UNITED STATESSECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 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, 2005

| | [  ] | 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.)

420
Lexington Avenue, Suite 2450, New York, New York 10170
(Address of principal executive offices)   
   (Zip Code)

Registrants
telephone number, including area code:     (646)
452-6128

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  [   ]

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  [   ]

The issuers
revenues for the fiscal year ended June 30, 2005 were $0. The aggregate market value of
the issuer's voting common equity held as of September 26, 2005 by non-affiliates of the
Issuer was approximately $2,800 based on the last trade price of $0.01 as of September 1,
2005.

As of September
26, 2005, the issuer had 3,999,730 shares of its $0.01 par value common stock outstanding.

Transitional
Small Business Disclosure Format (check one):     Yes  [   ]     No  [X]

---

U.S.
Wireless Data, Inc.
ANNUAL REPORT ON FORM 10-KSB
FOR THE YEAR ENDED JUNE 30, 2005
INDEX

Page

|                                                                           | 
|-------------------------------------------------------------------------- | 
|PART I                                                                     | 
|Item 1.     DESCRIPTION OF BUSINESS                                        | 
|Item 2.     DESCRIPTION OF PROPERTY                                        | 
|Item 3.     LEGAL PROCEEDINGS                                              | 
|Item 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            | 
|PART II                                                                    | 
|Item 5.     MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS          | 
|AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES                   | 
|Item 6.     MANAGEMENTS PLAN OF OPERATION                                 | 
|Item 7.     FINANCIAL STATEMENTS                                           | 
|Item 8.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON               | 
|ACCOUNTING AND FINANCIAL DISCLOSURE                                        | 
|Item 8A.   CONTROLS AND PROCEDURES                                         | 
|Item 8B.   OTHER INFORMATION                                               | 
|PART III                                                                   | 
|Item 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, | 
|COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT                          | 
|Item 10.    EXECUTIVE COMPENSATION                                         | 
|Item 11.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS                | 
|AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS                             | 
|Item 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                 | 
|Item 13.    EXHIBITS                                                       | 
|Item 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES                         | 

2

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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,  L.P.  (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.

Trinad and
Managements Plan of Operation

Trinad,
a hedge fund dedicated to investing in micro-cap companies, is seeking to raise
additional capital with a view to making us an attractive vehicle with which to
acquire a business. It will then seek a suitable acquisition candidate. No such
business has been identified and we are therefore subject to a number of risks,
including: any acquisition consummated by us may turn out to be unsuccessful;
our investors will not know what operating business, if any, will be acquired,
including the particular industry in which the business operates, 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.

3

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Trinad
has agreed that it will not dispose of any of our common stock held by it until
an acquisition transaction has been consummated and a Current Report on Form 8-K
setting forth the terms of the acquisition and audited financial statements of
the acquisition target have been filed with the Securities and Exchange
Commission (SEC).

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 will
be used to pay administrative costs and creditors of the Chapter 11 Proceedings.
If there is any remaining cash in the Liquidation Trust, it will be used to
settle a small 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 to.

Chapter 11
Proceedings

Prior
to the Reorganization, 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. As of March 18, 2005, we had an accumulated deficit of
approximately $142 million. Managements concerns about capital led it to
take additional steps to cut costs, dispose of operations and, 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.

4

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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.

In
connection with the Chapter 11 Proceedings, we executed an agreement with NBS
Synapse Corporation to sell our Synapse point-of-sale gateway business to NBS
for $2.85 million in cash plus up to $2.15 million credit for free payment
processing services to be rendered to us for our vending operations plus the
assumption of certain liabilities. We simultaneously had reached an agreement
with SANI Operating Co., LLC (SANI) to sell our vending operations,
including the $2.15 million credit for payment processing services from NBS, for
$1.6 million in cash plus the assumption of certain liabilities. We had also
arranged DIP financing with SANI in order to fund our ongoing operations during
the bankruptcy process and through the closing of the sales of the operations.
We drew $925,000 on the DIP loan at March 31, 2004 and $675,000 on May 7, 2004.
Interest accrued on the DIP loan at a rate of 6% per annum. The DIP loan was
repaid, with interest, on May 11, 2004 from a deposit of the proceeds of the
Auction Sales (as defined below).

On May
11, 2004, we completed the bankruptcy auctions for the sale of (i) our Synapse
point-of-sale gateway business, and (ii) our vending operations (collectively,
the Auction Sales). Transaction Network Services (TNS)
was awarded by the Court as the winning bidder for each of the operations
offered for sale. TNS paid $6 million in cash for our wireless payment
processing business and $3.7 million in cash for our wireless vending business,
for an aggregate purchase price of $9.7 million in cash. The sales to TNS were
completed on May 21, 2004.

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:

5

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

Prepetition
liabilities subject to compromise were as follows:

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

Loan, Going
Concern and Liquidity Uncertainties

On
September 23, 2005, we executed a loan agreement with Trinad whereby Trinad has
agreed to loan us up to a principal amount of $100,000 (the Loan) at
any time and from time to time prior to our consummation of a Next Financing (as
defined below). Trinad shall make advances to us in such amounts as we shall
request from time to time. The Loan bears interest at the prime rate plus 1
percent per annum. The entire outstanding principal amount of the Loan and any
accrued interest thereon shall be due and payable by us upon, and not prior to,
the consummation of a sale of securities (other than a sale of shares of our
Common Stock to officers, directors or employees of, or consultants to, us in
connection with their provision of services to us), to a third party or parties
with proceeds to us of not less than $200,000 (a Next Financing).

As of
June 30, 2005, we had cash of $28,000 remaining of the original $100,000
contributed to us by Trinad, as well as the ability to draw additional funds up
to $100,000 from the Loan. We believe that we will have sufficient cash
available to us to satisfy our monetary needs for the next fiscal year as a
shell company. We also believe that Trinad has the financial ability and intent
to fund our financial needs to the extent reasonably necessary. Since our
emergence from bankruptcy from effectuating the Reorganization, we have had no
liabilities related to the Chapter 11 Proceedings. 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.

Bridge Loan

Prior
to the Petition Date, we partially financed our business through a factoring
arrangement with Platinum Funding Corp. (Platinum). Our obligations
to Platinum were secured by all of the Companys assets. By the date of the
Auction Sales, we had fully repaid this obligation and were released from the
liens on our assets.

6

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Also
prior to the Petition Date, we financed our business through a $2.75 million
bridge loan (the Bridge Loan) made by Brascan Financial Corporation
(Brascan), a subsidiary of the Toronto, Canada-based Brascan
Corporation. The Bridge Loan was secured by a lien upon and security interest in
all of the Companys assets. As part of the transaction, Platinum
contractually subordinated its lien upon our assets (other than Accounts
Receivable) to Brascans liens to the extent of $3,500,000. In connection
with the Bridge Loan, Brascan received a warrant on September 16, 2003
exercisable for 10 million shares of our common stock at $.15 per share (the
Bridge Loan Warrant). The Bridge Loan Warrant was subsequently
amended and restated to 5 million shares as of the Petition Date. The Bridge
Loan Warrant became exercisable on December 31, 2003 and was to expire in
September 2008. As of the effective date of the Plan and as provided for under
the provisions of the Plan, all outstanding warrants expired without value.

As of
January 31, 2004, the Company was not in compliance with the minimum net worth
requirement set forth in the Bridge Loan documents and was in technical default
under several provisions of the Bridge Loan. Nonetheless, Brascan continued to
extend the balance of the remaining unadvanced amounts under the Bridge Loan to
us. As of January 31, 2004, we had drawn down the full amount of the $2.75
million Bridge Loan commitment. The Bridge Loan was repaid, with interest, on
May 21, 2004 from the proceeds of the Auction Sales.

ITEM 2.
DESCRIPTION OF PROPERTY

Until
May 28, 2004, the Predecessor Company occupied office space located at 750
Lexington Avenue, 20th 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 Successor Company from this office such as the sorting of applicable
mail between the Liquidation Trust and Successor Company. In addition, Trinad,
with an address at 153 East 53rd Street, 48th Floor, New York, NY 10022, also
provides certain office space and other services to Successor Company without
remuneration.

ITEM 3.
LEGAL PROCEEDINGS

Predecessor
Company was engaged in ongoing arbitration with AT&T Wireless. In 2000,
Predecessor Company entered into an agreement with AT&T Wireless pursuant to
which AT&T Wireless was to provide CDPD Wireless service to Predecessor
Company. In reliance upon that agreement, Predecessor Company purchased
substantially all the assets and assumed certain liabilities of Cellgate
Technologies, LLC. Shortly after completion of the Cellgate acquisition,
AT&T Wireless announced that it was going to launch a new GPRS network.
AT&T Wireless also later announced that it was going to decommission its
CDPD network. Predecessor Company was materially harmed by AT&T
Wirelesss decision to launch a GPRS network and decommission its CDPD
network, and by AT&T Wirelesss failure to advise Predecessor Company
prior to the Cellgate acquisition that it was considering these decisions.
Predecessor Company attempted, but was unable, to resolve its claims for damages
with AT&T Wireless without litigation. Accordingly, on February 20, 2004,
Predecessor Company commenced an arbitration against AT&T Wireless before
the American Arbitration Association seeking an amount in excess of $12 million
(the AT&T Action).

