**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      DC 20549**





**FORM
      10-QSB**





**QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE**


**SECURITIES
      EXCHANGE ACT OF 1934**





**For
      the Quarterly Period ended December 31, 2005**





**Commission
      File Number** **000-51010**


**DELAWARE**
              
              **87-0419571**(State
                  or other jurisdiction of incorporation or organization)
              
              (I.R.S.
                  Employer Identification No.)
 
 **6701
                  Democracy Boulevard, Suite 202, Bethesda, MD**
              
              **20817**(Address
                  of principal executive offices)
              
              (Zip
                  Code)
 
 **(301)
                  315-9040****(**Registrant’s
                  telephone number, including area
                  code)


Check
      whether the issuer (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Exchange Act during the past 12 months (or for such shorter period
      that the registrant was required to file such reports), and (2) has been subject
      to such filing requirements for the past 90 days. Yes x No
o





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





State
      the
      number of shares outstanding of each of the issuer’s classes of common equity,
      as of the latest practicable date: As of February 9, 2006, the Company had
      447,161,236 outstanding shares of its common stock, $0.001 par value per
      share.


















**TABLE
      OF CONTENTS**


**ITEM
                  NUMBER AND CAPTION**
              **PAGE****PART
                  I**ITEM
                  1.
              FINANCIAL
                  STATEMENTS
                NOTES
                  TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              3ITEM
                  2.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
                  CONDITION
              23ITEM
                  3
              CONTROLS
                  AND PROCEDURES
              45**PART
                  II**ITEM
                  1.
              LEGAL
                  PROCEEDINGS
              46ITEM
                  2.
              CHANGES
                  IN SECURITIES
              47ITEM
                  3.
              DEFAULTS
                  UPON SENIOR SECURITIES
              47ITEM
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              47ITEM
                  5.
              OTHER
                  INFORMATION
              47ITEM
                  6.
              EXHIBITS
              48






2




**PART
      I**


**FINANCIAL
      INFORMATION**





**Item
      1. Financial Statements.**




**MOBILEPRO
        CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS MARCH 31,
        2005 AND DECEMBER 31, 2005**


**ASSETS****March
                  31, 2005**
              
              **December
                  31, 2005****(audited)**
              
              **(unaudited)****CURRENT
                  ASSETS**Cash
                  and cash equivalents
              
              $
              4,669,787
              
              $
              4,960,703Restricted
                  cash
              
              
              429,954
              
              
              337,200Accounts
                  receivable, net
              
              
              12,658,313
              
              
              11,376,784Prepaid
                  expenses and other current assets
              
              
              2,511,697
              
              
              3,740,602**Total
                  Current Assets**
              
              
              20,269,751
              
              
              20,415,289**FIXED
                  ASSETS, NET OF ACCUMULATED DEPRECIATION**
              
              
              13,193,056
              
              
              14,286,154**OTHER
                  ASSETS**Goodwill,
                  net of impairment
              
              
              32,579,099
              
              
              37,310,829Customer
                  contracts and relationships, net of amortization
              
              
              2,965,456
              
              
              8,669,910Other
                  intangible assets, net of amortization
              
              
              1,511,005
              
              
              423,259Deferred
                  financing fees, net of amortization
              
              
              1,026,667
              
              
              366,667Other
                  assets
              
              
              1,277,897
              
              
              1,914,77939,360,124
              
              
              48,685,444**TOTAL
                  ASSETS**
              
              $
              72,822,931
              
              $
              83,386,887










3




**MOBILEPRO
          CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
MARCH 31, 2005 AND DECEMBER 31, 2005**





**LIABILITIES
                AND STOCKHOLDERS' EQUITY****March
                31, 2005**
            
            **December
                31, 2005****(audited)**
            
            **(unaudited)****CURRENT
                LIABILITIES**Current
                portion of convertible debenture
            
            $
            -
            
            $
            3,500,000Notes
                payable under the Standby Equity Distribution Agreement ( the
                "SEDA")
            
            
            6,500,000
            
            
            -Current
                portion of other notes payable
            
            
            19,035,263
            
            
            6,817,581Accounts
                payable and accrued expenses
            
            
            19,863,088
            
            
            16,873,156Liability
                for common stock to be issued
            
            
            -
            
            
            53,167Deferred
                revenue
            
            
            3,470,731
            
            
            4,442,492**Total
                Current Liabilities**
            
            
            48,869,082
            
            
            31,686,396**LONG-TERM
                LIABILITIES**Convertible
                debenture, net of unamortized debt discount of $602,452 and current
                portion
            
            
            -
            
            
            10,897,548Notes
                payable and other long-term liabilities, net of current
                maturities
            
            
            999,196
            
            
            800,659**Total
                Long-Term Liabilities**
            
            
            999,196
            
            
            11,698,207**TOTAL
                LIABILITIES**
            
            
            49,868,278
            
            
            43,384,603**MINORITY
                INTERESTS**
            
            
            600,000
            
            
            3,799,605**STOCKHOLDERS'
                EQUITY**Preferred
                stock, $.001 par value, 20,035,425 shares authorized and 35,378 shares
                issued and outstanding at March 31, 2005 and December 31,
                2005
            
            
            35
            
            
            35Common
                stock, $.001 par value, 1,500,000,000 shares authorized and 355,918,011
                and 432,161,235 shares issued and outstanding at March 31, 2005 and
                December 31, 2005
            
            
            355,918
            
            
            432,161Additional
                paid-in capital
            
            
            43,195,250
            
            
            60,731,473Additional
                paid-in capital, beneficial conversion feature
            
            
            -
            
            
            1,395,000Additional
                paid-in capital, stock warrant
            
            
            -
            
            
            853,200Accumulated
                deficit
            
            
            (21,196,550
            )
            
            (27,209,190
            )**Total
                Stockholders' Equity**
            
            
            22,354,653
            
            
            36,202,679**TOTAL
                LIABILITIES AND STOCKHOLDERS' EQUITY**
            
            $
            72,822,931
            
            $
            83,386,887













4




**MOBILEPRO
        CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
        OPERATIONS(unaudited)**
  **For
                  the Three Months Ended December 31,**
              
              **For
                  the Nine Months Ended December 31,****2004**
              
              **2005**
              
              **2004**
              
              **2005****REVENUES**
              
              $
              17,127,133
              
              $
              26,244,606
              
              $
              23,265,366
              
              $
              75,297,101**OPERATING
                  COSTS AND EXPENSES**Cost
                  of services (exclusive of depreciation and amortization)
              
              
              8,633,278
              
              
              13,790,195
              
              
              11,158,590
              
              
              36,466,453Payroll,
                  professional fees and related expenses
              
              
              4,268,757
              
              
              4,206,066
              
              
              8,794,048
              
              
              13,405,613Advertising
                  and marketing expenses
              
              
              686,129
              
              
              1,064,475
              
              
              852,766
              
              
              2,382,332Office
                  rent and expenses
              
              
              355,686
              
              
              522,703
              
              
              508,216
              
              
              1,415,523Other
                  general and administrative expenses
              
              
              4,439,560
              
              
              6,590,282
              
              
              4,889,344
              
              
              16,970,288Depreciation
                  and amortization
              
              
              792,717
              
              
              1,293,993
              
              
              1,290,212
              
              
              3,163,689Goodwill
                  impairment
              
              
              -
              
              
              3,764,429
              
              
              -
              
              
              3,764,429Restructuring
                  costs
              
              
              -
              
              
              1,335,612
              
              
              -
              
              
              1,335,612**Total
                  Operating Costs and Expenses**
              
              
              19,176,127
              
              
              32,567,755
              
              
              27,493,176
              
              
              78,903,939**OPERATING
                  LOSS**
              
              
              (2,048,994
              )
              
              (6,323,149
              )
              
              (4,227,810
              )
              
              (3,606,838
              )**INTEREST
                  EXPENSE, NET**
              
              
              (905,896
              )
              
              (582,785
              )
              
              (1,232,280
              )
              
              (2,213,295
              )**MINORITY
                  INTERESTS IN NET INCOME OF CONSOLIDATED
                  SUBSIDIARIES**
              
              
              -
              
              
              (49,798
              )
              
              -
              
              
              (192,507
              )**NET
                  LOSS BEFORE PROVISION FOR INCOME TAXES**
              
              
              (2,954,890
              )
              
              (6,955,732
              )
              
              (5,460,090
              )
              
              (6,012,640
              )**Provision
                  for Income Taxes**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**NET
                  LOSS APPLICABLE TO COMMON SHARES**
              
              $
              (2,954,890
              )
              $
              (6,955,732
              )
              $
              (5,460,090
              )
              $
              (6,012,640
              )**NET
                  LOSS PER SHARE**Basic
              
              $
              (0.0093
              )
              $
              (0.0165
              )
              $
              (0.0202
              )
              $
              (0.0154
              )Diluted
              
              $
              (0.0093
              )
              $
              (0.0165
              )
              $
              (0.0202
              )
              $
              (0.0154
              )**WEIGHTED
                  AVERAGE NUMBER OF COMMON SHARES OUTSTANDING**
              
              
              317,287,577
              
              
              421,105,524
              
              
              270,117,287
              
              
              390,067,725




5




MOBILEPRO
      CORP. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH
      FLOWS(unaudited)


**For
                  the Nine Months Ended December 31,****2004**
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net
                  loss
              
              $
              (5,460,090
              )
              $
              (6,012,640
              )**Adjustments
                  to reconcile net loss to net cash provided by (used in) operating
                  activities:**Goodwill
                  impairment
              
              
              -
              
              
              3,764,429Depreciation
                  and amortization
              
              
              1,290,212
              
              
              3,163,689Restructuring
                  costs
              
              
              -
              
              
              1,335,612Noncash
                  interest expense
              
              
              375,150
              
              
              536,810Minority
                  interests
              
              
              -
              
              
              192,507Investments
                  received for services
              
              
              (450,000
              )
              
              -Other
              
              
              15,000
              
              
              38,019**Changes
                  in assets and liabilities**Decrease
                  in accounts receivable
              
              
              1,011,676
              
              
              1,359,448(Increase)
                  decrease in other current assets
              
              
              743,283
              
              
              (1,046,675
              )(Increase)
                  in other assets
              
              
              (90,377
              )
              
              (725,039
              )Increase
                    (decrease) in accounts payable andaccrued
                    expenses
              
              
              4,069,833
              
              
              (4,142,706
              )Increase
                  in deferred revenue
              
              
              431,247
              
              
              95,353Total
                  adjustments
              
              
              7,396,024
              
              
              4,571,447**Net
                  cash provided by (used in) operating activities**
              
              
              1,935,934
              
              
              (1,441,193
              )**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition
                  of intangible assets
              
              
              -
              
              
              (6,778,129
              )Cash
                  paid for acquisitions
              
              
              (32,960,500
              )
              
              (4,973,122
              )Cash
                  received in acquisition of subsidiaries
              
              
              5,827,223
              
              
              1,046,111Capital
                  expenditures, net
              
              
              (1,384,688
              )
              
              (2,674,904
              )**Net
                  cash (used in) investing activities**
              
              
              (28,517,965
              )
              
              (13,380,044
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Borrowings
                  under convertible debenture
              
