad. As a result of the private placements consummated in December 2005and
      March 2006, Trinad experienced dilution of its ownership and currently owns
      approximately 40% of our Common Stock.




We
      are
      currently a “shell” company with no operations and controlled by Trinad, our
      majority stockholder. As a result of (i) the sale of virtually all of our
      operating assets in the auction sales conducted in the Court (the “Auction
      Sales”), and (ii) the Reorganization, very little of what is included in this
      Report on Form 10-KSB is relevant to any assessment of the Company on an ongoing
      basis. Accordingly, readers are advised not to rely on any historical
      information in considering an investment in or disposition of our
      stock.




The
      following table contains certain information with respect to our current
      directors.




**Name******
            
            **Age******
            
            **Principal
                Occupation******Robert
                S. Ellin
            
            41
            
            Director
                and Chief Executive OfficerJay
                A. Wolf
            
            34
            
            Director,
                Chief Operating Officer and Chief Financial OfficerDavid
                Chazen
            
            45
            
            Director
                and PresidentBarry
                I. Regenstein
            
            50
            
            DirectorDavid
                Goddard
            
            50
            
            Director




**Robert
      S. Ellin.** Mr.
      Ellin is a Managing Member of Trinad, which is a hedge fund dedicated to
      investing in micro-cap public companies. Mr. Ellin currently sits on the board
      of Command Security Corporation (CMMD), ProLink Holdings Corporation (PLKH)
      and
      Mediavest, Inc (MVSI). Prior to joining Trinad Capital LP, Mr. Ellin was the
      founder and President of Atlantis Equities, Inc., a personal investment company.
      Founded in 1990, Atlantis has actively managed an investment portfolio of small
      capitalization public company as well as select private company investments.
      Mr.
      Ellin frequently played an active role in Atlantis investee companies including
      Board representation, management selection, corporate finance and other advisory
      services. Through Atlantis and related companies Mr. Ellin spearheaded
      investments into ThQ, Inc. (OTC:THQI), Grand Toys (OTC: GRIN), Forward
      Industries, Inc. (OTC: FORD) and completed a leveraged buyout of S&S
      Industries, Inc. where he also served as President from 1996 to 1998. Prior
      to
      founding Atlantis Equities, Mr. Ellin worked in Institutional Sales at LF
      Rothschild and prior to that he was the Manager of Retail Operations at Lombard
      Securities. Mr. Ellin received a Bachelor of Arts from Pace
      University.




40




**Jay
      A. Wolf.** Mr. Wolf
      is a Managing Director of Trinad Capital LP. Mr. Wolf currently sits on the
      board of Shells Seafood Restaurants (SHLL), ProLink Holdings Corporation (PLKH),
      StarVox Communications, Inc., Optio Software, Inc. and Mediavest, Inc. (MVSI).
      Mr. Wolf has ten years of investment and operations experience in a broad range
      of industries. Mr. Wolf’s investment experience includes senior and subordinated
      debt, private equity, mergers & acquisitions and public equity investments.
      Prior to joining Trinad Capital LP, Mr. Wolf served as the Vice President of
      Corporate Development for a marketing communications firm where he was
      responsible for the company's acquisition program. Prior to that he worked
      at
      CCFL Ltd. a Toronto based merchant bank in the Senior Debt Department and
      subsequently for Trillium Growth Capital the firm's venture capital Fund. Mr.
      Wolf received a Bachelor of Arts from Dalhousie University.




**Barry
      I. Regenstein.** Mr.
      Regenstein is the President and Chief Financial Officer of Command Security
      Corporation. Trinad is a significant shareholder of Command Security Corporation
      and Mr. Regenstein has formerly served as a consultant for Trinad. Mr.
      Regenstein has over 28 years of experience with 23 years of such experience
      in
      the aviation services industry. Mr. Regenstein was formerly Senior Vice
      President and Chief Financial Officer of Globe Ground North America (previously
      Hudson General Corporation), and previously served as the Corporation’s
      Controller and as a Vice President. Prior to joining Hudson General Corporation
      in 1982, he had been with Coopers & Lybrand in Washington, D.C. since 1978.
      Mr. Regenstein currently sits of the boards of GTJ Co., Inc., ProLink
      Corporation (PLKH) and Mediavest, Inc. (MVSI).  Mr. Regenstein is a
      Certified Public Accountant and received his Bachelor of Science in Accounting
      from the University of Maryland and an M.S. in Taxation from Long Island
      University.