7

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On
February 23, 2005, Predecessor Company entered into a Settlement and Release
Agreement with Cingular Wireless, LLC (successor in interest to AT&T
Wireless Services, Inc.) in order to settle the AT&T Action between the
parties. The Court approved the Settlement and Release 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 and Release
Agreement were transferred to the Liquidation Trust at the effectuation of the
Reorganization as of the close of business on March 18, 2005.

On
March 26, 2004, Predecessor Company filed a petition for relief under Chapter 11
of the Bankruptcy Code with the Court. On December 27, 2004, the Court confirmed
the Plan. As of the close of business on March 18, 2005, we effectuated the
completion of the Reorganization, thereby emerging from the Chapter 11
Proceedings.

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

Not applicable.

PART II

ITEM 5.
MARKET FOR COMMON  EQUITY,  RELATED  STOCKHOLDER  MATTERS AND SMALL  BUSINESS  ISSUER
PURCHASES  OF EQUITY  SECURITIES

Market
Information

As of
the Reorganization, holders of record of Predecessor Company 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
August 16, 2005, our common stock, par value $.01 per share, is currently 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.

8

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The
following table reflects the high and low closing quotations of our common stock
for the two years ended June 30, 2005.

|Fiscal 2005    | High | Low    
|-------------- | ---- | -------
|First quarter  |      | $0.003 
|Second quarter |      | $0.002 
|Third quarter  |      | $0.0025
|Fourth quarter |      | $0.004 
|
|First quarter  |      | $0.290 
|Second quarter |      | $0.450 
|Third quarter  |      | $0.260 
|Fourth quarter |      | $0.009 

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 Predecessor Company were terminated in accordance with the Plan.

Holders

As of
September 26, 2005, there were 351 holders of record of the 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, 2005.

9

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ITEM 6.
MANAGEMENTS PLAN OF OPERATION

MANAGEMENTS
PLAN OF OPERATION

As
described under Item 1. Description of Business, on March 26, 2004,
Predecessor Company filed a petition for relief under Chapter 11 of the
Bankruptcy Code with the Court. On December 27, 2004, the Court confirmed the
Plan. As of the close of business on March 18, 2005, we effectuated the
completion of the Reorganization, thereby emerging from the Chapter 11
Proceedings. 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. We are currently a
shell company with no operations and controlled by Trinad, our
majority stockholder.

Trinad
has advised us that it will seek to raise additional capital (which will dilute
the ownership interests of all stockholders) with a view to making us an
attractive vehicle with which to acquire a business. Trinad, a hedge fund
dedicated to investing in micro-cap companies, plans to seek a suitable
acquisition candidate. No such business has been identified and we are therefore
subject to a number of risks, including those described below under the caption
RISK FACTORS.

Trinad
has agreed that it will not dispose of any of our common stock held by it until
an acquisition transaction has been consummated and a Current Report on Form 8-K
setting forth the terms of the acquisition and audited financial statements of
the acquisition target have been filed with the Securities and Exchange
Commission (SEC).

On
September 23, 2005, we executed a loan agreement with Trinad whereby Trinad has
agreed to loan us up to a principal amount of $100,000 (the Loan) at
any time and from time to time prior to our consummation of a Next Financing (as
defined below). Trinad shall make advances to us in such amounts as we shall
request from time to time. The Loan bears interest at the prime rate plus 1
percent per annum. The entire outstanding principal amount of the Loan and any
accrued interest thereon shall be due and payable by us upon, and not prior to,
the consummation of a sale of securities (other than a sale of shares of our
Common Stock to officers, directors or employees of, or consultants to, us in
connection with their provision of services to us), to a third party or parties
with proceeds to us of not less than $200,000 (a Next Financing).

As of
June 30, 2005, we had cash of $28,000 remaining of the original $100,000
contributed to us by Trinad, as well as the ability to draw additional funds up
to $100,000 from the Loan. We believe that we will have sufficient cash
available to us to satisfy our monetary needs for the next fiscal year as a
shell company. We also believe that Trinad has the financial ability and intent
to fund our financial needs to the extent reasonably necessary. Since our
emergence from bankruptcy from effectuating the Reorganization, we have had no
liabilities related to the Chapter 11 Proceedings. 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.

10

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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. 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.

We may
enter into a definitive agreement with a wide variety of private businesses
without limitation as to their industry or revenues. It is not possible at this
time to predict when, if ever, we will enter into a business combination with
any such private company or the industry or the operating history, revenues,
future prospects or other characteristics of any such company. Trinad has not
identified anyone for acquisition at this juncture.

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.

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.

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.

11

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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
postpetition 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.

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 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. Revenue from service fees aggregated $4,828,000 for the year
ended June 30, 2004 and $0 for both the nine months ended March 31, 2005
(Predecessor Company) and three months ended June 30, 2005 (Successor Company),
respectively.

Product
Sales. Product sales (i.e., sales of equipment) are primarily derived from
the sale of USWDs proprietary Synapse Adapter and Synapse Enabler
products. Revenues from product sales are recognized upon shipment and
acceptance. Revenue from product sales aggregated $97,000 for the year ended
June 30, 2004 and $0 for both the nine months ended March 31, 2005 (Predecessor
Company) and three months ended June 30, 2005 (Successor Company), respectively.

12

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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.

RECENT
ACCOUNTING PRONOUNCEMENTS

In
December 2004, the Financial Accounting Standards Board (FASB)
issued SFAS No. 123 (Revised 2004) Share-Based Payment (SFAS
No. 123R) that addresses the accounting for share-based payment
transactions in which a company receives employee services in exchange for (a)
equity instruments of the company or (b) liabilities that are based on the fair
value of the companys equity instruments or that may be settled by the
issuance of such equity instruments. SFAS No. 123R addresses all forms of
share-based payment awards, including shares issued under employee stock
purchase plans, stock options, restricted stock and stock appreciation rights.
SFAS No. 123R eliminates the ability to account for share-based compensation
transactions using APB Opinion No. 25, Accounting for Stock Issued to
Employees, that was provided in Statement 123 as originally issued. Under
SFAS No. 123R companies are required to record compensation expense for all
share based payment award transactions measured at fair value. This statement is
effective for quarters ending after June 15, 2005. We have not yet determined
the impact of applying the various provisions of SFAS No. 123R.

13

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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.

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

Trinad
intends to raise capital to make us a more attractive acquisition vehicle and
then seek a suitable merger candidate. Trinad has not identified acquisition
candidates at this juncture. There can be no assurance that Trinad will be
successful in raising capital on favorable terms, or at all, or in finding a
suitable merger candidate for us. Any acquisition consummated by us may turn out
to be unsuccessful, our investors will not know what operating business, if any,
will be acquired, including the particular industry in which the business
operates, and 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 enter into a merger or other business combination with a business entity
having no significant operating history, losses, limited or no potential for
immediate earnings, limited assets, negative net worth or other negative
characteristics, such as dependency on management that has not proven its
abilities or effectiveness. In the event that we complete a merger or other
business combination, the success of our operations will be dependent upon the
management of the target company and numerous other factors beyond our control.
There is no assurance that we will be able to negotiate a merger or business
combination on favorable terms, or at all.

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.

We
currently do not have any full-time employees and are dependent on Trinad,
independent contractors and consultants for the operation of our business.

We are
currently a shell company with no operations or employees. 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.

14

---

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 93% 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 93% 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.

15

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ITEM 7.
FINANCIAL STATEMENTS

|Report of Independent Registered Public Accounting Firm |  | 17    | 
|------------------------------------------------------- |  | ----- | 
|Consolidated Balance Sheet as of June 30, 2005          |  | 18    | 
|Consolidated Statements of Operations                   | 
|for the three months ended June 30, 2005,               | 
|nine months ended March 31, 2005 and the                | 
|year ended June 30, 2004                                |  | 19    | 
|Consolidated Statements of Cash Flows                   | 
|for the three months ended June 30, 2005,               | 
|nine months ended March 31, 2005 and the                | 
|year ended June 30, 2004                                |  | 20    | 
|Consolidated Statements of Stockholders Equity         | 
|for the three months ended June 30, 2005,               | 
|nine months ended March 31, 2005 and the                | 
|year ended June 30, 2004                                |  | 21    | 
|Notes to Consolidated Financial Statements              |  | 22-42 | 

16

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FRIEDMAN LLPACCOUNTANTS AND
ADVISORS

REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF
DIRECTORS AND STOCKHOLDERS OF   U.S. WIRELESS DATA, INC.

We
have audited the accompanying consolidated balance sheet of U.S. WIRELESS DATA,
INC. as of June 30, 2005 (Successor Company) and the related consolidated
statements of operations, stockholders equity, and cash flows for the
three months ended June 30, 2005 (Successor Company), the nine months ended
March 31, 2005 (Predecessor Company) and the year ended June 30, 2004
(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 audit.

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 audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides 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, 2005 (Successor Company) and the results of its operations,
its stockholders equity, and its cash flows for the three months ended
June 30, 2005 (Successor Company), the nine months ended March 31, 2005
(Predecessor Company) and the year ended June 30, 2004 (Predecessor Company), in
conformity with accounting principles generally accepted in the United States of
America.