              
              -
              
              
              15,500,000Borrowings
                  under acquisition bridge loan
              
              
              15,200,000
              
              
              -Payments
                  on acquisition bridge loan
              
              
              (2,200,000
              )
              
              (13,000,000
              )Borrowings/(payments)
                    under other notes payable, net
              
              
              17,208,449
              
              
              10,797,628Investment
                  by minority interests
              
              
              -
              
              
              3,612,525Debt
                  financing fees
              
              
              -
              
              
              (1,295,000
              )SEDA
                  conversion fees
              
              
              -
              
              
              (503,000
              )Proceeds
                  from common stock issuances
              
              
              84,499
              
              
              -**Net
                  cash provided by financing activities**
              
              
              30,292,948
              
              
              15,112,153







6




MOBILEPRO
      CORP. AND S UBSIDIARIESCONDENSED
      CONSOLIDATED STATEMENTS OF CASH FLOWS
      (CONTINUED)(unaudited)


**For
                  the Nine Months Ended December 31,****2004**
              
              **2005****NET
                  INCREASE IN CASH AND CASH EQUIVALENTS**
              
              $
              3,710,917
              
              $
              290,916**CASH
                  AND CASH EQUIVALENTS - BEGINNING OF YEAR**
              
              
              1,955,607
              
              
              4,669,787**CASH
                  AND CASH EQUIVALENTS - END OF PERIOD**
              
              $
              5,666,524
              
              $
              4,960,703**SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:**Cash
                  paid during the period for interest
              
              $
              45,550
              
              $
              1,043,073**SUPPLEMENTAL
                  DISCLOSURE OF NONCASH ACTIVITIES:**Issuance
                  of common stock for:Conversion
                  of debt and accrued interest to common stock
              
              $
              13,000,000
              
              $
              17,950,304Acquisition
                  of AFN
              
              $
              -
              
              $
              1,500,000Acquisition
                  of InReach Internet
              
              $
              -
              
              $
              950,000Acquisition
                  of Evergreen Broadband
              
              $
              -
              
              $
              231,073Acquisition
                  of WazAlliance
              
              $
              -
              
              $
              135,333Investment
                  banker retainer fee
              
              $
              -
              
              $
              58,500Conversion
                  of payables to common stock
              
              $
              90,000
              
              $
              -Debt
                  financing fees paid in common stock
              
              $
              1,760,000
              
              $
              -Transfer
                  of notes payable/debenture maturities to the SEDA
              
              $
              9,200,000
              
              $
              7,700,000Goodwill
                  recorded in acquisitions
              
              $
              31,893,329
              
              $
              5,743,263Amortization
                  of SEDA deferred financing fees
              
              $
              -
              
              $
              660,000Liability
                  for common stock to be issued
              
              $
              500,000
              
              $
              53,167Adjustment
                  to minority interest
              
              $
              -
              
              $
              150,000Note
                  payable in escrow
              
              $
              75,000
              
              $
              -




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




7


**MOBILEPRO
      CORP. AND SUBSIDIARIES**


**NOTES
        TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**
 **DECEMBER
        31, 2005**
 **(unaudited)**
 
 **NOTE
        1-** **ORGANIZATION**
 
 **Overview**
 
 MobilePro
        Corp., incorporated under the laws of the State of Delaware in July 2000,
        is a
        broadband wireless, telecommunications, and integrated data communication
        services company that delivers a comprehensive suite of voice and data
        communications services to its customers, including local exchange, long
        distance, enhanced data, Internet, cellular, and wireless broadband, through
        its
        operations in three industry segments - voice services, Internet services
        and
        wireless networks. Together with its consolidated subsidiaries, Mobilepro
        Corp.
        is hereinafter referred to as “Mobilepro” or the “Company”.
 
 The
        Company’s voice services segment includes the operations of CloseCall America,
        Inc. (“CloseCall”), a Stevensville, Maryland-based competitive local exchange
        carrier (a “CLEC”), Davel Communications, Inc. (“Davel”), a Cleveland,
        Ohio-based independent payphone provider, and American Fiber Network, Inc.
        (“AFN”), a CLEC based in Kansas City, Kansas. The Company’s Internet services
        segment includes DFW Internet Services, Inc. (“DFW”, doing business as
        Nationwide Internet), an Irving, Texas-based Internet services provider,
        its
        acquired Internet service provider subsidiaries, and InReach Internet L.L.C.
        (“InReach”), an Internet service provider based in Stockton, California. The
        Company’s municipal wireless networks operations are conducted primarily in
        Phoenix, Arizona, by a wholly owned subsidiary, NeoReach, Inc. (“NeoReach”), and
        its subsidiary, NeoReach Wireless, Inc. The wireless networks segment also
        includes the operations of the Company’s subsidiary, Kite Broadband, LLC
        (“Kite”), a broadband wireless service provider based in Ridgeland,
        Mississippi.
 
 **Summary
        of Acquisition Activities**
 
 In
        April
        2004, DFW acquired August.net Services LLC, an Internet service provider
        located
        in Texas, for $1,730,000 in cash and promissory notes.
 
 In
        June
        2004, DFW acquired ShreveNet, Inc. (“ShreveNet”), an Internet service provider
        located in Louisiana, for $1,250,000 in cash and common stock. The issued
        shares
        were valued at a fair value of $190,000 based on the average 20-day closing
        price ($0.2162 per share) prior to June 3, 2004. Mobilepro issued the common
        stock in August 2004.
 
 In
        June
        2004, DFW acquired certain assets of Crescent Communications, Inc., an Internet
        service provider located in Houston, for $1,194,767 in cash and a promissory
        note.
 
 In
        June
        2004, the Company acquired US1 Telecommunications, Inc. (“US1”), a long distance
        provider located in Kansas, for $135,282 in cash and conditional promissory
        notes.
 
 In
        July
        2004, DFW acquired Clover Computer Corporation (“Clover”), a Coshocton,
        Ohio-based Internet services provider with operations in several Ohio cities,
        for $1,216,993 in cash and promissory notes.
  In
        July
        2004, DFW acquired Ticon.net (“Ticon”), a Janesville, Wisconsin-based Internet
        service provider with operations in Janesville and Milwaukee, for $1,000,000
        in
        cash and promissory notes.
 
 In
        August
        2004, the Company acquired Affinity Telecom (“Affinity”), a Michigan-based CLEC
        and long distance carrier. The Company paid $2,513,000 in cash, notes, and
        a
        convertible note.
 
 In
        August
        2004, DFW acquired the customer base, corporate name and certain other assets
        of
        Web One, Inc. (“Web One”), a Kansas City, Missouri-based Internet service and
        web-hosting provider, for $1,960,000 in cash and common stock.
 
 In
        September 2004, DFW acquired World Trade Network, Inc. an Internet services
        provider based in Houston, for $1,200,000 in cash and promissory
        notes.
 
 8
  In
        September 2004, DFW acquired The River Internet Access Co. (“The River”), an
        Internet services provider based in Tucson, Arizona, for $2,467,204 in cash
        and
        promissory notes.
 
 In
        October 2004, Mobilepro acquired CloseCall, a CLEC offering local telephone
        service, long distance service, 1.800CloseCall prepaid calling cards, and
        wireless, dial-up and DSL Internet services. The purchase price included
        1) a
        cash payment of $8,000,000, 2) 39,999,999 shares of Mobilepro’s common stock
        valued at $10,000,000, and 3) warrants to purchase 3,500,000 additional shares
        of Mobilepro’s common stock exercisable at $0.30 per share for 2,500,000 shares
        and $0.35 per share for 1,000,000 shares.
 
 In
        November 2004, Mobilepro acquired Davel, the owner and operator of approximately
        36,000 payphones predominantly located in 42 states and the District of
        Columbia. In connection with this transaction, the Company acquired all of
        Davel’s senior secured debt in the approximate principal amount of $103.1
        million, a $1.3 million note receivable from Davel held by one of its secured
        lenders, and approximately 95.2% of the common stock of Davel. The purchase
        price included cash of $14,000,000 plus warrants to purchase up to 5,000,000
        shares of common stock at the price of $0.30 per share. In May 2005, the
        Company
        purchased the remaining 4.8% of Davel’s outstanding common stock for $450,000
        cash.
 
 In
        May
        2005, NeoReach acquired WazAlliance, a network of metro-wide commercial and
        residential wireless Internet access zones for a total purchase price of
        $257,500. Consideration included the issuance of 760,000 shares of Mobilepro’s
        common stock valued at $110,200, a liability to issue an addition 540,000
        shares
        of common stock valued at $78,300, and the payment of certain liabilities
        in the
        amount of $69,000 on behalf of WazAlliance.
 
 In
        June
        2005, the Company acquired Evergreen Open Broadband (“Evergreen”), a wholesale
        wireless Internet service provider based in Boston, for a purchase price
        of
        approximately $231,073 representing 1,505,360 shares of Mobilepro common
        stock
        valued at $0.1535 per share based on the date that the parties reached agreement
        on the terms of the acquisition.
 
 In
        June
        2005, Mobilepro acquired 100% of the outstanding common stock of AFN, a CLEC
        that is licensed to provide local telephone, long distance and/or Internet
        services throughout the United States, for a cost of $3,434,331, including
        10,000,000 shares of Mobilepro common stock, valued at $1,500,000 based on
        the
        value of the Company's common stock at the time that the substantive terms
        of
        the acquisition were accepted, a cash payment of $1,500,000 and the excess
        of
        liabilities assumed over the fair value of assets acquired. The assumed
        liabilities included $1,337,103 payable to a related party company that supplied
        administrative and support services to AFN.
 
 In
        September 2005, AFN acquired the assets of AllCom USA and their long distance
        and T-1 customers for $300,000 cash, providing the Company with an additional
        base of customers for bundled services.
 
 In
        November 2005, Mobilepro acquired InReach for a cost of $3,061,873, including
        a
        cash payment of $2,111,873 and 4,357,798 shares of Mobilepro common stock,
        valued at $950,000 based on the value of the Company's common stock at the
        time
        that the substantive terms of the acquisition were accepted.
 
 **NOTE
        2-** **SUMMARY
        OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Financial
        Statement Presentation**
 
 The
        condensed consolidated financial statements include the accounts of the Company
        and its subsidiaries. All significant inter-company accounts and transactions
        have been eliminated in consolidation. In accordance with the requirements
        of
        Statement of Financial Accounting Standard (“SFAS”) No. 131, “Disclosures about
        Segments of an Enterprise and Related Information”, the Company has provided
        certain financial information relating to the operating results and assets
        of
        its industry segments (see Note 15) based on the manner in which management
        disaggregates the Company in making internal operating decisions.
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles in the United States of America requires management
        to
        make estimates and assumptions that affect the reported amounts of assets
        and
        liabilities, the disclosure of contingent assets and liabilities at the date
        of
        the financial statements and the reported amounts of revenue and expenses
        during
        the reporting periods. Actual results could differ from those
        estimates.
 