**David
      Chazen.** Mr.
      Chazen is Managing Director of Chazen Capital Partners, a private investment
      partnership founded in 1997 that provides equity capital and management support
      to consumer oriented companies. Mr. Chazen also serves as President of
      Win Stuff Corporation, the largest specialized operator of
      entertainment skill crane vending machines in the U.S. Mr. Chazen also serves
      as
      the president of Good Stuff Toys, a manufacturer of licensed toys. Mr.
      Chazen is also the Managing Director of HQ Enterprises, a provider of
      stored value gift cards for the shopping mall industry. Mr. Chazen is a director
      of the St. Johns Companies, the Chazen Institute of International Business
      at
      Columbia University, the Society of Fellows at the Aspen Institute, and Jazz
      Aspen. Mr. Chazen also serves on the Board of Advisors of Trinad Management,
      LLC, the manager of Trinad Capital L.P., the Company’s principal stockholder.
      Mr. Chazen received his B.S. from the Wharton School at the University of
      Pennsylvania in 1982, and his MBA from Columbia Business School in
      1986.




**David
      R. Goddard** . Mr.
      Goddard is the Chief Executive Officer for FutureVest, Inc., a venture
      investment company.  Mr. Goddard has 25 years of merchant banking, capital
      markets and investment experience.  He is on the Board of Directors of
      CipherPass Corporation and the Board of Advisors of LifeHouse Retirement
      Properties, Inc.  He has been a partner in Macluan Capital, a Vancouver
      based Private Equity firm since 2001.  From 1998 to 2001 Mr. Goddard was a
      Senior Managing Director and head of the Private Equity Capital Markets Group
      at
      Bear Stearns & Company.  Mr. Goddard was also a Managing Director at
      BankBoston  Robertson Stephens, Inc. in the Private Equity Placement Group
      and a portfolio manager for mezzanine investments.  Prior to this, Mr.
      Goddard was a Managing Director at Chase Securities, Inc.   He began
      his career at Bank of America Securities in the Investment Banking group.
 He has his MBA from New York University and his BA from St. Lawrence
      University.




41




**Audit
      Committee.** We do
      not currently have an Audit Committee and all actions that would otherwise
      be
      handled by the Audit Committee are undertaken by the full Board of Directors.
      If
      and when we find a suitable merger candidate and we successfully enter into
      a
      merger transaction whereby a company with assets and operations survives, we
      intend to establish an Audit Committee that fulfills the independence and other
      requirements promulgated by the SEC.




**Board
      of Directors and Executive Officers prior to our emergence from
      Bankruptcy**




Prior
      to
      our emergence from Chapter 11 of the Bankruptcy Code, Dean M. Leavitt was our
      Chairman of the Board and Chief Executive Officer, Barry A. Kaplan was a
      director of the Company, Chester N. Winter was a director of the Company, Heidi
      R. Goff was our President and Chief Operating Officer, Charles I. Leone was
      our
      Executive Vice President, Chief Administrative Officer and Secretary and Adi
      Raviv was our Executive Vice President and Chief Financial Officer. With the
      exception of Mr. Leone, who is currently serving as an outside consultant to
      the
      Company, none of our directors and officers prior to the Reorganization has
      any
      current affiliation with us.




**Section
      16(A) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Exchange Act requires our officers, directors, and persons owning
      more than ten percent of a registered class of our equity securities (“ten
      percent stockholders”) to file reports of ownership and changes of ownership
      with the SEC. Officers, directors, and ten-percent stockholders are required
      by
      SEC regulations to furnish us with copies of all Section 16(a) reports they
      file
      with the SEC. To the best of our knowledge, based solely on review of the copies
      of such reports and amendments thereto furnished to us, we believe that during
      our fiscal year ended June 30, 2006, all Section 16(a) filing requirements
      applicable to our officers, directors, and ten percent stockholders were
      met , except
      that the reports filed by Messrs. Chazen and Regenstein were not filed on a
      timely basis.