/s/ Friedman LLP
New York, New YorkSeptember 26, 2005

17

---

# U.S.
WIRELESS DATA, INC.CONSOLIDATED BALANCE SHEET

|                                                                | June 30,2005
|--------------------------------------------------------------- | ------------
|ASSETS                                                          |             
|Current assets:                                                 |             
|Cash and cash equivalents                                       |             
|                                                                |             
|Total assets                                                    |             
|                                                                |             
|                                                                |             
|LIABILITIES AND STOCKHOLDERS EQUITY                            |             
|Current liabilities:                                            |             
|Accounts payable                                                |             
|Accrued liabilities                                             |             
|                                                                |             
|Total liabilities                                               |             
|                                                                |             
|Commitments and contingencies                                   |             
|Stockholders equity:                                           |             
|Preferred stock, 1,000,000 shares authorized at $.01 par value, |             
|no shares issued or outstanding at June 30, 2005                |             
|Common stock, 19,000,000 shares authorized at $.01 par value,   |             
|3,999,730 shares issued and outstanding at June 30, 2005        |             
|Accumulated deficit                                             |             
|                                                                |             
|Total stockholders equity                                      |             
|                                                                |             
|Total liabilities and stockholders equity                      |             
|                                                                |             
|                                                                |             

Accompanying
notes are an integral part of the financial statements

18

---

# U.S.
WIRELESS DATA, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                  | SuccessorCompany | PredecessorCompany | PredecessorCompany
|----------------------------------------------------------------- | ---------------- | ------------------ | ------------------
|
|Continuing operations                                             |                  |                    |                   
|General and administrative expenses                               |                  | $   (25,000        | )                 
|Interest income                                                   |                  | --                 |                   
|Interest (expense) reversal                                       |                  | --                 |                   
|Other income                                                      |                  | --                 |                   
|                                                                  |                  |                    |                   
|Loss before reorganization items                                  |                 
|and discontinued operations                                       |                  | (25,000            | )                 
|Reorganization items                                              |                 
|Gain on sale of shell                                             |                  | --                 |                   
|Professional fees and U.S. Trustee fees                           |                  | --                 |                   
|Rejection of real property lease                                  |                  | --                 |                   
|Rejection of executory agreements                                 |                  | --                 |                   
|3rd party and breakup fees                                        |                  | --                 |                   
|Interest income                                                   |                  | --                 |                   
|                                                                  |                  |                    |                   
|Loss before discontinued operations                               |                  | (25,000            | )                 
|                                                                  |                  |                    |                   
|Discontinued operations                                           |                 
|Loss on discontinued operations                                   |                  | --                 |                   
|Gain on sale of discontinued operations                           |                  | --                 |                   
|                                                                  |                  |                    |                   
|Income (loss) from discontinued operations                        |                  | --                 |                   
|                                                                  |                  |                    |                   
|Net income (loss)                                                 |                  | $   (25,000        | )                 
|                                                                  |                  |                    |                   
|                                                                  |                  |                    |                   
|Basic and diluted net income (loss) per share (a):                |                 
|Loss before reorganization items and discontinued operations      |                  | $             --   |                   
|Income (loss) from discontinued operations                        |                  | --                 |                   
|                                                                  |                  |                    |                   
|Net income (loss) per share                                       |                  | $             --   |                   
|                                                                  |                  |                    |                   
|                                                                  |                  |                    |                   
|Weighted average common shares outstanding, basic and diluted (a) |                  | 4,000,000          |                   
|                                                                  |                  |                    |                   
|                                                                  |                  |                    |                   

(a)  See Note 14

Accompanying
notes are an integral part of the financial statements

19

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# U.S.
WIRELESS DATA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                               | SuccessorCompany | PredecessorCompany | PredecessorCompany
|-------------------------------------------------------------- | ---------------- | ------------------ | ------------------
|
|CASH FLOWS FROM OPERATING ACTIVITIES:                          |                  |                    |                   
|Net income (loss)                                              |                  | $(25,000           | )                 
|Adjustments to reconcile net income (loss) to net cash used in |                 
|operating activities:                                          |                 
|Depreciation and amortization from discontinued operations     |                  | --                 |                   
|Accretion of bridge loan discount                              |                  | --                 |                   
|Provision for rejected real property lease                     |                  | --                 |                   
|Provision for rejected executory agreements                    |                  | --                 |                   
|Gain on sale of discontinued operations                        |                  | --                 |                   
|Customer advances assigned as part of auction sales            |                  | --                 |                   
|Provision for doubtful accounts                                |                  | --                 |                   
|Deferred rent                                                  |                  | --                 |                   
|Write-down of inventory                                        |                  | --                 |                   
|Changes in operating assets and liabilities:                   |                 
|Accounts receivable                                            |                  | --                 |                   
|Due from factor                                                |                  | --                 |                   
|Due from Plan Sponsor                                          |                  | --                 |                   
|Due from winning auction sale bidder                           |                  | --                 |                   
|Deferred cost of revenue                                       |                  | --                 |                   
|Prepaids and other current assets                              |                  | --                 |                   
|Accounts payable                                               |                  | 8,000              |                   
|Accrued liabilities                                            |                  | 5,000              |                   
|Accrued restructuring expense                                  |                  | --                 |                   
|Customer advances                                              |                  | --                 |                   
|Deferred revenue                                               |                  | --                 |                   
|Prepetition liabilities                                        |                  | --                 |                   
|Other liabilities                                              |                  | --                 |                   
|                                                               |                  |                    |                   
|Net cash (used in) operating activities                        |                  | (12,000            | )                 
|                                                               |                  |                    |                   
|CASH FLOWS FROM INVESTING ACTIVITIES:                          |                 
|Proceeds from the Auction Sales                                |                  | --                 |                   
|Purchase of property and equipment                             |                  | --                 |                   
|Decrease in restricted cash                                    |                  | --                 |                   
|Transfer to Chapter 11 escrow accounts                         |                  | --                 |                   
|Transfer from Chapter 11 escrow accounts                       |                  | --                 |                   
|Transfer to Liquidation Trust                                  |                  | --                 |                   
|Transfer to Plan Sponsor escrow account                        |                  | --                 |                   
|Transfer from Plan Sponsor escrow account                      |                  | --                 |                   
|                                                               |                  |                    |                   
|Net cash provided by investing activities                      |                  | --                 |                   
|                                                               |                  |                    |                   
|CASH FLOWS FROM FINANCING ACTIVITIES:                          |                 
|Proceeds from DIP loan                                         |                  | --                 |                   
|Repayment of DIP loan                                          |                  | --                 |                   
|Proceeds from bridge loan                                      |                  | --                 |                   
|Repayment of bridge loan                                       |                  | --                 |                   
|Proceeds from Plan Sponsor                                     |                  | 100,000            |                   
|Costs related to acquisition of shell                          |                  | (60,000            | )                 
|Proceeds from notes payable                                    |                  | --                 |                   
|Payment of notes payable                                       |                  | --                 |                   
|Payments for real estate lease termination                     |                  | --                 |                   
|Payments of obligations under capital lease                    |                  | --                 |                   
|                                                               |                  |                    |                   
|Net cash provided by (used in) financing activities            |                  | 40,000             |                   
|                                                               |                  |                    |                   
|Net increase (decrease) in cash and cash equivalents           |                  | 28,000             |                   
|Cash and cash equivalents, beginning of period                 |                  | --                 |                   
|                                                               |                  |                    |                   
|Cash and cash equivalents, end of period                       |                  | $   28,000         |                   
|                                                               |                  |                    |                   
|                                                               |                  |                    |                   

Accompanying
notes are an integral part of the financial statements

20

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# U.S.
WIRELESS DATA, INC.CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYFor the
three months ended June 30, 2005, the nine months ended March 31, 2005 and for the
year ended June 30, 2004

|                                        | Series C Convertible Preferred Stock | Common Stock | AdditionalPaid-in | Accumulated   | TotalStockholders |            | 
|--------------------------------------- | ------------------------------------ | ------------ | ----------------- | ------------- | ------------------ | ---------- | 
|
|Predecessor Company                     |                                      |              |                   |               |                    |            | 
|BALANCE AT JUNE 30, 2003                |                                      | 3,548,700    |                   | $   36,000    |                    | 17,628,716 | 
|Conversion of Series C convertible      |                                     
|preferred stock                         |                                      | (308,500     | )                 | (4,000        | )                  | 514,173    | 
|Issuance of warrants for bridge loan    |                                      | --           |                   | --            |                    | --         | 
|Termination of warrants for bridge loan |                                      | --           |                   | --            |                    | --         | 
|Net income                              |                                      | --           |                   | --            |                    | --         | 
|                                        |                                      |              |                   |               |                    |            | 
|BALANCE AT JUNE 30, 2004                |                                      | 3,240,200    |                   | $   32,000    |                    | 18,142,889 | 
|Conversion of Series C convertible      |                                     
|preferred stock                         |                                      | (10,000      | )                 | --            |                    | 16,667     | 
|Net loss                                |                                      | --           |                   | --            |                    | --         | 
|                                        |                                      |              |                   |               |                    |            | 
|Balance at March 31, 2005,              |                                     
|Immediately before cancelation          |                                     
|and transfer to Liquidation             |                                     
|Trust for Reorganization                |                                      | 3,230,200    |                   | $   32,000    |                    | 18,159,556 | 
|                                        |                                      |              |                   |               |                    |            | 
|                                        |                                      |              |                   |               |                    |            | 
|Successor Company                       |                                     
|Capital contribution at Reorganization  |                                      | --           |                   | --            |                    | 3,999,730  | 
|Acquisition costs                       |                                      | --           |                   | --            |                    | --         | 
|Net loss                                |                                      | --           |                   | --            |                    | --         | 
|                                        |                                      |              |                   |               |                    |            | 
|BALANCE AT JUNE 30, 2005                |                                      | --           |                   | $          -- |                    | 3,999,730  | 
|                                        |                                      |              |                   |               |                    |            | 
|                                        |                                      |              |                   |               |                    |            | 

Accompanying
notes are an integral part of the financial statements

21

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# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

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, L.P. (Trinad), our majority stockholder.