 These
        financial statements are unaudited and have been prepared by the Company
        pursuant to the rules and regulations of the Securities and Exchange Commission
        regarding interim financial reporting. Accordingly, they do not include all
        of
        the information and footnotes required by generally accepted accounting
        principles for complete financial statements, and it is suggested that these
        financial statements be read in conjunction with the financial statements,
        and
        notes thereto, included in the Company’s Annual Report on Form 10-KSB for the
        fiscal year ended March 31, 2005. In the opinion of management, the comparative
        financial statements for the periods presented herein include all adjustments
        that are normal and recurring, and that are necessary for a fair presentation
        of
        results for the interim periods. The results of operations for the three
        and
        nine months ended December 31, 2005 are not necessarily indicative of the
        results that will be achieved for the fiscal year ending March 31,
        2006.
 
 9
 **Reclassifications**
 
 Certain
        prior-period financial statement balances have been reclassified to conform
        to
        the December 31, 2005 presentation. The reclassifications resulted in no
        changes
        to the accumulated deficits reported in prior periods.
 
 **Revenue
        Recognition**
 
 The
        Company recognizes revenue related to local telephone, long distance, wireless
        calling and Internet access services when such services are rendered and
        collection is reasonably assured; it defers revenue for services that the
        Company bills in advance. Revenue related to service contracts covering future
        periods is deferred and recognized ratably over the periods covered by the
        contracts.
 
 Davel
        derives its payphone revenue from two principal sources: coin calls and non-coin
        calls. Revenue related to all calls, including dial-around compensation and
        operator service revenue, is recognized in the periods that the customers
        place
        the calls. Any variations between recorded amounts of revenue and actual
        cash
        receipts are accounted for at the time of receipt.
 
 Non-coin
        operator service calls are handled by independent operator service providers.
        These carriers assume billing and collection responsibilities for
        operator-assisted calls originating on Davel’s payphone network and pay
        commissions to Davel based upon gross revenue. Davel recognizes revenue related
        to operator service calls in amounts equal to the commissions that it is
        entitled to receive in the periods that the services are rendered.
 
 Davel
        also recognizes revenue related to non-coin dial-around calls that are initiated
        from a Company payphone in order to gain access to a long distance company
        or to
        make a standard toll free call. Revenue related to such dial-around calls
        is
        recognized initially based on estimates. The inter-exchange carriers have
        historically paid for fewer dial-around calls than are actually made and
        the
        collection period for dial-around revenue is generally four to six months,
        but
        can be in excess of a year. Davel’s estimates of revenue are based on the
        historical analysis of calls placed versus amounts collected. These analyses
        are
        updated on a periodic basis. Recorded amounts of revenue may be adjusted
        based
        on actual receipts and/or the subsequent revision of prior estimates. Reported
        revenues for the three month period ended March 31, 2005 included a reduction
        to
        previously recorded revenues of $167,319. No such adjustments were recorded
        in
        the nine-month period ended December 31, 2005.
 
 **Financing
        Fees**
 
 The
        financing fees paid in May 2004 to Cornell Capital Partners, L.P. (“Cornell
        Capital”) and others related to the negotiation of the Standby Equity
        Distribution Agreement (the “SEDA”) were deferred and, in the current year, are
        being amortized against additional paid-in-capital on a straight-line basis
        over
        the twenty-four (24) month term of the SEDA. These fees were paid with the
        issuance of 8,000,000 shares of Mobilepro common stock valued in the amount
        of
        $1,760,000. The Company recorded amortization of approximately $220,000 in
        each
        of the three-month periods ended December 31, 2004 and 2005, respectively,
        and
        amortization of approximately $513,000 and $660,000 in the nine-month periods
        ended December 31, 2004 and 2005, respectively. The prior year amounts were
        included in depreciation and amortization expense. The fees paid to Cornell
        Capital and others at the time that funds are drawn under equity lines of
        credit
        (5% for the SEDA), amounting to $127,500 in the three-month period ended
        December 31, 2005, and amounting to $503,000 in the nine-month period ended
        December 31, 2005, were charged to additional paid-in-capital. Such fees,
        in the
        nine months ended December 31, 2004, amounting to $1,135,249, were charged
        to
        professional fees. No such fees were incurred in the three months ended December
        31, 2004.
 
 The
        Company also incurred financing costs of $1,295,000 in May 2005 in connection
        with issuance of the $15.5 million convertible debenture to Cornell Capital
        and
        the early retirement of the bridge loan (see Note 8). These costs, including
        fees paid in cash to Cornell Capital, were charged to additional
        paid-in-capital.
 
 10
 **Accounting
        for Stock Options and Warrants**
 
 The
        Company accounts for its stock-based compensation under the recognition and
        measurement principles of Accounting Principles Board (“APB”) Opinion No. 25,
“Accounting for Stock Issued to Employees,” and related interpretations. APB
        Opinion No. 25 provides that compensation expense relative to a Company’s
        employee stock options is measured based on the intrinsic value of the stock
        options at the measurement date.
 
 If
        compensation expense had been determined based on the fair value of the options
        at the grant dates consistent with the method of accounting proscribed by
        SFAS
        No. 123, “Accounting for Certain Transactions Involving Stock Compensation,” as
        amended by SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and
        Disclosure,” the Company’s net loss per share amounts would have been stated at
        the following pro forma amounts for the nine-month periods ended December
        31,
        2004 and 2005:
  **For
                  the Nine Months Ended December 31,****2004**
              
              
              **2005**Net
                  loss, as reported
              
              $
              (5,460,090
              )
              
              $
              (6,012,640
              )Add:
                  Stock-based employee compensation expense included in reported
                  net
                  loss
              
              
              -
              
              
              
              -Deduct:
                  Total stock-based employee compensation expense determined under
                  fair
                  value based method for all awards
              
              
              (6,093,029
              )
              
              
              (3,028,803
              )Pro
                  forma net loss
              
              $
              (11,553,120
              )
              
              $
              (9,041,443
              )Net
                  loss per share:As
                  reported
              
              $
              (0.0202
              )
              
              $
              (0.0154
              )Pro
                  forma
              
              $
              (0.0428
              )
              
              $
              (0.0232
              )
 
 The
        fair
        value of each option is estimated on the date of grant using the Black-Scholes
        option-pricing model with the following assumptions used for grants during
        the
        periods ended December 31, 2004 and 2005:
  **2004**
                
                **2005**Dividend
                    yield
                
                None
                
                NoneExpected
                    volatility
                
                
                60
                %
                
                60
                %Risk-free
                    interest rate
                
                
                3.00
                %
                
                3.00
                %Expected
                    term (in years)
                
                
                10.00
                
                
                10.00
 For
          stock
          options granted during the nine-month periods ended December 31, 2004 and
          2005,
          the weighted-average grant-date fair value was $0.13 per share and $0.21
          per
          share, respectively.
 
 **Property,
        Plant and Equipment**
 
 Furniture
        and equipment are included in fixed assets in the accompanying balance sheets
        and are stated at cost. Depreciation expense is computed using the straight-line
        method during the estimated useful life of each asset. When an asset is retired
        or otherwise disposed of, the cost and related accumulated depreciation are
        removed from the accounts, and any resulting gain or loss is recognized in
        income for the period. The costs of maintenance and repairs are charged to
        expense as incurred; significant renewals and betterments are
        capitalized.
   11
 
 At
        March
        31, 2005 and December 31, 2005, property, plant and equipment values were
        as
        follows:
 
 **Estimated**
                **Useful**
                **Lives****(****in********years)**
              
              **March
                  31, 2005**
              
              **December
                  31,******
                **2005**(audited)
              
              (unaudited)Furniture
                  and fixtures
              
              
              7
              
              $
              387,861
              
              $
              471,816Machinery
                  and equipment
              
              
              5
              
              
              13,584,088
              
              
              16,587,715Leasehold
                  improvements
              
              
              7
              
              
              263,452
              
              
              638,584Vehicles
              
              
              5
              
              
              287,733
              
              
              226,470Subtotals
              
              
              
              
              
              14,523,134
              
              
              17,924,585Less
                  accumulated depreciation
              
              
              
              
              
              (
                  1,330,078
              )
              
              (
                  3,638,431
              )Fixed
                  assets, net
              
              
              
              
              $
              13,193,056
              
              $
              14,286,154
 
 The
        Company recorded depreciation expense of $447,919 and $925,899 for the
        three-month periods ended December 31, 2004 and 2005, respectively, and
        depreciation expense of $614,098 and $2,254,899 for the nine-month periods
        ended
        December 31, 2004 and 2005, respectively.
 
 **Advertising
        Contracts**
 
 CloseCall
        uses print, signage, radio and television advertising to market services
        to
        customers of certain local professional sports teams. Advertising programs
        include the use of long-term contracts. Upon the negotiation of such a contract,
        the Company records the cost of the advertising program as an asset, and
        amortizes the balance to operating expenses over the life of the contract.
        At
        December 31, 2005, prepaid expenses and other assets included balances of
        $328,064 and $554,118, respectively, related to such contracts. The
        corresponding contract liability is paid typically in installments. At December
        31, 2005, accounts payable and long-term liabilities included balances of
        $345,672 and $517,430, respectively, that are payable under such contracts.
 
 **Customer
        Contracts and Relationships**
 
 In
        connection with the acquisition of certain customer rights under an agreement
        with Sprint Communications Company L.P. (“Sprint”), the Company made an up-front
        payment of $6,578,550, after adjustment for the difference in the closing
        number
        of customers subscribing to the service as compared to a target subscriber
        number (see Note 5). Accordingly, the amount of this payment, which is also
        net
        of the portion allocated to the value of the tangible assets and adjusted
        to
        include payments for legal and direct professional advisory fees, was
        capitalized as an intangible asset ascribed to the subscriber customer contracts
        and relationships and will be amortized on a straight-line basis over the
        estimated life of the subscriber base. The Company has estimated this life
        to be
        ten years based upon an analysis of the operating history of the base and
        the
        average monthly disconnects. In addition, the Company intends to evaluate
        the
        value of this intangible asset for potential impairment at least annually
        and to
        adjust both the asset value and the prospective life in the future if determined
        necessary. For the three months ended December 31, 2005, amortization expense
        was $165,702. Amortization expense of $331,053 was included in the statement
        of
        operations for the nine months ended December 31, 2005, representing the
        amount
        of amortization recorded by Kite since it began operations on July 1,
        2005.
 
 This
        account also includes location contracts with net balances of $2,965,456
        and
        $2,373,185 at March 31, 2005 and December 31, 2005, respectively, representing
        Davel acquisition costs allocated to location owner payphone contracts and
        other
        costs associated with obtaining written and signed location contracts. These
        other assets are amortized on a straight-line basis over their estimated
        useful
        lives based on contract terms (generally 5 years). Accumulated amortization
        related to these contracts at March 31, 2005 and December 31, 2005 was $267,586
        and $706,570, respectively. Amortization related to location contracts was
        $152,366 and $472,976, respectively, for the three-month and nine-month periods
        ended December 31, 2005.
 
 **Investments**
 
 During
        the year ended March 31, 2005, the Company provided certain management services
        to two emerging technology firms. As consideration, the Company received
        a 5%
        ownership in each firm. These investments were recorded in the amounts of
        $300,000 and $150,000, respectively, approximating the value of the services
        provided. The total investment amount of $450,000 was included in other assets
        at March 31, 2005 and December 31, 2005.
 