**Code
      of Ethics**




We
      do not
      currently have a code of ethics because we are not an operating company. If
      and
      when we find a suitable merger candidate and we successfully enter into a merger
      transaction whereby a company with assets and operations survives, we intend
      to
      establish a code of ethics.




**ITEM
      10. EXECUTIVE COMPENSATION**




On
      March
      18, 2005, Robert Ellin became a director and our Chief Executive Officer, Jay
      Wolf became a director and our Chief Operating Officer and Chief Financial
      Officer and Barry Regenstein became a director. On January 18, 2006, upon the
      appointment of Mr. David Chazen as President and a member of the Board of
      Directors, the Company has agreed to compensate Mr. Chazen for his services
      as
      President at a rate of $10,000 per month. This compensation arrangement can
      be
      terminated by either the Company or Mr. Chazen upon written notice to the other
      party. In addition, for agreeing to serve as a member of the Company’s Board of
      Directors, Mr. Chazen was granted a warrant to purchase 150,000 shares of the
      Company’s Common Stock, having an exercise price of $1.00 and an expiration date
      of January 18, 2008. The warrants were valued at $225,000 using the
      Black-Scholes Model, and was charged to compensation expense.




42




Prior
      to
      our Reorganization, our former directors and officers received compensation
      paid
      by us. After our emergence from Chapter 11 of the Bankruptcy Code, with the
      exception of Mr. Leone, who is currently serving as an outside consultant and
      receives compensation paid by us for those services, none of our former
      directors and officers have any current affiliation with us and accordingly
      do
      not receive compensation paid by us.




In
      accordance with the Plan, all of the options and warrants held by our former
      directors and officers prior to the Reorganization were canceled.




We
      have
      no plan for compensating our directors for their service in their capacity
      as
      directors, although such directors are expected in the future to receive stock
      options to purchase common shares as awarded by our Board of Directors or (as
      to
      future stock options) a compensation committee which may be established.
      Directors are entitled to reimbursement for reasonable travel and other
      out-of-pocket expenses incurred in connection with attendance at meetings of
      our
      Board of Directors. Our Board of Directors may award special remuneration to
      any
      director undertaking any special services on our behalf other than services
      ordinarily required of a director. Although it is our policy that no director
      receive and/or accrue any compensation for their services as a director,
      including committee participation and/or special assignments, on
      January 18, 2006, upon the appointment of Messrs. Chazen and Regenstein as
      members of our Board of Directors, Mr. Chazen granted a warrant to purchase
      150,000 shares and Mr. Regenstein was granted a warrant to purchase 50,000
      shares of the Company’s Common Stock, each warrant having an exercise price of
      $1.00 and an expiration date of January 18, 2008. The warrants granted to
      Messrs. Chazen and Regenstein contain standard piggyback registration rights,
      provided, however, the shares of common
      stock issued
      upon exercise will be subject to restrictions on resale for a period of one
      year
      from the date of exercise .




Although
        it is our policy that no director receive and/or accrue any compensation
        for
        their services as a director, including committee participation and/or special
        assignments, on January 18, 2006, upon the appointment of Messrs. Chazen
        and
        Regenstein as members of our Board of Directors, Mr. Chazen granted a warrant
        to
        purchase 150,000 shares and Mr. Regenstein was granted a warrant to purchase
        50,000 shares of the Company’s Common Stock, each warrant having an exercise
        price of $1.00 and an expiration date of January 18, 2008. The warrants granted
        to Messrs. Chazen and Regenstein contain standard piggyback registration
        rights,
        provided, however, the shares of common stock issued upon exercise will be
        subject to restrictions on resale for a period of one year from the date
        of
        exercise.