Trinad
and Managements Plan of Operation

Trinad, a hedge
fund dedicated to investing in micro-cap companies, is seeking to raise additional
capital with a  view to making us an attractive vehicle with which to acquire a business.
It will then seek a suitable  acquisition candidate. No such business has been identified
and we are therefore subject to a number of risks,  including: any acquisition
consummated by us may turn out to be unsuccessful; our investors will not know what
operating business, if any, will be acquired, including the particular industry in which
the business operates,  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.

Trinad
has agreed that it will not dispose of any of our common stock held by it until
an acquisition transaction has been consummated and a Current Report on Form 8-K
setting forth the terms of the acquisition and audited financial statements of
the acquisition target have been filed with the Securities and Exchange
Commission (SEC).

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.

22

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# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

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 will be used to pay administrative costs
and creditors of the Chapter 11 Proceedings. If there is any remaining cash in
the Liquidation Trust, it will be used to settle a small 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 to.

Chapter
11 Proceedings

Prior
to the Reorganization, 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. As of March 18, 2005, we had an accumulated deficit of
approximately $142 million. Managements concerns about capital led it to
take additional steps to cut costs, dispose of operations and, 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.

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.

In
connection with the Chapter 11 Proceedings, we executed an agreement with NBS
Synapse Corporation to sell our Synapse point-of-sale gateway business to NBS
for $2.85 million in cash plus up to $2.15 million credit for free payment
processing services to be rendered to us for our vending operations plus the
assumption of certain liabilities. We simultaneously had reached an agreement
with SANI Operating Co., LLC (SANI) to sell our vending operations,
including the $2.15 million credit for payment processing services from NBS, for
$1.6 million in cash plus the assumption of certain liabilities. We had also
arranged DIP financing with SANI in order to fund our ongoing operations during
the bankruptcy process and through the closing of the sales of the operations.
We drew $925,000 on the DIP loan at March 31, 2004 and $675,000 on May 7, 2004.
Interest accrued on the DIP loan at a rate of 6% per annum. The DIP loan was
repaid, with interest, on May 11, 2004 from a deposit of the proceeds of the
Auction Sales (as defined below).

On May
11, 2004, we completed the bankruptcy auctions for the sale of (i) our Synapse
point-of-sale gateway business, and (ii) our vending operations (collectively,
the Auction Sales). Transaction Network Services (TNS)
was awarded by the Court as the winning bidder for each of the operations
offered for sale. TNS paid $6 million in cash for our wireless payment
processing business and $3.7 million in cash for our wireless vending business,
for an aggregate purchase price of $9.7 million in cash. The sales to TNS were
completed on May 21, 2004.

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.

23

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# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

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:

|ASSETS                                                           |  |             | 
|---------------------------------------------------------------- |  | ----------- | 
|Current assets:                                                  | 
|Cash and cash equivalents                                        |  | $   100,000 | 
|Cash and cash equivalents in escrow                              |  | 2,225,000   | 
|Due from Plan Sponsor                                            |  | 400,000     | 
|Due from winning auction sale bidder                             |  | 64,000      | 
|Prepaids and other current assets                                |  | 13,000      | 
|                                                                 |  |            
|                                                                 |  | $2,802,000  | 
|                                                                 |  |            
|                                                                 |  |            
|LIABILITIES                                                      | 
|Current liabilities:                                             | 
|Accounts payable                                                 |  | $   212,000 | 
|Accrued liabilities                                              |  | 73,000      | 
|                                                                 |  |            
|Total liabilities not subject to compromise                      |  | 285,000     | 
|Prepetition liabilities subject to compromise                    |  | 1,572,000   | 
|                                                                 |  |            
|Total liabilities                                                |  | 1,857,000   | 
|                                                                 |  |            
|                                                                 |  |            
|Prepetition liabilities subject to compromise were as follows: | 
|Accounts payable                                                 |  | $1,154,000  | 
|Accrued liabilities                                              |  | 206,000     | 
|Obligation for rejected real property lease                      |  | 212,000     | 
|                                                                 |  |            
|                                                                 |  | $1,572,000  | 
|                                                                 |  |            
|                                                                 |  |            

24

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

Loan,
Going Concern and Liquidity Uncertainties

On
September 23, 2005, the Company executed a loan agreement with Trinad whereby
Trinad has agreed to loan the Company up to a principal amount of $100,000 (the
Loan) at any time and from time to time prior to the Companys
consummation of a Next Financing (as defined below). Trinad shall make advances
to the Company in such amounts as the Company shall request from time to time.
The Loan bears interest at the prime rate plus 1 percent per annum. The entire
outstanding principal amount of the Loan and any accrued interest thereon shall
be due and payable by the Company upon, and not prior to, the consummation of a
sale of securities (other than a sale of shares of the Companys Common
Stock to officers, directors or employees of, or consultants to, the Company in
connection with their provision of services to the Company), to a third party or
parties with proceeds to the Company of not less than $200,000 (a Next
Financing).

As of
June 30, 2005, we had cash of $28,000 remaining of the original $100,000
contributed to us by Trinad, as well as the ability to draw additional funds up
to $100,000 from the Loan. We believe that we will have sufficient cash
available to us to satisfy our monetary needs for the next fiscal year as a
shell company. We also believe that Trinad has the financial ability and intent
to fund our financial needs to the extent reasonably necessary. Since our
emergence from bankruptcy from effectuating the Reorganization, we have had no
liabilities related to the Chapter 11 Proceedings. 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.

Bridge
Loan

Prior
to the Petition Date, we partially financed our business through a factoring
arrangement with Platinum Funding Corp. (Platinum). Our obligations
to Platinum were secured by all of the Companys assets. By the date of the
Auction Sales, we had fully repaid this obligation and were released from the
liens on our assets.

Also
prior to the Petition Date, we financed our business through a $2.75
million bridge loan (the Bridge Loan) made by Brascan Financial
Corporation (Brascan), a subsidiary of the Toronto, Canada-based
Brascan Corporation. The Bridge Loan was secured by a lien upon and security
interest in all of the Companys assets. As part of the transaction,
Platinum contractually subordinated its lien upon our assets (other than
Accounts Receivable) to Brascans liens to the extent of $3,500,000. In
connection with the Bridge Loan, Brascan received a warrant on September 16,
2003 exercisable for 10 million shares of our common stock at $.15 per share
(the Bridge Loan Warrant). The Bridge Loan Warrant was subsequently
amended and restated to 5 million shares as of the Petition Date. The Bridge
Loan Warrant became exercisable on December 31, 2003 and was to expire in
September 2008. As of the effective date of the Plan and as provided for under
the provisions of the Plan, all outstanding warrants expired without
value.

As of
January 31, 2004, the Company was not in compliance with the minimum net worth
requirement set forth in the Bridge Loan documents and was in technical default
under several provisions of the Bridge Loan. Nonetheless, Brascan continued to
extend the balance of the remaining unadvanced amounts under the Bridge Loan to
us. As of January 31, 2004, we had drawn down the full amount of the $2.75
million Bridge Loan commitment. The Bridge Loan was repaid, with interest, on
May 21, 2004 from the proceeds of the Auction Sales.

25

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

NOTE
2  BASIS OF CONSOLIDATION AND 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 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, and (ii) 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.

Basis
of Consolidation, Dissolution of Subsidiary and Auction Sales

Our
consolidated financial statements include the accounts of our former
wholly-owned subsidiary, UNS Corporation, formerly known as NXT Corporation
(NXT). UNS Corporation was dormant during the period July 1, 2003
through its dissolution on December 11, 2003. We had sold all of the operating
assets of NXT effective as of the close of business on August 31, 2002. NXT has
been classified as a discontinued operation in the accompanying consolidated
financial statements.

During
March 2004, our Board of Directors approved and authorized management to seek
the sale of our operations which were sold in the Auction Sales. We closed the
sales of our operations included in the Auction Sales on May 21, 2004. Such
operations have been classified as discontinued operations in the accompanying
consolidated financial statements.

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.

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.

26

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

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
postpetition 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.

Reclassifications

Certain
amounts in the prior period financial statements have been reclassified to
conform to the current presentation.

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 are insured by the
Federal Deposit Insurance Corporation up to $100,000. There were no uninsured
balances of Cash and cash equivalents at June 30, 2005.

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 SEC 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 SEC. In addition, we follow the guidance contained in
Emerging Issues Task Force (EITF) position No. 00-21 with respect to
sales arrangements with multiple deliverables.

We
adopted EITF No. 00-21, Accounting for Revenue Arrangements with Multiple
Deliverables, which is being applied on a prospective basis. The consensus
addresses how to account for arrangements that may involve the delivery or
performance of multiple products, services and/or rights to use assets. Revenue
arrangements with multiple deliverables are required to be divided into separate
units of accounting if the deliverables in the arrangement meet certain
criteria. Arrangement consideration must be allocated among the separate units
of accounting based on their relative fair values. The consensus also supersedes
certain guidance set forth in SEC Staff Accounting Bulletin Number 101, Revenue
Recognition in Financial Statements (SAB 101). SAB 101 was amended in December
2003 by Staff Accounting Bulletin Number 104 (SAB 104). The adoption of this
pronouncement did not have a material impact on our financial statements.