 12
  **Accounts
        Payable and Accrued Liabilities**
 
 At
        March
        31, 2005 and December 31, 2005, accounts payable and accrued liabilities
        consisted of the following:
 
 **March
                  31,**
              
              **December
                  31,****2005**
              
              **2005**(audited)
              
              (unaudited)Accounts
                  payable
              
              $
              14,083,842
              
              $
              12,331,292Accrued
                  restructuring costs
              
              
              -
              
              
              1,335,612Accrued
                  compensation
              
              
              2,147,138
              
              
              1,070,948Accrued
                  interest expense
              
              
              937,509
              
              
              429,459Other
                  accrued liabilities
              
              
              2,694,599
              
              
              1,705,845Totals
              
              $
              19,863,088
              
              $
              16,873,156
 
 **Income
        Taxes**
 
 Effective
        July 14, 2000, the Company adopted the provisions of Statement of Financial
        Accounting Standards (SFAS) No. 109, “Accounting for Income Taxes”. The
        statement requires an asset and liability approach for financial accounting
        and
        reporting for income taxes, and the recognition of deferred tax assets and
        liabilities for the temporary differences between the financial reporting
        bases
        and tax bases of the Company’s assets and liabilities at enacted tax rates
        expected to be in effect when such amounts are realized or settled. Because
        of
        its history of losses, the Company has not had any material federal or state
        income tax obligations. Due to the anticipated use of net operating loss
        carryforwards to offset current year income, no provision for income taxes
        was
        recorded for the three or nine months ended December 31, 2005. The Company’s net
        operating loss carryforwards totaled $15,873,774 at March 31, 2005, expiring
        through March 31, 2025. When there has been a change in an entity’s ownership,
        utilization of net operating loss carryforwards may be limited. Because of
        the
        changes in the ownership of prior acquisitions of the Company, the use of
        these
        acquired net operating losses will be limited and may not be available to
        offset
        future taxable income.
 
 **Recent
        Accounting Pronouncements**
 
 In
        December 2004, the Financial Accounting Standards Board revised SFAS
        No. 123. The revision was entitled “Share-Based Payment” (“SFAS
        No. 123R”), replacing SFAS 123 and superseding APB No. 25, and its
        scope encompasses a wide range of share-based compensation arrangements
        including share options, restricted share plans, performance-based awards,
        share
        appreciation rights and employee share purchase plans.
 
 SFAS
        123R
        requires that the compensation cost relating to share-based payment transactions
        be recorded in financial statements. For each transaction, compensation cost
        is
        to be measured based on the fair value of the equity or liability instrument
        issued. The
        pro
        forma disclosures previously permitted under SFAS No. 123 no longer will be
        an alternative to financial statement recognition of compensation expense.
        In
        accordance with a recently-issued Securities and Exchange Commission rule,
        small
        business registrants will be allowed to implement SFAS No. 123R as of the
        beginning of the first fiscal year that begins after December 15, 2005. The
        Company currently expects that it will adopt SFAS No. 123R for the fiscal
        quarter ending June 30, 2006.
 
 Under
        SFAS No. 123R, the Company must determine the appropriate fair value model
        to be used for valuing share-based payments, the amortization method for
        compensation cost and the transition method to be used at date of adoption.
        The
        permitted transition methods include either retrospective or prospective
        adoption. Under the retrospective method, prior periods may be restated either
        as of the beginning of the year of adoption or for all periods presented.
        The
        prospective method requires that compensation expense be recorded for all
        unvested stock options at the beginning of the first quarter of adoption
        of SFAS
        No. 123R, while the retrospective methods would record compensation expense
        for all unvested stock options beginning with the first period presented.
        The
        Company is evaluating the requirements of SFAS No. 123R and expects that
        its adoption will have a material impact on the company’s consolidated financial
        position and consolidated results of operations including an increase
        in compensation expense for equity instruments issued to employees .
        The
        Company has not yet determined the method of adoption or the effect of adopting
        SFAS No. 123R, and it has not determined whether the adoption will result
        in amounts that are similar to the current pro forma disclosures under SFAS
        No. 123.
 
 13
  **NOTE
        3-** **IMPAIRMENT
        OF GOODWILL**
 
 At
        September 30, 2005, the Company’s balance sheet included intangible assets with
        a total carrying value of approximately $49,060,000, representing 56.3% of
        total
        assets and including approximately $37,492,000 in goodwill. Substantially,
        this
        goodwill was recorded in connection with the series of acquisitions completed
        by
        the Company since April 1, 2004. In connection with the acquisition of InReach,
        an additional $3,003,974 in goodwill was added to the balance sheet during
        the
        quarter ended December 31, 2005. Generally accepted accounting principles
        require that the Company assess the fair values of acquired entities at least
        annually in order to identify any impairment in the values. However, on a
        quarterly basis, management is alert for events or circumstances that would
        indicate, more likely than not, that the fair value of a reporting segment
        has
        been reduced below its carrying amount. If there is a determination that
        the
        fair value of an acquired entity is less than the corresponding net assets,
        including goodwill, an impairment loss would be identified and recorded at
        that
        time.
 
 During
        the three months ended December 31, 2005, neither the Internet services segment
        nor the voice services segment performed as expected. As a result, management
        reviewed the carrying values of the assets of these segments and determined
        that
        an adjustment for goodwill impairment was appropriate at December 31, 2005.
        The
        Company recorded an impairment charge in the amount of $3,764,429, including
        $1,945,519 relating the Internet service companies and $1,818,910 related
        to
        Affinity. The churn of dial-up Internet access customers, the steady loss
        of
        Affinity customers, and bad debt losses related to Affinity customers (occurring
        at a greater rate than in the Company’s other CLEC companies), all contributed
        to the net losses incurred by these segments during the three months ended
        December 31, 2005. The impairment charge represented approximately 12.8%
        and
        73.0% of the goodwill related to the Internet service companies (excluding
        InReach) and Affinity, respectively.
 
 **NOTE
        4-** **RESTRUCTURING
        OF OPERATIONS**
 
 During
        the current year, the activities of the Internet services segment have focused
        on the integration of the operations of the acquired companies comprising
        this
        business segment. The efforts are focused on combining service offerings,
        consolidating network operations and customer support locations, and reducing
        operating costs. As a result of this effort, the Company recorded a
        restructuring charge of $1,335,612 in the three months ended December 31,
        2005,
        including $902,306 related to the loss expected on the abandonment of leased
        facilities, $392,899 related to the loss expected upon the disposal of excess
        equipment, and $40,407 related to certain employees terminated in January
        2006.
 
 **NOTE
        5-** **THE
        FORMATION OF KITE BROADBAND, LLC**
 
 In
        June
        2005, Kite was funded with the Company making an investment of $3,825,000
        in
        cash and receiving 51% ownership. The minority owners invested $3,675,000
        in cash. On June 30, 2005, Kite closed a Master Agreement for Services (the
        “Sprint Agreement”) with Sprint under which the Company shall provide services
        to Sprint’s broadband customers in fourteen (14) metropolitan markets for a
        period of three years utilizing the Sprint mark. The Sprint Agreement covers,
        among other things, the provisioning of certain customer-facing services,
        such
        as customer operations and call center management, sales, marketing, billing,
        collection, installation and repair. Sprint continues to provide network
        support
        and transport services. The customers remain Sprint customers during the
        three-year term of the Sprint Agreement. Upon expiration of the Sprint
        Agreement, the Company will have the option to acquire the then existing
        customers pursuant to the terms of the Sprint Agreement. All network and
        spectrum assets will remain Sprint property. In December 2005, Kite made
        a cash
        distribution of $127,500 to its investors resulting in a $62,475 reduction
        of
        the minority interest in Kite. The Company’s share of the distribution was
        $65,025. At December 31, 2005, the 49% minority ownership of Kite was reflected
        in the condensed consolidated balance sheet in the amount of $3,840,677.
        Subsequent to December 31, 2005, the Company acquired the minority interest
        in
        Kite.
 
 **NOTE
        6-** **THE
        ACQUISITION OF AFN**
 
 The
        acquisition of AFN, that occurred on June 30, 2005, has been accounted for
        under
        the purchase method of accounting. Accordingly, AFN is treated as a wholly
        owned
        subsidiary of the Company. The operating results of AFN are included in the
        operating results of the Company from and including July 1, 2005. The following
        unaudited pro forma information for the three and nine months ended December
        31,
        2004 and 2005 has been presented as if the acquisition occurred on April
        1,
        2004, and reflects the elimination of revenues recorded on the books of both
        US1
        and AFN, and the issuance of 10,000,000 shares of the Company’s common stock.
        The unaudited pro forma information does not necessarily represent the actual
        results that would have been achieved had the companies been combined at
        April
        1, 2004, nor may they be indicative of future operating results.
  
 14
  **Three
                    Months Ended December 31,**
                
                **Nine
                    Months Ended December 31,****2004**
                
                **2005**
                
                **2004**
                
                **2005**Revenues
                
                $
                18,724,342
                
                $
                26,244,606
                
                $
                28,056,994
                
                $
                76,859,869Net
                    loss
                
                
                (2,862,304
                )
                
                (6,955,732
                )
                
                (5,182,331
                )
                
                (5,902,469
                )Net
                    loss per share:Basic
                
                
                (0.0087
                )
                
                (0.0165
                )
                
                (0.0185
                )
                
                (0.0149
                )Diluted
                
                
                (0.0087
                )
                
                (0.0165
                )
                
                (0.0185
                )
                
                (0.0149
                )
  **NOTE
        7-** **THE
        ACQUISITION OF INREACH**
 
 The
        acquisition of InReach occurred on November 1, 2005, and has been accounted
        for
        under the purchase method of accounting. Accordingly, InReach is treated
        as a
        wholly owned subsidiary of the Company. The operating results of InReach
        are
        included in the operating results of the Company from and including November
        1,
        2005. The following unaudited pro forma information for the three and nine
        months ended December 31, 2004 and 2005 has been presented as if the acquisition
        occurred on April 1, 2004, and reflects the issuance of 4,357,798 shares
        of the
        Company’s common stock. The unaudited pro forma information does not necessarily
        represent the actual results that would have been achieved had the companies
        been combined at April 1, 2004, nor may they be indicative of future operating
        results.
 **Three
                    Months Ended December 31,**
                
                **Nine
                    Months Ended December 31,****2004**
                ****
                **2005**
                ****
                **2004**
                ****
                **2005**Revenues
                
                $
                18,790,255
                
                $
                26,723,477
                
                $
                28,544,302
                
                $
                78,813,687Net
                    loss
                
                
                (2,982,966
                )
                
                (6,913,378
                )
                
                (5,421,255
                )
                
                (5,703,671
                )Net
                    loss per share:Basic
                
                
                (0.0093
                )
                
                (0.0164
                )
                
                (0.0198
                )
                
                (0.0145
                )Diluted
                
                
                (0.0093
                )
                
                (0.0164
                )
                
                (0.0198
                )
                
                (0.0145
                )
 **NOTE
        8-**  **NOTES
        PAYABLE**
 
 **Secured
        Convertible Debenture**
 
 On
        May 13, 2005, the Company issued a secured convertible debenture (the
“Debenture”) in the aggregate amount of $15.5 million to Cornell Capital.
        The Company used most of the proceeds to pay in full the remaining $13,000,000
        balance of a note payable that bore interest at the rate of 23% and was due
        on
        November 15, 2005; the retired note was the source of bridge financing for
        the
        Company’s acquisition of Davel. Interest expense related to the retired note in
        the current year was $381,225; this amount is included in interest expense
        for
        the nine-month period ended December 31, 2005.
 