On
      March
      10, 2006, a Management Agreement with Trinad Management, LLC ("Trinad
      Management") and the Company, pursuant to which Trinad Management agrees to
      provide the Company with certain management services (the "Management
      Services"), including, without limitation, the sourcing, structuring and
      negotiation of a potential business combination involving the Company became
      effective. As compensation for such Management Services, the Company shall
      pay
      Trinad Management a monthly management fee of $30,000 for a period of five years. The Company may terminate
      the agreement by paying a termination fee of $1,000,000. Trinad and its
      affiliates collectively own approximately 40% of the Company's issued and
      outstanding Common Stock. The Company paid $90,000 in fees for
      Management Services to Trinad Management during the year ended June 30,
      2006.




43




Other
      than as describe above, there are no management agreements with our directors
      or
      executive officers and we do not anticipate that written agreements will be
      put
      in place in the foreseeable future.




We
      have
      no plans or arrangements in respect of remuneration received or that may be
      received by our executive officers to compensate such officers in the event
      of
      termination of employment (as a result of resignation, retirement, change of
      control) or a change of responsibilities following a change of
      control.




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS**




The
      following tables set forth certain information regarding the beneficial
      ownership of our common stock as of October 10, 2006, by the (i) Named Executive
      Officers, (ii) all persons, including groups, known to us to own beneficially
      more than five percent (5%) of the outstanding Common Stock, and (iii) all
      executive officers and directors as a group. A person (or group) is deemed
      to be
      a beneficial owner of common stock that can be acquired by such person or group
      within 60 days from October 10, 2006, upon the exercise of warrants, options
      or
      other rights exercisable for, or convertible into, Common stock. As of October
      10, 2006, there were a total of 9,499,730 shares of Common Stock outstanding
      and
      there were 5,750,000 warrants outstanding that were convertible into shares
      of
      Common Stock.




Except
      as
      otherwise indicated, the address of each of the following persons is c/o U.S.
      Wireless Data, Inc., 2121 Avenue of the Stars, Suite 1650, Los Angeles, CA
      90067.




**CERTAIN
      HOLDERS OF COMMON STOCK**




**Beneficially
                Owned as of**
              **October
                10, 2006 (1)********Name
                and Address of Owner******
            
            **Number
                of**
              **Shares******
            
            **Percent
                of**
              **Class******Trinad
                Capital L.P2121
                Avenue of the Stars,Suite
                1650Los
                Angeles, CA 90067
            
            
            3,720,000
            (2)
            
            39.2
            %David
              Smith
            
            
            1,000,000
            (3)
            
            10
            %Lyrical
              Opportunity Partners, LP
            
            
            1,000,000
            (4)
            
            10
            %Current
                directors or officers:Robert
                S. Ellin
            
            
            —
            (2)
            
            *Jay
                A. Wolf
            
            
            —
            (2)
            
            *David
                Chazen
            
            
            550,000
            (5)
            
            5.6
            %Barry
                I. Regenstein
            
            
            50,000
            (2)
            
            *David
                Goddard
            
            
            50,000
            
            
            *All
                current directors and named executive officers asa
                group (four persons)
            
            
            6,370,000
            
            
            64.8
            %




44





*
      Represents less than 1% of outstanding shares.




(1)
            
            Except
                as specifically indicated in the footnotes to this table, the persons
                named in this table have sole voting and investment power with respect
                to
                all shares of Common Stock shown as beneficially owned by them, subject
                to
                community property laws where applicable. Beneficial ownership is
                determined in accordance with the rules of the SEC. In computing
                the
                number of shares beneficially owned by a person and the percentage
                ownership of that person, shares of common stock subject to options,
                warrants or rights held by that person that are currently exercisable
                or
                exercisable, convertible or issuable within 60 days of October 10,
                2006,
                are deemed outstanding. Such shares, however, are not deemed outstanding
                for the purpose of computing the percentage ownership of any other
                person.