27

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

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 our hosts; and (d) other fees, including administration and other fees
for certain wireless services, certain charges for telecommunications
connections between us and a party, and installation fees and expenses. Service
fees are generated from our Synapse service. Service activation fees are
recognized ratably over the estimated average life of a customer contract. All
other service revenues are recognized as services are provided. Revenue from
service fees aggregated $4,828,000 for the year ended June 30, 2004 and $0 for
both the nine months ended March 31, 2005 (Predecessor Company) and three months
ended June 30, 2005 (Successor Company), respectively.

Product
sales.Product sales (i.e., sales of equipment) are primarily derived
from the sale of our proprietary Synapse Enabler and Synapse Adapter products.
Revenues from product sales are recognized upon shipment and acceptance,
although product sales of our Synapse Enabler for Vending are recognized ratably
over the life of the customer contract upon activation. Revenue from product
sales aggregated $97,000 for the year ended June 30, 2004 and $0 for both the
nine months ended March 31, 2005 (Predecessor Company) and three months ended
June 30, 2005 (Successor Company), respectively.

Research
and Development Costs

Research
and development costs are expensed as incurred. Research and development costs
included in Loss from discontinued operations approximated $313,000
for the year ended June 30, 2004 and $0 for both the nine months ended March 31,
2005 (Predecessor Company) and three months ended June 30, 2005 (Successor
Company), respectively.

Advertising
and Promotion

Costs
of advertising are expensed as incurred. Advertising and promotion expense
included in Loss from discontinued operations approximated $8,000
for the year ended June 30, 2004 and $0 for both the nine months ended March 31,
2005 (Predecessor Company) and three months ended June 30, 2005 (Successor
Company), respectively.

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

We
account for employee stock-based compensation cost using the intrinsic value
method of accounting prescribed by the Accounting Principles Board Opinion No.
25, Accounting for Stock Issued to Employees (APB No.
25). The Company has adopted the disclosure-only provisions of SFAS No.
123, Accounting for Stock Based-Compensation and SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and
Disclosure for employee stock arrangements. Restricted stock or stock
awards are recorded as compensation expense over the vesting period, if any,
based on the market value on the date of grant.

28

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

For options
issued to non-employees, we utilize the fair value method prescribed in SFAS No. 123.

Prior
to the effective date of the Plan, we had four fixed stock-based compensation
plans. The exercise price of each option granted pursuant to these plans was
equal to the market price of the Companys common stock on the date of
grant. Accordingly, pursuant to APB No. 25, no compensation cost has been
recognized for such grants. Had compensation cost been determined based on the
fair value at the grant dates for such awards consistent with the method
prescribed by SFAS No. 123, the Companys net loss and loss per share for
the periods indicated would have been as follows:

|                                            | SuccessorCompany | PredecessorCompany | PredecessorCompany
|------------------------------------------- | ---------------- | ------------------ | ------------------
|
|Income (loss) from continuing operations    |                  | $(25,000           | )                 
|Income (loss) from discontinued  operations |                  | --                 |                   
|                                            |                  |                    |                   
|Net income (loss), as reported              |                  | $(25,000           | )                 
|Deduct: Total stock-based compensation      |                 
|expense determined under fair value         |                 
|based method                                |                  | --                 |                   
|                                            |                  |                    |                   
|Pro forma net loss                          |                  | $(25,000           | )                 
|                                            |                  |                    |                   
|                                            |                  |                    |                   
|Per share, as reported (a)                  |                 
|From continuing operations                  |                  | --                 |                   
|From discontinued operations                |                  | --                 |                   
|                                            |                  |                    |                   
|Net                                         |                  | --                 |                   
|                                            |                  |                    |                   
|                                            |                  |                    |                   
|Per share, pro forma (a)                    |                 
|From continuing operations                  |                  | --                 |                   
|From discontinued operations                |                  | --                 |                   
|                                            |                  |                    |                   
|Net                                         |                  | --                 |                   
|                                            |                  |                    |                   
|                                            |                  |                    |                   

(a)
See Note 14 - Net Loss Per Share.

In
determining the fair value of each option, we used the Black-Scholes
option-pricing model as prescribed by SFAS No. 123 using the following
assumptions: dividend yield of zero, expected volatility of 123%, an average
expected option life of 3.5 years and an average risk-free interest rate of
2.31% for the year ended June 30, 2003. We did not grant options during the year
ended June 30, 2005 or 2004.

29

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

Fair
Value of Financial Instruments

The
carrying value of the Companys financial instruments, including accounts
receivable, accounts payable, deferred revenue, accrued liabilities and other
liabilities, approximate their fair values due to their relatively short
maturities.

NOTE
3  RECENT ACCOUNTING PRONOUNCEMENTS

In
December 2004, the FASB issued SFAS No. 123 (Revised 2004) Share-Based
Payment (SFAS No. 123R) that addresses the accounting for
share-based payment transactions in which a company receives employee services
in exchange for (a) equity instruments of the company or (b) liabilities that
are based on the fair value of the companys equity instruments or that may
be settled by the issuance of such equity instruments. SFAS No. 123R addresses
all forms of share-based payment awards, including shares issued under employee
stock purchase plans, stock options, restricted stock and stock appreciation
rights. SFAS No. 123R eliminates the ability to account for share-based
compensation transactions using APB Opinion No. 25, Accounting for Stock
Issued to Employees, that was provided in Statement 123 as originally
issued. Under SFAS No. 123R, companies are required to record compensation
expense for all share based payment award transactions measured at fair value.
This statement is effective for quarters ending after June 15, 2005. We have not
yet determined the impact of applying the various provisions of SFAS No. 123R.

NOTE
4  DUE FROM FACTOR

On May
14, 2003, we entered into an agreement (the Factoring Agreement)
with a finance company to sell a portion of our trade receivables on a regular
monthly basis. Under the terms of the Factoring Agreement, the Company received
70% of the face amount of approved invoices. Receivables may be sold in lots of
not less than $10,000. We received the remaining 30% of a lot sold, net of fees
and expenses, upon the finance companys receipt of payment of the entire
lot. The Factoring Agreement required that we sell not less than $450,000 per
quarter until the expiration of the agreement in May 2005. The Factoring
Agreement expired with the filing of the petition for the Chapter 11
Proceedings. By orders dated March 30, 2004 and April 15, 2004, the Court
approved a post petition factoring agreement. Prior to the closing of the
Auction Sales on May 21, 2004, all amounts due to the factor had been repaid in
full or repurchased by us, and the factors claims have been satisfied in
full. For the nine months ended March 31, 2005 (Predecessor Company) and three
months ended June 30, 2005 (Successor Company) , we did not incur interest or
other expenses related to the Factoring Agreement. For the year ended June 30,
2004, we paid $137,000 included in Interest expense and $115,000 in
other expenses related to the Factoring Agreement.

30

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

NOTE
5  ASSETS HELD FOR SALE AND AUCTION SALES

In
August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets (SFAS 144), which addressed
financial accounting and reporting for the impairment or disposal of long-lived
assets. SFAS 144 is applicable to certain long-lived assets, including those
reported as discontinued operations, and develops one accounting model for
long-lived assets to be disposed of by sale. SFAS 144 superseded SFAS No. 121,
Accounting for the Impairment of Long-lived Assets and for Long-lived
Assets to be Disposed Of, and APB 30 for the disposal of a segment of a
business. We adopted the provisions of SFAS 144 effective January 1, 2002.

SFAS
144 requires that long-lived assets to be disposed of by sale be measured at the
lower of carrying amount or fair value less cost to sell, whether reported in
continuing operations or in discontinued operations. Discontinued operations
will no longer be measured at net realizable value or include amounts for
operating losses that have not yet been incurred. SFAS 144 also broadened the
reporting of discontinued operations to include the disposal of a component of
an entity provided that the operations and cash flows of the component will be
eliminated from the ongoing operations of the entity and the entity will not
have any significant continuing involvement in the operations of the component.
We recorded write downs for inventory as disclosed further below.

Assets
held for sale at June 30, 2003 representing the assets held for the Auction
Sales closed on May 21, 2004 were as follows:

|                                    | June 30, 2003
|----------------------------------- | -------------
|Assets held for sale consist of:    |              
|Property and equipment, net         |              
|Inventory                           |              
|                                    |              
|                                    |              
|                                    |              
|                                    |              
|
|Property and equipment, included in |              
|Assets held for sale, consist of:   |              
|Equipment and furniture             |              
|Leasehold improvements              |              
|Less accumulated depreciation       |              
|and amortization                    |              
|                                    |              
|                                    |              
|                                    |              
|                                    |              

Depreciation
and amortization expense related to property and equipment was $479,000 for the
year ended June 30, 2004.

We
curtailed further efforts and resources associated with our Synapse Enabler for
Transportation and Synapse Enabler T8, and intended to liquidate our remaining
inventory of these products and other materials. As a result, during the quarter
ended December 31, 2003, we recorded a charge of $79,000 to write-down the
remaining inventory to the net realizable value we estimated we would realize
from such sales. In this regard, subsequent to December 31, 2003, we had
returned for a refund approximately $69,000 of previously purchased inventory
items and sold approximately $29,000 of other materials.