 The
        Debenture bears interest at an annual rate of 7.75% and is due and payable
        in
        the following installments over a three-year period: $500,000 due on November
        15, 2005; $1,500,000 due on May 15, 2006; $1,000,000 due on each of August
        15,
        2006, November 15, 2006 and February 15, 2007; $2,000,000 due on each of
        May 15,
        2007, August 15, 2007, November 15, 2007 and February 15, 2008; and the
        remaining $2,500,000 due on May 15, 2008. The interest payable under the
        Debenture is due at the time of conversion or maturity; the holder of the
        Debenture may elect to receive the interest in cash or in the form of common
        stock of Mobilepro. The Company satisfied its obligations to make the $500,000
        payment due in November 2005 and to pay accrued interest in the amount of
        $600,625 with the transfer of these amounts to the SEDA. Until the Debenture
        is
        repaid in full, Cornell Capital may elect to convert any portion of the
        outstanding principal amount of the Debenture, plus accrued interest, into
        shares of common stock of Mobilepro at a conversion price of $0.30 per share.
        The conversion price of the Debenture may be adjusted if the Company issues
        additional equity or instruments convertible into equity in connection with
        a
        transaction such as a stock dividend or a stock split pursuant to a formula
        included in the Debenture. For the three-month and nine-month periods ended
        December 31, 2005, the amount of interest expense related to the Debenture,
        based on the stated interest rate, was $297,897 and $758,651, respectively.
        Unpaid interest included in accrued liabilities at December 31, 2005 was
        $158,026.
 
 15
 As
        the
        market value of the Company’s common stock on the date of the Debenture, $0.327
        per share, exceeded the conversion price, an amount equal to the difference
        in
        the price times the number of shares subject to conversion was reclassified
        from
        additional paid-in capital and was included as additional paid-in capital,
        beneficial conversion feature, in the accompanying balance sheet at December
        31,
        2005. Such amount will be eliminated upon the conversion of the Debenture
        into
        shares of the Company's common stock or the repayment of the
        Debenture.
 
 The
        Debenture is secured by the assets of the Company. The terms of the Debenture
        obligate the Company to comply with certain covenants including an agreement
        that, on March 1, 2006, if the Company’s aggregate indebtedness to Cornell
        Capital exceeds $4,000,000, the parties will enter into a new SEDA in an
        amount
        not less than the amount of the indebtedness.
 
 In
        connection with the issuance of the Debenture, the Company also issued to
        Cornell Capital a five-year warrant to purchase 6,000,000 shares of its common
        stock at an exercise price of $0.50 per share (the “Warrant”). If the Company
        issues additional equity or instruments convertible into equity as described
        in
        the Warrant, or is deemed to have done so, at a lower per share price than
        the
        then-effective Warrant exercise price, the exercise price may be adjusted
        downward to such lower per share price. In that case, the number of shares
        issuable upon exercise of the Warrant would be increased so that the total
        exercise price would remain $3,000,000.
 
 The
        face
        amount of the Debenture is reflected in the balance sheet at December 31,
        2005,
        net of unamortized debt discount of $602,452. The net amount of the Debenture
        reflects the fair market value on the date of issuance after allocating $853,200
        of the proceeds to the Warrant. The discount on the Debenture is being amortized
        as a charge to interest expense over the three-year period until the Debenture
        becomes due in May 2008. Interest expense for the three-month and
        nine-month periods ended December 31, 2005 included debt discount amortization
        in the amounts of $99,323 and $250,748, respectively. The value of the Warrant
        will be eliminated upon its exercise or expiration.
 
 **Standby
        Equity Distribution Agreement (the “SEDA”)**
 
 On
        May
        13, 2004, the Company entered into the SEDA with Cornell Capital that provides,
        generally, that Cornell Capital will purchase up to $100 million of the common
        stock of Mobilepro over a two-year period, with the time and amount of such
        purchases, if any, at the Company’s discretion. Cornell Capital will purchase
        the shares at a 2% discount to the prevailing market price of the common
        stock.
        There are certain conditions applicable to the Company’s ability to draw down on
        the SEDA including the continuing effectiveness of a registration statement
        covering the resale of all shares of common stock that may be issued to Cornell
        Capital under the SEDA, the Company’s payment of a fee to Cornell Capital and
        other advisors at the time of each draw (5% of the amount of each draw),
        and the
        Company’s adherence with certain other covenants.
 
 In
        the
        event that Cornell Capital would hold more than 9.9% of the then outstanding
        common stock of the Company, the Company would be unable to draw down on
        the
        SEDA. At December 31, 2005, Cornell held 4,995,000 unregistered shares of
        the
        Company’s common stock representing an ownership percentage of approximately
        1.12%.
 
 In
        the
        nine-month periods ended December 31, 2004 and 2005, draws under the SEDA,
        including amounts transferred from existing notes payable to Cornell Capital,
        the Debenture, and related accrued interest amounts, totaled $9,213,907 and
        $10,909,222, respectively. The Company has advanced 120,000,000 shares of
        its
        common stock to the escrow agent in accordance with the terms of the SEDA
        since
        the inception of the SEDA. In the nine-month periods ended December 31, 2004
        and
        2005, the Company converted $9,213,907 and $17,409,222 in draws under the
        SEDA,
        respectively, into 52,253,547 and 77,803,600 shares of common stock,
        respectively, that were issued to Cornell Capital by the escrow agent. At
        December 31, 2005, there were no unconverted outstanding draws. At March
        31,
        2005, borrowings under the SEDA of $6,500,000 were outstanding, representing
        unconverted draws at that date, and were classified in the accompanying balance
        sheet as current liabilities.
 
 The
        SEDA
        replaced a similar equity line of credit arrangement with Cornell Capital
        that
        was negotiated in May 2002 and that was intended to provide up to $10 million
        in
        equity financing to the Company. In the nine months ended December 31, 2004,
        the
        Company drew $2,000,000 from Cornell Capital in accordance with this arrangement
        and advanced 10,000,000 shares of its common stock to the escrow agent. During
        the nine months ended December 31, 2004, 18,298,438 shares of common stock
        were
        issued to Cornell Capital under this arrangement. At March 31, 2005 and December
        31, 2005, there were no outstanding borrowed amounts under this terminated
        arrangement.
 
 The
        discounts provided to Cornell Capital upon the conversion of equity line
        of
        credit draws to shares of common stock, amounting to $90,021 and $84,889
        in the
        three-month periods ended December 31, 2004 and 2005, respectively, and $375,150
        and $291,956 in the nine-month periods ended December 31, 2004 and 2005,
        respectively, were included in interest expense.
 
 16
 **Notes
        Payable to Cornell Capital**
 
 In
        August
        2004, the Company borrowed $8,500,000 from Cornell Capital. The amount was
        due
        in one-year with interest applied at an annual rate of 12%. Prior to March
        31,
        2005, the Company converted $7,200,000 of the note balance into debt under
        the
        SEDA; the remaining principal balance of the note payable, classified as
        a
        current liability in the balance sheet, was $1,300,000 at March 31, 2005.
        In May
        2005, the remaining $1,300,000 outstanding principal amount was transferred
        into
        debt under the SEDA.
 
 In
        September 2004, the Company borrowed $3,700,000 from Cornell Capital. The
        amount
        was due in one year with interest applied at an annual rate of 12%. At March
        31,
        2005, the Company classified the outstanding principal balance of this note
        payable of $3,700,000 as a current liability in the balance sheet. In June
        2005
        the remaining $3,700,000 outstanding principal amount was transferred into
        debt
        under the SEDA.
 
 On
        June
        24, 2005, the Company borrowed $6,300,000 from Cornell Capital, and
        simultaneously transferred $2,200,000 of the note balance into debt under
        the
        SEDA. The remaining amount of the note, $4,100,000, was due in one year with
        interest applied at an annual rate of 8% and was classified as a current
        liability in the balance sheet. Proceeds from this borrowing were used to
        fund
        the $1,500,000 cash consideration portion of the AFN purchase price and the
        $3,825,000 cash investment in Kite. Subsequent to December 31, 2005, the
        $4,100,000 outstanding balance of this note payable was transferred to the
        SEDA.
 
 On
        September 7, 2005, the Company borrowed $2,000,000 from Cornell Capital,
        and
        simultaneously transferred the entire note balance into debt under the
        SEDA.
 
 On
        October 21, 2005, the Company borrowed $2,500,000 from Cornell Capital under
        a
        note payable in 150 days, with interest applied at an annual rate of 8%;
        this
        amount was classified as a current liability in the accompanying consolidated
        balance sheet at December 31, 2005. Subsequent to December 31, 2005, the
        balance
        of this note payable was transferred to the SEDA.
 
 Interest
        expense, based on the stated rates of interest, on the notes payable to Cornell
        Capital, including amounts transferred to the SEDA, was $470,639 and $149,266,
        respectively, for the three months ended December 31, 2004 and 2005, and
        $470,639 and $581,627, respectively, for the nine months ended December 31,
        2004
        and 2005. Accrued and unpaid interest at December 31, 2005 related to these
        notes was $269,183.
  **Notes
        Payable Related to Acquisitions**
 
 As
        a
        portion of the consideration paid to owners of acquired companies, the Company
        may issue promissory notes. These notes typically are payable over terms
        ranging
        from 4 months to two years and bear interest at annual rates ranging from
        3% to
        7%. At March 31, 2005 and December 31, 2005, the aggregate balances due under
        the acquisition notes payable were $1,723,201 and $42,909,
        respectively.
 
 In
        June
        2005, the Company retired notes payable to the former owners of Clover with
        remaining principal balances that totaled $570,372, by converting $535,188
        into
        2,200,000 shares of common stock of Mobilepro. The difference of $35,184
        between
        the common stock payment and notes payable balances was credited to
        goodwill.
 
 In
        September 2005, the Company settled a dispute with the former owners of Ticon
        with the cash payment of $195,000. The $55,000 difference between the payment
        and the $250,000 note payable balance was credited to goodwill.
 
 In
        September 2005, the Company retired notes payable to the former owners of
        Internet Express, Inc., an Internet service provider acquired in March 2004,
        with remaining principal balances that totaled $209,533, by making a cash
        payment in the amount of $80,000. The difference of $129,533 between the
        payment
        and notes payable balances was credited to goodwill.
 
 In
        September 2005, a majority of the former owners of The River, holding notes
        convertible into common stock of Mobilepro at a price of $0.20 per share
        with a
        total principal balance of $369,346, notified the Company of their intent
        to
        convert the notes. In October 2005, the Company completed the conversion
        with
        the issuance of 1,846,733 shares of common stock of Mobilepro to the note
        holders.
 
 17
 
 
 **Other
        Notes Payable and Long-Term Liabilities**
 
 The
        Company has other notes and long-term liabilities payable to banks and various
        other creditors with aggregate balances due at March 31, 2005 and December
        31,
        2005 of $209,357 and $975,331, respectively.
 