(2)
            
            Trinad
                owns 39% of our outstanding Common Stock. Robert Ellin and Jay Wolf,
                two
                of our directors and executive officers, are principals of Trinad
                and
                Barry Regenstein, our other director, is affiliated with Trinad.
                Robert
                Ellin and Jay Wolf may be deemed to beneficially own the stock that
                Trinad
                owns.(3)
            
            Amount
              shown includes warrants to purchase 500,000 shares of Common Stock
              that
              are currently exercisable.(4)
            
            Amount
              shown includes warrants to purchase 500,000 shares of Common Stock
              that
              are currently exercisable.(5)
            
            Amount shown
              includes
              warrants to purchase 350,000 shares of Common Stock that are currently
              exercisable.




**Changes
      in Control**




On
      June
      14, 2006, the Company entered into an Agreement and Plan of Merger (“Merger
      Agreement”) with StarVox Acquisition, a California corporation and wholly-owned
      subsidiary of the Company, and StarVox Communications, Inc. (“StarVox”). At the
      closing of the merger, the shares of StarVox common and preferred stock issued
      and outstanding immediately prior to the effective time of the merger shall
      be
      converted on a pro rata basis automatically into the right to receive 451.004079
      shares of fully paid and non-assessable shares of the Company’s preferred stock
      (the “Preferred Stock”) which, when converted, will equal 18,494,534 fully paid
      and non-assessable shares of the Company’s common stock (the “Common Stock”). At
      the effective time of the merger, each outstanding option to acquire StarVox
      common stock, whether vested or unvested, will be assumed by the Company and
      will be deemed to constitute an option to acquire, on the same terms and
      conditions, the same number of shares of the Company’s Common Stock as the
      holder of such option would have been entitled to receive pursuant to the merger
      had such holder exercised such option in full including unvested shares,
      immediately prior to the effective time. At closing, the Company will issue
      warrants to acquire shares of the Company’s Preferred Stock, which such number
      of shares of Preferred Stock will be based on the exchange ratio used in the
      merger, to existing warrant holders of StarVox such that the holder of such
      warrants, upon exercise, will receive that number of shares of the Company’s
      Common Stock as such holder would have been entitled to receive pursuant to
      the
      merger had such holder exercised such warrants immediately prior to the
      effective time of the merger, with the same expiration date as currently exists
      and at a per share exercise price proportionately adjusted for the exchange
      ratio.




As
      a
      condition to closing, the parties to the Merger Agreement have agreed that
      the
      Management Agreement between the Company and Trinad Management, LLC dated March
      10, 2006, must be terminated. According to the terms of the Management
      Agreement, The Company may terminate the agreement by paying a termination
      fee
      of $1,000,000.




45




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




There
      have been no transactions, or proposed transactions, which have materially
      affected or will materially affect us in which any director, executive officer
      or beneficial holder of more than 10% of the outstanding Common Stock, or any
      of
      their respective relatives, spouses, associates or affiliates, has had or will
      have any direct or material indirect interest except as noted below.




On
      March
      18, 2005, in accordance with the Plan, Trinad Capital, L.P (“Trinad”), our Plan
      sponsor, became the holder of 93% of our newly issued common stock (the
“Reorganization”). Additionally, on March 18, 2005, Robert Ellin became a
      director and our Chief Executive Officer, Jay Wolf became a director and our
      Chief Operating Officer and Chief Financial Officer and Barry Regenstein became
      a director. Robert Ellin and Jay Wolf are the Managing Member and Managing
      Director of Trinad, respectively, and Barry Regenstein is an outside consultant
      to Trinad.




On
      March
      10, 2006, a Management Agreement with Trinad Management, LLC ("Trinad
      Management") and the Company, pursuant to which Trinad Management agrees to
      provide the Company with certain management services (the "Management
      Services"), including, without limitation, the sourcing, structuring and
      negotiation of a potential business combination involving the Company became
      effective. As compensation for such Management Services, the Company shall
      pay
      Trinad Management a monthly management fee of $30,000 for a period of five
      years. The Company may terminate the agreement by paying a termination fee
      of
      $1,000,000. The Company paid $90,000 in fees for Management Services to Trinad
      Management during the year ended June 30, 2006. Trinad and its affiliates (which
      includes Trinad Management) collectively own approximately 40% of the Company's
      issued and outstanding Common Stock.