31

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

Revenues
and loss from discontinued operations relating to the Auction Sales are as
follows:

|                                  | Year ended June 30, |              
|--------------------------------- | ------------------- | -------------
|
|Revenues                          |                     | $          --
|Loss from discontinued operations |                     | (305,000     

For
the year ended June 30, 2004, we recorded a gain of $8,186,000 on the sale of
discontinued operations related to the Auction Sales.

NOTE
6  INTANGIBLE ASSETS

All of USWDs
acquired  intangible  assets  prior to June 30,  2003 were  subject to  amortization.
There were no  material  acquisitions  of intangible  assets during the years ended June
30, 2005 and 2004.  Amortization  expense  related to  intangible  assets was $45,000
for the year ended June 30, 2004 and $0 for both the nine months  ended  March 31, 2005
(Predecessor Company) and three months ended June 30, 2005 (Successor Company),
respectively.

NOTE
7  ACCRUED LIABILITIES

|                                 | June 30, 2005
|-------------------------------- | -------------
|Accrued liabilities consists of: |              
|Accrued professional fees        |              
|                                 |              
|                                 |              
|                                 |              
|                                 |              

NOTE 8
 ACCRUED RESTRUCTURING EXPENSE

The following
is an analysis of the changes in the restructuring accrual:

|Balance at June 30, 2003 |  | $560,000      |  
|------------------------ |  | ------------- | -
|Charges against accrual  |  | (560,000      | )
|                         |  |              
|Balance at June 30, 2004 |  | $          -- |  
|                         |  |              
|                         |  |              

NOTE
9  CAPITAL LEASE OBLIGATION

In
November 2000, we purchased the assets and assumed liabilities of Cellgate Technologies LLC (Cellgate).
Included in the assumed liabilities were leases related to equipment used in the
ordinary course of business. In addition, NXT entered into capital leases for
certain computer and network equipment, which expired on various dates through
2002.

32

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

On
July 29, 1999, Cellgate entered into a Master Purchase and Lease Agreement with
Tellus Technology Inc. (Tellus) and Varilease Corporation
(Varilease) in which Tellus agreed to sell to Varilease and
Varilease agreed to lease to the Company wireless IP modem adapters (the
Synapse Adapters). In connection therewith, Cellgate entered into a
separate Master Lease Agreement with Varilease to lease Synapse Adapters. On
April 4, 2002, we entered an agreement with Varilease to extend the term of the
lease for an additional twelve months. On October 25, 2002, we paid the lessor
$462,000, which included the application of a $52,000 deposit held by the
lessor, to buy out the first five of 11 leases.

In
July 2003, we paid $24,000 representing six monthly installments of interest due
from May 25th to October 25th. The lessor agreed to defer all
principal payments until November 25, 2003. In the event that the Company raised
net debt or net equity in the amount of $2 million or more, up to and including
$5 million dollars, prior to November 25, 2003, the Company would have been
obligated to immediately commence making additional monthly payments aggregating
approximately $26,000 to the lessor. In the event that the Company raised net
equity in an amount in excess of $5 million dollars at any time during the terms
of the remaining leases, all amounts due under the remaining leases would have
been immediately due and payable to the lessor.

At
June 30, 2004, unpaid minimum lease payments due on capital leases were as
follows (listed in years payments were originally due):

|                                  | 
|--------------------------------- | 
|For fiscal year ending June 30:   | 
|2003                              | 
|2004                              | 
|2005                              | 
|                                  | 
|Total minimum payments required   | 
|Less amount representing interest | 
|                                  | 
|Present value of net minimum      | 
|lease payments                    | 
|                                  | 
|                                  | 

The present
value of net minimum lease payments of $510,000 at June 30, 2004 was included in
Prepetition liabilities subject to compromise at June 30, 2004, and
was transferred to the Liquidation Trust.

NOTE
10  STOCKHOLDERS EQUITY

On October 6,
2000,  authorized  capital was increased to 225,000,000  shares,  200,000,000  of which
consisted of  $.01 par value common stock and  25,000,000  of which  consisted of $.01
par value  preferred  stock.  On March 23,  2005,  authorized  capital was changed to
20,000,000  shares,  19,000,000 of which consist of $.01 par value common  stock and
1,000,000 of which consist of $.01 par value  preferred  stock.  There was no preferred
stock issued or  outstanding at June 30, 2005. At June 30, 2004, the only preferred
stock issued and  outstanding  was the Series C  Convertible Preferred Stock.

33

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

The
Bridge Loan Warrant was valued at $780,000 and was being accreted to interest
expense over the 18-month period of the Bridge Loan. In determining the fair
value of the warrants issued, we used the Black-Scholes option pricing model as
prescribed by SFAS No. 123 using the following assumptions: dividend yield of
zero, volatility of 144%, expected life of 18 months, an exercise price of
$0.15, and an average risk free rate of 1.74%. On the Petition Date, the Bridge
Loan Warrant was amended and restated to 5 million shares and we reversed the
associated $390,000 of debt discount and adjusted additional paid in capital for
the same amount. Interest expense for the year ended June 30, 2004
includes accretion of $390,000 of the amended debt discount.

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.

NOTE
11  SERIES C CONVERTIBLE PREFERRED STOCK

On
March 10, 2000, the Company authorized 8,450,000 shares as Series C Convertible
Preferred Stock with a stated value of $0.01 per share. Under the terms of, and
in accordance with the Plan, holders of record of our Series C Preferred Stock
as of February 7, 2005 received a pro rata share of an aggregate of 3.5% of the
new Common Stock issued in exchange for the Series C Preferred Stock. In
addition, all outstanding Series C Preferred Stock were cancelled.

Liquidation
Value

Prior
to the cancellation of the Series C Preferred Stock at the Reorganization, in
the event of a liquidation, dissolution or winding up of the Company, either
voluntary or involuntary, the holders of the Series C Preferred Stock were
entitled to receive, for each of their shares, prior and in preference to any
distribution to the holders of the Common Stock or other series of preferred
stock, a Liquidation Value equal to $10.00 per share, plus any accrued and
unpaid dividends. If there is any remaining cash in the Liquidation Trust, it
will be used to settle a small 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 to.

Optional
Conversion

Prior
to the Reorganization, each share of Series C Preferred Stock was convertible, at the
option of the holder into a number of shares of Common Stock determined by
dividing (A) the Liquidation Value by (B) the Conversion Price ($6.00 per share)
which is subject to adjustment for stock splits, recapitalizations and other
similar events. During fiscal year 2005, 10,000 shares of Series C Preferred
Stock were converted into 16,667 shares of Common Stock. During fiscal year
2004, 308,500 shares of Series C Preferred Stock were converted into 514,173
shares of Common Stock.

34

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

NOTE
12  STOCK OPTIONS

As of
the effective date of the Plan and as provided for under the provisions of
the Plan, all outstanding options expired worthless and the stock option plans
were effectively terminated.

Stock
Option Plans

In
December 2002, the Company adopted a new combined incentive and a non-qualified
stock option plan (the 2002 Stock Option Plan), which provided for
the issuance of up to 3,500,000 shares of Common Stock under the plan. As of
June 30, 2004, there were no option grants issued under the 2002 Stock Option
Plan. Although options remained outstanding under the 1992 Stock Option Plan and
the 2000 Stock Option Plan, as of June 30, 2003, the Company no longer issued new
grants under those plans. Options granted under the plans generally vested over a
period of three years and must be exercised no later than ten years from the
date of grant.

The
following table summarizes information for stock options outstanding under the
stock option plans and outside the stock option plans at June 30, 2005:

|               | Outstanding Options | Options Exercisable |  |      | 
|-------------- | ------------------- | ------------------- |  | ---- | 
|
|$0.00 - $26.00 |                     | None                |  | None | 

Stock
option transactions relating to options granted under the stock option plans and
other stock options (discussed below) for the years ended June 30, 2005 and 2004
were as follows:

1992
Stock Option Plan

|                             | Number ofShares | WeightedAverage ExercisePrice PerShare
|---------------------------- | --------------- | --------------------------------------
|Balance at June 30, 2003     |                 | 401,945                               
|Granted                      |                 | --                                    
|Exercised                    |                 | --                                    
|Cancelled                    |                 | (3,750                                
|                             |                 |                                       
|Balance at June 30, 2004     |                 | 398,195                               
|Granted                      |                 | --                                    
|Exercised                    |                 | --                                    
|Cancelled                    |                 | (398,195                              
|                             |                 |                                       
|Balance at June 30, 2005     |                 | --                                    
|                             |                 |                                       
|                             |                 |                                       
|Exercisable at June 30, 2005 |                 | --                                    
|                             |                 |                                       
|                             |                 |                                       

35

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

2000 Stock
Option Plan

|                             | Number ofShares | WeightedAverage ExercisePrice PerShare
|---------------------------- | --------------- | --------------------------------------
|Balance at June 30, 2003     |                 | 3,280,897                             
|Granted                      |                 | --                                    
|Exercised                    |                 | --                                    
|Cancelled                    |                 | (41,612                               
|                             |                 |                                       
|Balance at June 30, 2004     |                 | 2,759,054                             
|Granted                      |                 | --                                    
|Exercised                    |                 | --                                    
|Cancelled                    |                 | (2,759,054                            
|                             |                 |                                       
|Balance at June 30, 2005     |                 | --                                    
|                             |                 |                                       
|                             |                 |                                       
|Exercisable at June 30, 2005 |                 | --                                    
|                             |                 |                                       
|                             |                 |                                       