 **Debt
        Maturities**
 
 A
        summary
        of the balances of notes payable and other debts at December 31, 2005 was
        as
        follows (unaudited):
 
 Convertible
                  debenture payable to Cornell Capital
              
              $
              15,000,000Notes
                  payable to Cornell Capital under the SEDA
              
              
              -Notes
                  payable to Cornell Capital
              
              
              6,600,000Notes
                  payable related to acquisitions
              
              
              42,909Other
                  notes payable and long-term obligations
              
              
              975,33122,618,240Less:
                  Unamortized debt discount on convertible debenture
              
              
              (602,452
              )Less:
                  Amounts due within one year
              
              
              (10,317,581
              )Long-term
                  portion of debt
              
              $
              11,698,207
 
 At
        December 31, 2005, a summary of the future scheduled payments of the long-term
        portion of debt was as follows (unaudited):
 
 The
                  twelve-month period ending--December
                  31, 2007
              
              $
              7,510,888December
                  31, 2008
              
              
              4,789,77112,300,659Less
                  - Unamortized debt discount on convertible debenture
              
              
              (602,452
              )Long-term
                  portion of debt
              
              $
              11,698,207
 
 **NOTE
        9-** **STOCKHOLDERS’
        EQUITY**
 
 **Common
        Stock Transactions in the Fiscal Year Ended March 31, 2005**
 
 In
        June
        2004, the Company issued 8,000,000 shares of common stock in payment of the
        financing fees associated with the SEDA that were valued at $1,760,000. This
        cost was reflected as a deferred financing fee in the consolidated balance
        sheet.
 
 In
        August
        2004, the Company issued 878,816 shares of common stock to the former owners
        of
        ShreveNet as partial consideration for the acquisition of their company.
        The
        issued shares were valued at $190,000 based on the average 20-day closing
        price
        ($0.2162 per share) prior to June 3, 2004.
 
 In
        September 2004, the Company issued 5,000,000 shares of common stock to the
        former owners of Affinity as partial consideration for the acquisition of
        their
        company. The issued shares were valued at $1,000,000 based upon the date
        of
        agreement and the terms of the acquisition. The distribution of such value
        amount included an allocation of $995,000 to the terminated put
        agreement.
 
 In
        November 2004, the Company issued 39,999,999 shares of common stock in
        connection with the acquisition of CloseCall that was completed in October
        2004.
        The 39,999,999 shares were recorded at a fair value of $10,000,000.
 
 In
        March
        2005, the Company issued 1,500,000 shares of common stock in connection with
        the
        acquisition of Web One that was completed in August 2004. The 1,500,000 shares
        were recorded at a fair value of $300,000.
 
 During
        the year ended March 31, 2005, the Company issued 10,000,000 shares of common
        stock to the escrow agent for use in the conversion of borrowings made under
        the
        $10 million equity line of credit, and converted $3,800,000 of borrowings
        into
        25,276,134 shares of common stock.
 
 During
        the year ended March 31, 2005, the Company issued 65,000,000 shares of common
        stock to the escrow agent for use in the conversion of borrowings made under
        the
        SEDA, and converted $9,200,000 of debt into 52,172,192 shares of common stock.
        The Company also converted $13,907 of interest into 81,355 shares of common
        stock.
  18
 During
        the fiscal year ended March 31, 2005, the Company issued 1) 2,946,037 shares
        of
        its common stock in connection with the exercise of stock options and warrants
        for aggregate cash proceeds of approximately $100,000, 2) 2,000,000 shares
        of
        its common stock under a settlement agreement with a former executive valued
        at
        $90,000, and 3) 100,000 shares of common stock to an agency as compensation
        for
        personnel recruiting services.
 
 **Common
        Stock Transactions in the Nine-Month Period Ended December 31,
        2005**
 
 The
        Company issued 933,334 shares of common stock in connection with the acquisition
        of WazAlliance that was completed in May 2005; the shares were recorded at
        a
        fair value of $135,333. The Company also issued 100,000 shares of common
        stock
        to an agency as compensation for broker fees relating to this acquisition
        that
        were valued at $15,000.
 
 In
        June
        2005, the Company issued 2,200,000 shares of common stock in full satisfaction
        of the promissory notes, and related accrued interest, totaling $535,188
        that
        were issued in connection with the July 2004 acquisition of Clover.
 
 In
        July
        and August 2005, the Company issued a total of 10,000,000 shares of its common
        stock owed to the former owner of AFN, completing the acquisition. These
        shares
        were valued at $0.15 per share, based on the market value of the Company’s
        common stock at the time the basic terms of the acquisition were
        negotiated.
 
 In
        September 2005, the Company issued 1,505,360 shares of its common stock owed
        to
        the former owners of Evergreen, completing the acquisition. These shares
        were
        valued at $0.1535 per share, based on the market value of the Company’s common
        stock at the time the basic terms of the acquisition were
        negotiated.
 
 In
        October 2005, the Company completed the conversion of debentures and other
        amounts owed to the former owners of The River with the issuance of 1,846,733
        shares of common stock to the note holders.
 
 In
        November 2005, the Company issued 4,357,798 shares of its common stock in
        connection with its acquisition of InReach.
 
 In
        December 2005, the Company issued 300,000 shares of its common stock, valued
        at
        $58,500, in connection with receipt of investment banking services.
 
 During
        the nine months ended December 31, 2005, the Company issued 55,000,000 shares
        of
        common stock to the escrow agent for use in the conversion of borrowings
        made
        under the SEDA.
 
 **Stock
        Options and Warrants**
 
 The
        stockholders of the Company have approved the issuance of 30,000,000 shares
        of
        common stock in connection with stock options granted pursuant to the 2001
        Equity Performance Plan (the “2001 Plan”). In addition, the Company has issued
        options and warrants to purchase common stock to key personnel pursuant to
        specific authorization of the board of directors outside the scope of the
        2001
        Plan. The following tables summarize the stock option activity and the warrant
        activity for the nine months ended December 31, 2005 (unaudited):
 
 **Number
                  of**
              
              **Weighted-Average****Stock
                  Options****--**
              
              **Options**
              
              **Exercise
                  Price**Outstanding
                  - March 31, 2005
              
              
              1,725,000
              
              $
              0.192Granted
              
              
              8,696,000
              
              $
              0.231Exercised
              
              
              -
              
              $
              -Cancelled
              
              
              -
              
              $
              -Outstanding
                  - December 31, 2005
              
              
              10,421,000
              
              $
              0.225Exercisable
                  - December 31, 2005
              
              
              1,085,416
              
              $
              0.176
  
 19
 
 **Number
                  of**
              
              **Weighted-Average****Stock
                  Warrants****--**
              
              **Warrants**
              
              **Exercise
                  Price**Outstanding
                  - March 31, 2005
              
              
              61,232,500
              
              $
              0.117Granted
              
              
              19,600,000
              
              $
              0.290Exercised
              
              
              -
              
              $
              -Cancelled
              
              
              1,000,000
              
              $
              0.018Outstanding
                  - December 31, 2005
              
              
              79,832,500
              
              $
              0.1609Exercisable
                  - December 31, 2005
              
              
              68,284,353
              
              $
              0.1584
 
 **NOTE
        10-** **LIABILITY
        FOR COMMON STOCK TO BE ISSUED**
 
 As
        the
        purchase prices of certain acquisitions are subject to post-closing adjustments,
        some of the common stock of Mobilepro due to the former owners of such acquired
        companies may not yet be issued. The $53,167 liability for common stock to
        be
        issued at December 31, 2005, reflecting an obligation to issue 366,666 shares,
        relates to the acquisition of WazAlliance.
 
 **NOTE
        11-** **BASIC
        AND DILUTED INCOME (LOSS) PER SHARE**
 
 Basic
        income (loss) per share includes no dilution and is computed by dividing
        net
        income (loss) available to common stockholders by the weighted-average number
        of
        common shares outstanding for the period. Diluted income (loss) per share
        includes the potential dilution that could occur if securities or other
        contracts to issue common stock were exercised or converted into common stock. The
        effects of the assumed exercise of outstanding stock options and warrants
        and
        the assumed conversion of the Debenture and other convertible notes payable
        for
        the three and nine months ended December 31, 2005 and 2004 were antidilutive
        as
        the Company incurred net losses in these periods.
 
 **NOTE
        12-** **EXCHANGE
        OF PAYPHONES**
 
 In
        September 2005, Davel sold the majority of the payphones and certain related
        assets and liabilities of its Bronx, New York field service office (2,204
        payphones) for a net selling price of $962,246. Davel recognized a $91,373
        gain
        on the sale of the net assets and incurred $144,073 of exit and disposal
        activity costs associated with the closing of its Bronx field service office.
        The net loss before income taxes of $52,700 is included in other general
        and
        administrative expenses in the accompanying condensed consolidated statement
        of
        operations for the nine months ended December 31, 2005. Davel also entered
        into
        agreements with the purchaser of its payphones to acquire certain of their
        payphones in Florida and to maintain, to service and to collect Davel’s
        remaining payphones in the New York City area. On September 30, 2005, Davel
        acquired 2,240 payphones located in Florida from the purchaser for a net
        purchase price of $784,000.
 
 **NOTE
        13-** **COMMITMENTS**
  In
        June
        2005, Mr. Jay O. Wright, the Company’s President and Chief Executive Officer,
        extended his employment agreement with the Company through 2007, with the
        extension stipulating annual salary amounts during the term, restructuring
        the
        basis for bonus awards, and providing severance payment terms. The Company
        also
        has an employment contract with each senior executive, including the chief
        financial officer, the general counsel, and the general managers of the wirelss
        network segment, the Internet service segment, CloseCall and Davel.
  In
        August
        2004, the Company announced its intention to issue a property dividend of
        3,073,113 shares of common stock of Solution Technology International, Inc.
        (“STI”). The Company has a 5% ownership interest in STI. The Company
        stockholders are expected to receive one share of registered (i.e.
“free-trading”) STI stock for approximately every 93 shares of the Company stock
        that they own, based on the existing shares outstanding and certain warrants.
        The Company’s board of directors set September 15, 2004 as the record date for
        the stock dividend. In March 2005, STI withdrew its registration statement
        from
        the United States Securities and Exchange Commission. STI is contemplating
        other
        options to become a publicly traded company. The Company intends to pursue
        issuance of the property dividend upon STI obtaining its public listing.
        At this
        time, no date has been established for such listing, and there is no assurance
        that the STI dividend will ever occur.
   20
  **NOTE
        14-** **LITIGATION**
 
 At
        the
        time that the Company acquired 95.2 % of the stock of Davel, Davel was a
        defendant in a civil patent infringement lawsuit captioned Gammino
        v. Cellco Partnership d/b/a Verizon Wireless, et al. ,
        filed
        in the United States District Court for the Eastern District of Pennsylvania.
        The plaintiff claims that Davel and other defendants allegedly infringed
        its
        patent involving the prevention of fraudulent long-distance telephone calls
        and
        is seeking damages in connection with the alleged infringement. Davel continues
        to review and investigate the allegations set forth in the complaint, continues
        to assess the validity of the Gammino Patents and is in the process of
        determining whether the technology purchased by Davel from third parties
        infringes upon the Gammino Patents. According to the terms of the Davel
        acquisition agreement, the former secured lenders, subject to certain
        limitations, have agreed to reimburse the Company for the litigation costs
        and
        any losses resulting from the Gammino lawsuit from future regulatory receipts
        that were assigned previously to them by Davel. Any such regulatory receipts
        are
        deposited into a third-party escrow account and are used to reimburse the
        Company for costs incurred. The secured lenders are not required to fund
        the
        escrow account or otherwise reimburse the Company for amounts, if any, in
        excess
        of actual regulatory receipts collected. Any amount remaining in the escrow
        account at the conclusion of the litigation is to be returned to the former
        secured lenders. The Company has received significant regulatory receipts
        that
        are being held in escrow. The case is in the discovery phase of the litigation.
        The Company is unable to predict the likely outcome or assess the sufficiency
        of
        the escrowed receipts to cover legal costs and losses, if any, related to
        this
        matter.
 