As
      at the
      date of this annual report, we do not have any policies in place with respect
      to
      whether we will enter into agreements with related parties in the
      future.




**ITEM
      13. EXHIBITS**





**Exhibit
                  Number**
              
              **Description
                of
                Exhibit**2.1
              
              Amended
                  Disclosure Statement filed with the United States Bankruptcy Court
                  for the
                  Southern District of New York (1)2.2
              
              Amended
                  Plan of Reorganization filed with the United States Bankruptcy
                  Court for
                  the Southern District of New York (1)2.3
              
              Order
                  Confirming Amended Plan of Reorganization issued by the United
                  States
                  Bankruptcy Court for the Southern District of New York (1)2.4
              
              Agreement
                  and Plan of Merger, dated as of June 14, 2006, among the Company,
                  StarVox
                  Acquisition, Inc., and StarVox Communications, Inc. (2)3.1
              
              Certificate
                  of Incorporation (3)3.2
              
              Amended
                  and Restated Certificate of Incorporation (4)3.3
              
              Bylaws
                  adopted March 18, 2005 (4)4.1
              
              Form
                  of Warrant issued to investors in connection with Subscription
                  Agreement,
                  dated as of December 30, 2005 (5)
  46
  4.2
              
              Form
                  of Warrant issued to investors in connection with Subscription
                  Agreement,
                  dated as of January 16, 2006 (6)4.3
              
              Form
                  of Warrants issued to Messrs. Barry I. Regenstein and David Chazen
                  in
                  connection with their respective appointments to the Company’s Board of
                  Directors (7)4.4
              
              Form
                  of Warrant issued to David Goddard in connection with his appointment
                  to
                  the Company’s Board of Directors (8)4.5
              
              Form
                  of Warrant issued to investors in connection with Subscription
                  Agreement,
                  dated as of March 10, 2006 (9)10.1
              
              Agreement
                  of Purchase and Sale, dated as of March 26, 2004, by and between
                  U.S.
                  Wireless Data, Inc. and NBS Synapse Corporation (10)10.2
              
              Agreement
                  of Purchase and Sale, dated as of March 26, 2004, by and between
                  U.S.
                  Wireless Data, Inc. and SANI Operating Co., LLC (10)10.3
              
              Indemnification
                  Agreement with consultant dated as of May 18, 2005 (4)10.4
              
              Loan
                  Agreement with Trinad Capital, L.P. dated as of September 23, 2005
                  (4)10.5
              
              Form
                  of Subscription Agreement, dated as of December 30, 2005
                  (5)10.6
              
              Form
                  of Subscription Agreement, dated as of January 16, 2006
                  (6)10.7
              
              Letter
                  Agreement between the Company and David Chazen, dated as of January
                  18,
                  2006 (7)10.8
              
              Form
                  of Subscription Agreement, dated as of March 10, 2006
                  (9)10.9
              
              Management
                  Agreement between the Company and Trinad Management, LLC. Dated
                  as of
                  March 10, 2006 (9)10.10
              
              $300,000
                  Senior Secured Promissory Note issued to the Company by StarVox
                  Communications, Inc. dated April 20, 2006 (11)10.11
              
              $3,200,000
                  Senior Secured Promissory Note issued to the Company by StarVox
                  Communications, Inc. dated June 14, 2006 (2)16.
              
              Letter
                  from Deloitte & Touche LLP, dated January 12, 2005 (12)31.1
              
              Certification
                  of Principal Financial Officer Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350*31.2
              
              Certification
                  of Principal Financial Officer Pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350*32.1
              
              Certification
                  of Principal Executive Officer and Principal Financial Officer
                  Pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
                  1350*


47





(1)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on January 18, 2005.(2)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on June 20, 2006.(3)
            
            Incorporated
                by reference from the like-named exhibit filed with our Quarterly
                Report
                on Form 10-QSB for the fiscal quarter ended September 30, 2000, filed
                on
                November 14, 2000.(4)
            
            Incorporated
                by reference from the like-named exhibit filed with our Annual Report
                on
                Form 10-KSB for the fiscal year ended June 30, 2005, filed on September
                28, 2005.(5)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on January 5, 2006.(6)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on January 20, 2006.(7)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on January 24, 2006.(8)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on February 17, 2006.(9)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on March 16, 2006.(10)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on April 12, 2004.(11)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on April 26, 2006.(12)
            
            Incorporated
                by reference from the like-named exhibit filed with our Current Report
                on
                Form 8-K, filed on January 13, 2005.