The
following option activity relates to options issued by the Company, which are
unrelated to the foregoing stock option plans.

|                             | Number ofShares | WeightedAverage ExercisePrice PerShare
|---------------------------- | --------------- | --------------------------------------
|Balance at June 30, 2003     |                 | 1,391,546                             
|Granted                      |                 | --                                    
|Exercised                    |                 | --                                    
|Cancelled                    |                 | (33,710                               
|                             |                 |                                       
|Balance at June 30, 2004     |                 | 1,357,836                             
|Granted                      |                 | --                                    
|Exercised                    |                 | --                                    
|Cancelled                    |                 | (1,357,836                            
|                             |                 |                                       
|Balance at June 30, 2005     |                 | --                                    
|                             |                 |                                       
|                             |                 |                                       
|Exercisable at June 30, 2005 |                 | --                                    
|                             |                 |                                       
|                             |                 |                                       

NOTE
13  STOCK WARRANTS

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

The
following table summarizes information about stock warrants outstanding at June
30, 2005:

|              |  | Outstanding and Exercisable Warrants |  |     
|------------- |  | ------------------------------------ |  | ----
|
|$0.00 -$21.38 |  |                                      |  | None

36

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

Provided
below are warrant transactions for the years ended June 30, 2005 and 2004.

|                             | Number ofShares | Weighted AverageExercise Price
|---------------------------- | --------------- | ------------------------------
|Balance at June 30, 2003     |                 | 7,448,599                     
|Granted                      |                 | 10,000,000                    
|Exercised                    |                 | --                            
|Cancelled                    |                 | (5,002,083                    
|                             |                 |                               
|Balance at June 30, 2004     |                 | 12,446,516                    
|Granted                      |                 | --                            
|Exercised                    |                 | --                            
|Cancelled                    |                 | (12,446,516                   
|                             |                 |                               
|Balance at June 30, 2005     |                 | --                            
|                             |                 |                               
|                             |                 |                               
|Exercisable at June 30, 2005 |                 | --                            
|                             |                 |                               
|                             |                 |                               

See
the caption Bridge Loan contained in Note 1  The Company
regarding the Bridge Loan Warrants and Note 10  Stockholders Equity.

NOTE
14  NET LOSS PER SHARE

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 years ended June 30, 2005 and
2004, such incremental amounts have been excluded from the calculation since
their effect would be anti-dilutive. Such stock options, warrants and
conversions could potentially dilute earnings per share in the future.

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 is neither representative nor comparable to that
of the Company prior to March 18, 2005 and, accordingly, loss per share is not
presented for periods prior to March 18, 2005.

37

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

NOTE
15  INCOME TAXES

At
June 30, 2005 and 2004, we had net operating loss carry-forwards for federal and
state income tax purposes of approximately $82 and $81 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 $38,000 credit and $55,000 expense for the
years ended June 30, 2005 and 2004, respectively.

Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes, and operating loss and tax credit
carry-forwards. The tax effects of significant items comprising the
Companys deferred taxes are as follows:

|                                  | June 30, 2005
|--------------------------------- | -------------
|Deferred tax assets               |              
|Net operating loss carry-forwards |              
|Inventory reserves                |              
|                                  |              
|                                  |              
|Valuation allowance               |              
|                                  |              
|                                  |              
|                                  |              
|                                  |              

Realization
of deferred tax assets is dependent upon future earnings. We recorded a full
valuation allowance against the deferred tax assets since management believes
that it is more likely than not that these assets will not be realized.
Accordingly, no income tax benefit has been recorded because of the valuation
allowance. The valuation allowance decreased during fiscal 2005 by $28,983,000.

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

|                           | Year endedJune 30, |    
|-------------------------- | ------------------ | ---
|
|Federal statutory tax rate |                    | 35 
|State taxes                |                    | 7  
|Valuation allowance        |                    | (42
|                           |                    |    
|Effective tax rate         |                    | -- 
|                           |                    |    
|                           |                    |    

NOTE
16  EMPLOYEE BENEFIT PLAN

At
June 30, 2005, 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. During the year ended 2005 and 2004, we did not
contribute to the plan.

38

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

NOTE
17  RELATED PARTY TRANSACTIONS

We
received payments for services provided to a shareholder, Paymentech, a
subsidiary of First USA Inc. and its subsidiary, Merchant-Link, Inc.
(Merchant-Link). We obtained these relationships as part of our
acquisition of NXT in December 2000.

The
Company, excluding NXT, recorded approximately $0 for both the nine months ended
March 31, 2005 (Predecessor Company) and three months ended June 30, 2005
(Successor Company) and $1,133,000 for the year ended June 30, 2004 in revenue
from Paymentech for Synapse services and product purchases. For the year ended
June 30, 2004, we also recognized $213,000 in fees from Merchant-Link for the
transition discussed in Note 20  Sale of NXT.

NOTE
18  SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental
disclosure of cash flow information:

$0 for
both the nine months ended March 31, 2005 (Predecessor Company) and three months
ended June 30, 2005 (Successor Company), respectively and $272,000 for the year
ended June 30, 2004 was paid in cash for interest.

Supplemental
disclosure of non-cash financing and investing activities:

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 4,000,000 shares were issued as follows:
|-- |  | ---------------------------------------------------------------------

|o |  | 3,720,000 shares of common stock to Trinad Capital, L.P.
|- |  | --------------------------------------------------------

|o |  | 140,000
shares of common stock pro rata to the holders of Series C preferred shares held as of
February 7, 2005.
|- |  | ----------------------------------------------------------------------------------------------------------------

|o |  | 140,000 shares of common stock pro rata to the holders of common shares held as of
February 7, 2005.
|- |  | ----------------------------------------------------------------------------------------------------

Year ended June
30, 2004

|1. |  | Conversion of 308,500 shares of Series C Convertible Preferred Stock into
514,173 shares of Common Stock.
|-- |  | ---------------------------------------------------------------------------------------------------------

|2. |  | Issuance of warrant in connection with the Bridge Loan, exercisable for
10,000,000 shares of Common Stock valued at $780,000. Amended and restated for
5,000,000 shares on March 26, 2004.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Accretion of Bridge Loan discount of $390,000.
|-- |  | ----------------------------------------------

|4. |  | Reversal
of $390,000 of debt discount and adjust of additional paid in capital for the
same amount for the amended and restated warrant.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------

39

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

NOTE 19
 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.

Prior
to the Reorganization, we had entered into leases for facilities. Future minimum
lease payments and sublease income under non-cancelable operating leases as of
June 30, 2004, before adjustment for the Chapter 11 Proceedings, were as
follows:

|                                 | FacilityLeases | Less SubleasedFacilities | Net
|-------------------------------- | -------------- | ------------------------ | ---
|For fiscal years ending June 30: |                |                          |    
|2005                             |                | $   613,000              |    
|2006                             |                | 667,000                  |    
|2007                             |                | 667,000                  |    
|2008                             |                | 667,000                  |    
|Thereafter                       |                | 1,278,000                |    
|                                 |                |                          |    
|Total minimum payments required  |                | $3,892,000               |    
|                                 |                |                          |    
|                                 |                |                          |    

The
real property leases for our facilities located in Colorado were assigned in
conjunction with the Auction Sales.

On May
31, 2004, we vacated our former leased office space in New York and rejected the
balance of the lease. In addition, the sub-lease of this facility was terminated
on May 31, 2004. We accrued an aggregate of $668,000 at June 30, 2004 as an
estimated obligation on the rejected lease plus the associated New York City
Commercial Rent Taxes, recognizing that this amount is subject to rejection and
reduction for a variety of reasons. Such amount was reduced by the elimination
of $206,000 of deferred rent expense. We had maintained a letter of credit in
the amount of $456,000 as a security deposit for this lease and had restricted
cash of the same amount on deposit in a money market fund as collateral for the
letter of credit maintained by the issuing bank. In September 2004, the issuing
bank claimed the collateral in settlement of the letter of credit, which was
presented and drawn by the landlord. The actual amount of the remaining claim
may be greater or less than the remaining estimated accrual. The balance of any
obligation was transferred to the Liquidation Trust.

We
were subletting much smaller, more economical space on a month to month basis,
with the intent of allowing us to wind down the Chapter 11 Proceedings and
terminate our rental obligations once all such matters have been concluded. The
balance of any obligation was transferred to the Liquidation Trust.

Rent
expense for the nine months ended March 31, 2005 (Predecessor Company) and three
months ended June 30, 2005 (Successor Company) was $21,000 and $0, respectively
and $710,000 for the year ended June 30, 2004.

40

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

Prior
to the Reorganization, we had employment agreements with four of our executive
officers. The agreements were for initial terms of one to three years, with
automatic one-year extensions after the initial term. The employment agreements
had committed the Company to annual salary compensation of $738,000. The
agreements included provisions for severance payments upon nonrenewal or
termination under certain conditions. The agreements were rejected in
conjunction with, and were subject to, the Chapter 11 Proceedings. One agreement
was assigned with the Auction Sales. We accrued a Provision for rejected
executory agreements of $544,000 at June 30, 2004, which amount was
included in the Pre-petition liabilities subject to comprise. The
balance of any obligation was transferred to the Liquidation Trust.