 **NOTE
        15-**  **SEGMENT
        INFORMATION**
 
 The
        Company’s reportable operating segments include voice services, Internet
        services and wireless networks. Results of operations and certain asset data
        relating to the Company’s business segments for the three-month periods ended
        December 31, 2004 and 2005 were as follows (unaudited):
 
 **The
                  Three Month Period**
              
              **Voice**
              
              **Internet**
              
              **Wireless****Ended
                  December 31, 2004**
              
              **Services**
              
              **Services**
              
              **Networks**
              
              **Corporate**
              
              **Total**Revenues
              
              $
              12,391,227
              
              $
              4,735,906
              
              $
              -
              
              $
              -
              
              $
              17,127,133Cost
                  of revenues
              
              
              (6,327,807
              )
              
              (2,305,471
              )
              
              -
              
              
              -
              
              
              (8,633,278
              )Other
                  operating expenses
              
              
              (5,154,612
              )
              
              (1,942,579
              )
              
              (34,555
              )
              
              (2,618,386
              )
              
              (9,750,132
              )Depreciation
                  and amortization
              
              
              (410,339
              )
              
              (158,731
              )
              
              (3,647
              )
              
              (220,000
              )
              
              (792,717
              )Interest
                  and other, net
              
              
              83,312
              
              
              (41,871
              )
              
              (70,216
              )
              
              (877,121
              )
              
              (905,896
              )Net
                  income (loss)
              
              $
              581,781
              
              $
              287,254
              
              $
              (108,418
              )
              $
              (3,715,507
              )
              $
              (2,954,890
              )Total
                  assets
              
              $
              35,024,547
              
              $
              18,245,134
              
              $
              15,267
              
              $
              20,583,028
              
              $
              73,867,976Fixed
                  assets, net of accumulated depreciation
              
              $
              11,599,256
              
              $
              1,250,436
              
              $
              10,940
              
              $
              -
              
              $
              12,860,632Goodwill,
                  net of impairment
              
              $
              18,634,703
              
              $
              14,070,629
              
              $
              -
              
              $
              -
              
              $
              32,705,332
 
 
 **The
                  Three Month Period**
              
              **Voice**
              
              **Internet**
              
              **Wireless****Ended
                  December 31, 2005**
              
              **Services**
              
              **Services**
              
              **Networks**
              
              **Corporate**
              
              **Total**Revenues
              
              $
              18,505,132
              
              $
              4,534,617
              
              $
              3,204,857
              
              $
              -
              
              $
              26,244,606Cost
                  of revenues
              
              
              (9.862,109
              )
              
              (2,250,087
              )
              
              (1,678,000
              )
              
              -
              
              
              (13,790,196
              )Other
                  operating expenses
              
              
              (7,621,737
              )
              
              (2,164,515
              )
              
              (1,877,055
              )
              
              (720,218
              )
              
              (12,383,525
              )Depreciation
                  and amortization
              
              
              (999,883
              )
              
              (101,227
              )
              
              (192,883
              )
              
              -
              
              
              (1,293,993
              )Goodwill
                  impairment
              
              
              (1,818,910
              )
              
              (1,945,519
              )
              
              -
              
              
              -
              
              
              (3,764,429
              )Restructuring
                  costs
              
              
              -
              
              
              (1,335,612
              )
              
              -
              
              
              -
              
              
              (1,335,612
              )Interest,
                  net
              
              
              18,809
              
              
              (2,271
              )
              
              21,093
              
              
              (620,416
              )
              
              (582,785
              )Minority
                  interests
              
              
              -
              
              
              -
              
              
              (49,798
              )
              
              -
              
              
              (49,798
              )Net
                  loss
              
              $
              (1,778,698
              )
              $
              (3,264,614
              )
              $
              (571,786
              )
              $
              (1,340,634
              )
              $
              (6,955,732
              )Total
                  assets
              
              $
              51,450,926
              
              $
              19,681,335
              
              $
              10,923,229
              
              $
              1,331,397
              
              $
              83,386,887Fixed
                  assets, net of accumulated depreciation
              
              $
              11,431,676
              
              $
              1,701,120
              
              $
              1,153,358
              
              $
              -
              
              $
              14,286,154Goodwill,
                  net of impairment
              
              $
              20,568,280
              
              $
              16,248,330
              
              $
              494,219
              
              $
              -
              
              $
              37,310,829
 
 21
 
 Results
        of operations relating to the Company’s business segments for the nine-month
        periods ended December 31, 2004 and 2005 were as follows
        (unaudited):
 
 **The
                  Nine Month Period**
              
              **Voice**
              
              **Internet**
              
              **Wireless****Ended
                  December 31, 2004**
              
              **Services**
              
              **Services**
              
              **Networks**
              
              **Corporate**
              
              **Total**Revenues
              
              $
              13,346,798
              
              $
              9,303,568
              
              $
              -
              
              $
              615,000
              
              $
              23,265,366Cost
                  of revenues
              
              
              (6,794,042
              )
              
              (4,364,548
              )
              
              -
              
              
              -
              
              
              (11,158,590
              )Other
                  operating expenses
              
              
              (5,520,495
              )
              
              (3,730,718
              )
              
              (813,266
              )
              
              (4,979,895
              )
              
              (15,044,374
              )Depreciation
                  and amortization
              
              
              (438,259
              )
              
              (327,679
              )
              
              (10,941
              )
              
              (513,333
              )
              
              (1,290,212
              )Interest
                  and other, net
              
              
              83,312
              
              
              (83,126
              )
              
              (70,216
              )
              
              (1,162,250
              )
              
              (1,232,280
              )Net
                  income (loss)
              
              $
              677,314
              
              $
              797,497
              
              $
              (894,423
              )
              $
              (6,040,478
              )
              $
              (5,460,090
              )
 
 **The
                    Nine Month Period**
                
                **Voice**
                
                **Internet**
                
                **Wireless****Ended
                    December 31, 2005**
                
                **Services**
                
                **Services**
                
                **Networks**
                
                **Corporate**
                
                **Total**Revenues
                
                $
                56,301,164
                
                $
                12,395,635
                
                $
                6,600,302
                
                $
                -
                
                $
                75,297,101Cost
                    of revenues
                
                
                (27,113,902
                )
                
                (5,988,818
                )
                
                (3,363,733
                )
                
                -
                
                
                (36,466,453
                )Other
                    operating expenses
                
                
                (22,853,007
                )
                
                (5,600,769
                )
                
                (4,031,131
                )
                
                (1,688,849
                )
                
                (34,173,756
                )Depreciation
                    and amortization
                
                
                (2,511,742
                )
                
                (268,154
                )
                
                (376,500
                )
                
                (7,293
                )
                
                (3,163,689
                )Goodwill
                    impairment
                
                
                (1,818,910
                )
                
                (1,945,519
                )
                
                -
                
                
                -
                
                
                (3,764,429
                )Restructuring
                    costs
                
                
                -
                
                
                (1,335,612
                )
                
                -
                
                
                -
                
                
                (1,335,612
                )Interest,
                    net
                
                
                10,769
                
                
                (15,886
                )
                
                30,294
                
                
                (2,238,472
                )
                
                (2,213,295
                )Minority
                    interests
                
                
                35,645
                
                
                -
                
                
                (228,152
                )
                
                -
                
                
                (192,507
                )Net
                    income (loss)
                
                $
                2,050,017
                
                $
                (2,759,123
                )
                $
                (1,368,920
                )
                $
                (3,934,614
                )
                $
                (6,012,640
                )
  **NOTE
        13-** **SUBSEQUENT
        EVENTS**
 
 On
        January 31, 2006, the Company acquired the 49% minority interest in Kite
        in an
        all stock transaction for approximately 90,000,000 shares of the Company’s
        common stock. Effective at the closing, Mr. Jerry Sullivan, the Chief Executive
        Officer of Kite, was named President and Chief Operating Officer of the Company
        and Chief Executive Officer of the Company’s wireless networks
        business.
 
 Subsequent
        to December 31, 2005, the Company drew $1,200,000 under the SEDA that was
        converted into 5,489,985 shares of the Company’s common stock. As the current
        SEDA expires on May 19, 2006, the outstanding notes payable to Cornell Capital
        that totaled $6,600,000 on December 31, 2006 will be paid or converted into
        shares of the Company’s common stock by that date.
 
 On
        January 18, 2006, the Company issued 15,000,000 shares of its common stock
        to
        the escrow agent under the SEDA.
 
 22




**Item
      2. Management's Discussion and Analysis of Results of Operations and Financial
      Condition.**




The
      following is a discussion and analysis of our results of operations for the
      three-month and nine-month periods ended December 31, 2004 and 2005, our
      financial condition at December 31, 2005 and factors that we believe could
      affect our future financial condition and results of operations. Historical
      results may not be indicative of future performance.





This
      discussion and analysis should be read in conjunction with our consolidated
      financial statements and the notes thereto included elsewhere in this Form
      10-QSB. Our consolidated financial statements are prepared in accordance with
      Generally Accepted Accounting Principles in the United States (“GAAP”). All
      references to dollar amounts in this section are in United States
      dollars.





**Forward
      Looking Statements**





This
      Quarterly Report on Form 10-QSB contains forward-looking statements that involve
      risks and uncertainties. The statements contained in this document that are
      not
      purely historical are forward-looking statements within the meaning of Section
      27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
      Act
      of 1934, including without limitation statements regarding our expectations,
      beliefs, intentions or strategies regarding our business, and the level of
      our
      expenditures and savings for various expense items and our liquidity in future
      periods. We may identify these statements by the use of words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “will,”
“would” and other similar expressions. All forward-looking statements included
      in this document are based on information available to us on the date hereof,
      and we assume no obligation to update any such forward-looking statements,
      except as may otherwise be required by law. Our actual results could differ
      materially from those anticipated in these forward-looking
      statements.





**Overview**




We
      are a
      broadband wireless, telecommunications, and integrated data communication
      services company. We deliver a comprehensive suite of voice and data
      communications services, including local exchange, long distance, enhanced
      data,
      Internet, wireless and broadband services to our end-user customers. We are
      focused on growing our current customer bases, deploying wireless networks,
      and
      acquiring and growing profitable telecommunications and broadband
      companies.