**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




The
      following table presents fees for professional audit services rendered by
      Friedman, LLP for the audit of our annual financial statements and fees for
      other services for the years ended June 30, 2006 and 2005:




**2006**
            
            **2005**Audit
                fees: (1)
            
            $
            44,000
            
            $
            36,000Audit
                related fees: (2)
            
            
            None
            
            
            NoneTax
                fees: (3)
            
            
            None
            
            
            NoneAll
                other fees: (4)
            
            
            None
            
            
            NoneTotal
            
            $
            44,000
            
            $
            36,000




48




**Policy
      on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services
      of
      Independent Auditors**




We
      do not
      currently have an Audit Committee and all actions that would otherwise be
      handled by the Audit Committee are undertaken by our full Board of Directors.
      If
      and when we find a suitable merger candidate and we successfully enter into
      a
      merger transaction whereby a company with assets and operations survives, we
      intend to establish an Audit Committee that fulfills the independent and other
      requirements promulgated by the SEC. However, recognizing the SEC policies
      regarding auditor independence, our Board of Directors has responsibility for
      appointing, setting compensation and overseeing the work of the independent
      auditor. In recognition of this responsibility, our Board of Directors has
      established a policy to pre-approve all audit and permissible non-audit services
      provided by the independent auditor.




Prior
      to
      engagement of the independent auditor for the next year’s audit, management will
      submit an aggregate of services expected to be rendered during that year for
      each of the following four categories of services to our Board of Directors
      for
      approval.




1. ***Audit*** services
      include audit work performed in the preparation of financial statements, as
      well
      as work that generally only the independent auditor can reasonably be expected
      to provide, including comfort letters, statutory audits, and attest services
      and
      consultation regarding financial accounting and/or reporting standards.




2. ***Audit-Related*** services
      are for assurance and related services that are traditionally performed by
      the
      independent auditor, including due diligence related to mergers and
      acquisitions, employee benefit plan audits, and special procedures required
      to
      meet certain regulatory requirements.




3. ***Tax*** services
      include all services performed by the independent auditor’s tax personnel except
      those services specifically related to the audit of the financial statements,
      and includes fees in the areas of tax compliance, tax planning, and tax advice.




4. ***Other
      Fees*** are
      those associated with services not captured in the other categories.




Prior
      to
      engagement, our Board of Directors pre-approves these services by category
      of
      service. The fees are budgeted and our Board of Directors requires the
      independent auditor and management to report actual fees versus the budget
      periodically throughout the year by category of service. During the year,
      circumstances may arise when it may become necessary to engage the independent
      auditor for additional services not contemplated in the original pre-approval.
      In those instances, our Board of Directors requires specific pre-approval before
      engaging the independent auditor.




Our
      Board
      of Directors may delegate pre-approval authority to one or more of its members.
      The member to whom such authority is delegated must report, for informational
      purposes only, any pre-approval decisions to our Board of Directors at its
      next
      scheduled meeting.




Our
      Board
      of Directors pre-approved the retention of Friedman for all audit, and
      audit-related services during fiscal 2006 and 2005.




49




**SIGNATURES**





In
      accordance with Section 13 or 15 of the Exchange Act, the Registrant caused
      this
      Report to be signed on its behalf by the undersigned, thereunto duly
      authorized .




**U.S.
                WIRELESS DATA, INC.**Dated: October
              13, 2006
            By:
            /s/ Robert
              EllinRobert
                Ellin
                Chief
                  Executive Officer
                  (Principal
                    Executive Officer)




Dated: October 13,
              2006
            
            /s/ Jay
              WolfJay
                Wolf
                Chief
                  Operating Officer and
                  Chief
                    Financial Officer
                    (Principal
                      Financial
                      Officer)




50