Prior
to the Reorganization, we had committed to reimburse a third party 50%, up to a
maximum of $300,000, for certain agreed upon development costs. The obligation
was subject to, and extinguished in, the Chapter 11 Proceedings.

Prior
to the Reorganization, we maintained agreements with wireless, landline and
other carriers for certain telecommunication services. The agreements include
pricing for various services, including volume discounts. If the Company had
failed to maintain or reach minimum volume levels, the prices the Company pays
for services would have increased and this may have had an adverse effect on the
results of operations. These agreements were assigned as a component of the
operations sold in the Auction Sales.

On
March 12, 2004, the Company was served with a complaint filed by U.S.A.
Technologies, Inc. in the District Court for the District of Delaware, alleging
infringement of one patent relating to certain aspects of the Companys
technology to enable vending machines to accept credit cards and seeking
unspecified damages and injunctive relief. The Company believed this suit was
without merit and intended to vigorously defend such action. The suit has been
stayed by virtue of the Companys bankruptcy filing. The suit was subject
to the Chapter 11 Proceedings.

See Note 1 -
The Company.

NOTE 20
 SALE OF NXT

In May
2002, the Company adopted a formal plan to sell its wholly-owned subsidiary NXT.
Pursuant to an Asset Purchase Agreement dated August 31, 2002 (the
Agreement), the Company sold, for $5 million in cash, substantially
all of the operating assets and operating obligations of NXT to Paymentech,
which subsequently transferred the acquired assets and obligations to its
wholly-owned subsidiary, Merchant-Link. Pursuant to a Transition Services
Agreement, the Company entered into on the same date with Merchant-Link, certain
of the NXT assets continued to be located in the Companys Colorado
facility and the Company provided certain services for payment to Merchant-Link
for a limited period of time. NXT provides data services and landline-based
connectivity for credit-card transaction processing.

41

---

# U.S.
WIRELESS DATA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For the three months ended June 30, 2005, nine months ended March 31, 2005
and the year ended June 30, 2004

Revenues
and income from the discontinued operations of NXT were as follows:

|                              | Year ended June 30, |       
|----------------------------- | ------------------- | ------
|
|Revenues                      |                     | $   --
|Income (loss) from operations |                     | --    

We
recorded a gain on the sale of discontinued operations of $133,000 for the year
ended June 30, 2004 due to the reversal of an accrued vendor obligation as a
result of the sale of NXT, partially offset by additional transaction costs.

Paymentech
was obligated under the Agreement, subject to certain conditions, to purchase
goods or services from the Company or its affiliates over a three year period
that commenced September 1, 2002, in an amount aggregating a minimum of
$3,472,500. Paymentech was obligated to pay the Company at least $1,000,000
during the first year, in installments of $83,333 per month, at least $1,150,000
during the second year, in installments of $95,833 per month, and at least
$1,322,500 during the third year, in installments of $110,208. Paymentechs
obligation was assigned pursuant to the Auction Sales.

NOTE 21
 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.

42

---

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

As
previously disclosed, on March 26, 2004, we filed a petition for relief under
Chapter 11 of the United States Bankruptcy Code. Since that time, in light of
the uncertainties associated with the bankruptcy and in order to conserve cash,
we have not filed annual and quarterly reports with the Securities and Exchange
Commission and therefore, have not employed the services of an independent
public accounting firm.

Prior
to filing for bankruptcy, Deloitte & Touche (Deloitte) served as
our independent public accounting firm. Deloitte has not audited any financial
statements of the Company for any date or period subsequent to the year ended
June 30, 2003.

On
January 7, 2005, Deloitte was dismissed as our independent public accounting
firm. The decision to discontinue our relationship with Deloitte was approved by
The Audit Committee of our Board of Directors, and was based exclusively on the
fact that Deloittes audit fees are too costly for us at the present time.
Deloittes reports with respect to the financial statements for the fiscal
years ended June 30, 2003 and 2002 did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified with respect to
uncertainty, audit scope, or accounting principles except that Deloittes
report on its audit of our financial statements for the year ended June 30, 2003
contained an explanatory paragraph concerning matters that raised substantial
doubt about our ability to continue as a going concern.

During
the fiscal years ended June 30, 2002 and 2003 and the subsequent interim period
through the date of Deloittes dismissal, there were no disagreements with
Deloitte on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Deloittes satisfaction, would have caused it to make reference to the
subject matter of the disagreement(s) in connection with its reports on our
consolidated financial statements. We have provided Deloitte with a copy of this
disclosure and requested that Deloitte furnish us with a letter addressed to the
Securities and Exchange Commission stating whether it agrees with the above
statements.

On
January 7, 2005, we engaged Friedman LLP (Friedman) as our
independent registered public accounting firm. The decision to retain Friedman
as our independent registered public accounting firm was made by our Audit
Committee. We engaged Friedman to audit our financial statements for the fiscal
year ended June 30, 2004. During the years ended June 30, 2004 and June 30, 2003
and through January 7, 2005, neither we nor anyone on our behalf had consulted
with Friedman regarding the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on our financial statements.

43

---

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)) on June 30, 2005, have concluded that, based on such
evaluation, our disclosure controls and procedures were adequate and effective
to ensure that material information relating to us, including our consolidated
subsidiaries, 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 controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in our internal controls.
Accordingly, no corrective actions were required or undertaken.

ITEM 8B.
OTHER INFORMATION.

Not applicable.

PART III

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

The
information required by this Item will be included in our Proxy Statement for
the 2005 Annual Meeting of the Shareholders under the caption Directors
and Executive Officers which will be filed with the Securities and
Exchange Commission no later than 120 days after the close of the fiscal year
ended June 30, 2005, and is incorporated herein by reference.

ITEM 10.
EXECUTIVE COMPENSATION

The
information required by this Item will be included in our Proxy Statement for
the 2005 Annual Meeting of the Shareholders under the caption Executive
Compensation which will be filed with the Securities and Exchange
Commission no later than 120 days after the close of the fiscal year ended June
30, 2005, and is incorporated herein by reference.

44

---

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

The
information required by this Item will be included in our Proxy Statement for
the 2003 Annual Meeting of the Shareholders under the caption Security
Ownership of Certain Beneficial Owners and Management which will be filed
with the Securities and Exchange Commission no later than 120 days after the
close of the fiscal year ended June 30, 2005, and is incorporated herein by
reference. The information required by this Item with regard to Section 201(d)
of Regulation S-B of the Act, Securities Authorized for Issuance Under
Equity Compensation Plans, is included in Item 5(d) of Part II hereof.

ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The
information required by this Item will be included in our Proxy Statement for
the 2005 Annual Meeting of the Shareholders under the caption Certain
Relationships and Related Transactions which will be filed with the
Securities and Exchange Commission no later than 120 days after the close of the
fiscal year ended June 30, 2005, and is incorporated herein by reference.

ITEM 13.
EXHIBITS

ExhibitNumber         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)
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------

|3.1 |  | Amended
and Restated Certificate of Incorporation *
|--- |  | ---------------------------------------------------

|3.2 |  | Bylaws
adopted March 18, 2005 *
|--- |  | -------------------------------

|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 (2)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------

|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 (2)
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------

|10.3 |  | Indemnification
Agreement with consultant dated as of May 18, 2005 *
|---- |  | --------------------------------------------------------------------

45

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|10.4 |  | Loan
Agreement with Trinad Capital, L.P. dated as of September 23, 2005 *
|---- |  | -------------------------------------------------------------------------

|16. |  | Letter
from Deloitte & Touche LLP, dated January 12, 2005 (3)
|--- |  | -------------------------------------------------------------

|31.1 |  | Certification
of Chief Executive Officer *
|---- |  | ------------------------------------------

|31.2 |  | Certification
of Chief Financial Officer *
|---- |  | ------------------------------------------

|32.1 |  | Certification
of Principal Executive Officer pursuant to U.S.C. Section 1350 *
|---- |  | ------------------------------------------------------------------------------

|32.2 |  | Certification
of Principal Financial Officer pursuant to U.S.C. Section 1350 *
|---- |  | ------------------------------------------------------------------------------

_____________________

*
Filed herewith.

|(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 April 12, 2004.
|--- |  | -------------------------------------------------------------------------------------------------------------------------

|(3) |  | 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
information required by this Item will be included in our Proxy Statement for
the 2005 Annual Meeting of the Shareholders under the caption Principal
Accountant Fees and Services which will be filed with the Securities and
Exchange Commission no later than 120 days after the close of the fiscal year
ended June 30, 2005, and is incorporated herein by reference.

46

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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.

|Dated: September 28, 2005 |  | U.S. WIRELESS DATA, INC.    | 
|------------------------- |  | --------------------------- | 
|                          |  | By: /s/ Jay Wolf            | 
|                          |  | Jay Wolf                    | 
|                          |  | Chief Operating Officer     | 
|                          |  | and Chief Financial Officer | 

In
accordance with the requirements of the Exchange Act, this Report has been
signed below by the following persons in the capacities and on the dates
indicated.

|Signatures       | Title | Date                         
|---------------- | ----- | -----------------------------
|Robert Ellin     |       | Director and                 
|                 |       | Chief Executive Officer      
|                 |       | (Principal Executive Officer)
|Jay Wolf         |       | Director,                    
|                 |       | Chief Operating Officer      
|                 |       | and Chief Financial Officer  
|                 |       | (Principal Financial Officer)
|Barry Regenstein |       | Director                     

47

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