We
        market
        and sell our integrated communications services through 11 branch offices
        in
        eight states and we service over 155,000 billed accounts representing
        over 278,000 equivalent subscriber lines including
        approximately 145,000 local and long-distance telephone lines, 105,000
        dial-up lines, 5,000 broadband lines, and over 23,000 wireless
        customers. We own and operate approximately 36,000 payphones predominantly
        located in 42 states and the District of Columbia.





23


Our
      revenues are primarily generated through three of our four business
      reporting segments that are described as follows:





**Wireless
                Networks**
            Our
                broadband wireless network deployment efforts are being conducted
                by our
                wholly-owned subsidiary, NeoReach, Inc. (“NeoReach”), and its subsidiary,
                NeoReach Wireless, Inc. (“NeoReach Wireless”). This segment also includes
                the operations of Kite Broadband, LLC, a wireless broadband Internet
                service provider located in Ridgeland, Mississippi.**Voice Services**
            Our
                voice services segment is led by CloseCall America, Inc. (“CloseCall”), a
                Competitive Local Exchange Carrier (“CLEC”, which is a term applied under
                the Telecommunications Act of 1996 to new local telephone companies
                formed
                to compete with the incumbent local telephone companies), based in
                Stevensville, Maryland; American Fiber Network, Inc. (“AFN”), a CLEC based
                in Kansas City, Kansas; and Davel Communications, Inc. (“Davel”), an
                independent payphone provider based in Cleveland, Ohio. CloseCall
                offers
                our customers a full array of telecommunications products and services
                including local, long-distance, 1.800CloseCall anytime/anywhere calling,
                digital wireless, high-speed telephone (voice over IP), and dial-up
                and
                DSL Internet services. AFN is licensed to provide local telephone,
                long
                distance and/or Internet services throughout the United States. Davel
                is
                one of the largest independent payphone operators in the United States,
                providing approximately 57% of the revenues of the voice services
                segment
                in the nine months ended December 31, 2005.**Internet Services**
            Our
                internet services segment includes the operations of DFW Internet
                Services, Inc. (“DFW”, doing business as Nationwide Internet), an Internet
                services provider (“ISP”) based in Irving, Texas, its acquired ISP
                subsidiaries, and InReach Internet, L.L.C., a full service ISP located
                in
                Stockton, California, that we acquired on November 1, 2005. Our Internet
                services segment provides dial-up and broadband Internet access,
                web-hosting services and related Internet services to business and
                residential customers in over 40 states. Over 80% of our ISP customers
                subscribe to our dial-up service.**Corporate**
            Our
                corporate reporting segment serves as the holding company of the
                operating
                subsidiaries that are divided among the other three business reporting
                segments, provides senior executive and financial management, and
                performs
                corporate-level accounting, financial reporting and legal functions.
                Occasionally, its employees may provide services to customers resulting
                in
                the recognition of consulting service
                revenues.





Revenues
        for the reportable business segments for the three and nine months ended
        December 31, 2004 and 2005 were as follows:
 **Three
                    Months Ended December 31,**
                
                **Nine
                    Months Ended December 31,****Business
                    Segment**
                
                **2004**
                
                **2005**
                
                **2004**
                
                **2005****Voice**
                
                $
                12,391,227
                
                $
                18,505,132
                
                $
                13,346,798
                
                $
                56,301,164**Internet
                    Services**
                
                
                4,735,906
                
                
                4,534,617
                
                
                9,303,568
                
                
                12,395,635**Wireless
                    Networks**
                
                
                -
                
                
                3,204,857
                
                
                -
                
                
                6,600,302**Corporate**
                
                
                -
                
                
                -
                
                
                615,000
                
                
                -**Total
                    Revenues**
                
                $
                17,127,133
                
                $
                26,244,606
                
                $
                23,265,366
                
                $
                75,297,101
 
 24
 The
        revenues for each business segment, expressed as a percentage of total revenues
        for the respective period, were as follows:
  **Three
                    Months Ended December 31,**
                
                **Nine
                    Months Ended December 31,****Business
                    Segment**
                
                **2004**
                
                **2005**
                
                **2004**
                
                **2005****Voice**
                
                
                72.3
                %
                
                70.5
                %
                
                57.4
                %
                
                74.8
                %**Internet
                    Services**
                
                
                27.7
                
                
                17.3
                
                
                40.0
                
                
                16.5**Wireless
                    Networks**
                
                
                -
                
                
                12.2
                
                
                -
                
                
                8.7**Corporate**
                
                
                -
                
                
                
                
                
                2.6**Total
                    Revenues**
                
                
                100.0
                %
                
                100.0
                %
                
                100.0
                %
                
                100.0
                %
 The
          revenues of the voice services business segment are provided primarily
          by the
          operations of Davel and CloseCall. Davel’s revenues represented approximately
          57% and 43% of voice services revenues and consolidated revenues, respectively,
          for the nine months ended December 31, 2005. CloseCall’s revenues represented
          approximately 36% and 27% of voice services revenues and consolidated revenues,
          respectively, for the nine months ended December 31, 2005.
 
 The
        costs
        of the network services that we provide to our customers are comprised primarily
        of telecommunications charges, including data transmission and database access,
        leased digital capacity charges, circuit installation charges and activation
        charges. The costs of database access, circuits, installation charges and
        activation charges are based on fixed fee and/or measured services contracts
        with local exchange carriers, inter-exchange carriers and data services
        providers. The cost of providing services to our customers also includes
        salaries, equipment maintenance and other costs related to the ongoing operation
        of our network facilities. Depreciation expense on our network equipment
        is
        excluded from our cost of network services and is included in depreciation
        and
        amortization of property and equipment and amortization of intangible assets
        in
        our consolidated statements of operations. Our other operating expenses include
        costs related to sales, marketing, administrative and management personnel;
        outside legal, accounting and consulting services; advertising and occupancy
        expenses; and other costs of being a publicly traded company, including legal
        and audit fees, insurance premiums and board of director fees.
 
 Substantially,
        our business has been built through acquisitions. We expect that future revenue
        growth will occur largely through the consummation of additional acquisitions,
        the growth of our CLEC businesses, and the deployment, ownership and management
        of broadband wireless networks that we expect to provide subscription and
        advertising revenues.
 
 The
        adoption of initiatives by cities to create areas within city limits where
        residents, visitors, students and businesses can obtain wireless access to
        the
        Internet has created an emerging and growing market. We are concentrating
        efforts on the deployment, management and ownership of such municipally
        sponsored wireless access zones. In the current fiscal year, we have been
        selected by six municipalities for such projects. The deployment of our first
        network is scheduled for completion in February 2006. To date, no material
        revenues have been provided from this business.
 
 Prior
        to
        January 2004, we were a development stage company. Although we were incorporated
        only five years ago, we have undergone a number of changes in our business
        strategy and organization. In June 2001, we focused our business on the
        integration and marketing of complete mobile information solutions to meet
        the
        needs of mobile professionals. In April 2002, we acquired NeoReach, Inc.
        and
        shifted our focus toward solutions supporting the third generation wireless
        market that provides broadband to allow faster wireless transmission of data,
        such as the viewing of streaming video in real time. We shifted our business
        strategy again in December 2003 with a new management team, expanding
        significantly the scope of our business activity to include Internet access
        services, local and long distance telephone services and the ownership and
        operation of payphones. In 2005, we began to invest in the business of deploying
        broadband wireless networks and providing wireless network access services
        in
        wireless access zones to be primarily located in municipality-sponsored areas.
        As indicated above, we entered these businesses primarily through acquisitions.
        We have completed nineteen (19) acquisitions within the last 24 months.
        Accordingly, our experience in operating our current businesses is limited.
        The
        Company has lost money historically. For the nine month period ended December,
        31, 2005, we incurred a net loss of $6,012,640. In the years ended March
        31,
        2005 and 2004, we incurred net losses of $5,359,722 and $2,157,844,
        respectively. At December 31, 2005, we had an accumulated deficit of
        $27,209,190.
 
 25
 Our
        strategy is largely unproven and the revenue and income potential from our
        strategy is uncertain. We may encounter risks and difficulties frequently
        encountered by companies that have grown rapidly through acquisition, including
        the risks described elsewhere in this report. Our business strategy may not
        be
        successful and we may not be able to successfully address these
        risks.
 
 Mobilepro
        Corp (“Mobilepro”) was incorporated under the laws of Delaware in July 2000 and,
        at that time, was focused on the integration and marketing of complete mobile
        information solutions that satisfied the needs of mobile professionals. In
        June
        2001, Mobilepro merged with and into CraftClick.com, Inc. (“CraftClick”), with
        CraftClick remaining as the surviving corporation. The name of the surviving
        corporation was subsequently changed to Mobilepro Corp. on July 9, 2001.
        CraftClick had begun to cease its business operations in October 2000, and
        ultimately disposed of substantially all of its assets in February
        2001.
 
 On
        March
        21, 2002, Mobilepro entered into an Agreement and Plan of Merger with NeoReach,
        a private Delaware company, pursuant to which a newly formed, wholly owned
        subsidiary of Mobilepro merged into NeoReach in a tax-free transaction. The
        merger was consummated on April 23, 2002. As a result of the merger, NeoReach
        is
        now a wholly owned subsidiary of Mobilepro.
 
 DFW
        is
        the principal operating subsidiary within our Internet services division.
        On
        January 20, 2004, we acquired DFW.   Since then, we have acquired nine
        additional Internet service businesses that operate as subsidiaries of DFW
        and,
        on November 1, 2005, we acquired the business of InReach Internet L.L.C.
        (“InReach”).
 
 On
        October 15, 2004, we closed our acquisition of CloseCall, which further
        established our commitment to the provision of voice services. One month
        later,
        we closed our acquisition of Davel. On June 30, 2005, we acquired
        AFN.
 
 Our
        principal executive offices are located at 6701 Democracy Boulevard, Suite
        202,
        Bethesda, MD 20817 and our telephone number at that address is (301) 315-9040.
        We maintain a corporate web site at www.mobileprocorp.com. We make available
        free of charge through our web site our annual report on Form 10-KSB, quarterly
        reports on Form 10-QSB, current reports on Form 8-K, and all amendments to
        those
        reports, as soon as reasonably practicable after we electronically file or
        furnish such material with or to the SEC. The contents of our web site are
        not a
        part of this report. The SEC also maintains a web site at www.sec.gov that
        contains reports, proxy statements and other information regarding
        Mobilepro.
 
 **Geographic
        Markets**
 
 Through
        our various businesses, we provide service to customers located throughout
        the
        United States. However, certain portions of our consolidated business are
        concentrated in certain geographic markets. For example, the business of
        CloseCall is concentrated in the mid-Atlantic region of the country. Although
        Davel has payphones located across the United States, 41% of the payphones
        are
        located in the southeast states of Florida, Georgia, South Carolina, North
        Carolina and Virginia; 22% of the payphones are located in Midwest and eastern
        sections of the country, with usage thereby affected by climate; and 12%
        of the
        payphones are located in the southwest states of Texas, Arizona and New Mexico.
        The Internet services business provides service to customers that are primarily
        located in the states of Texas, Arizona, Louisiana, Kansas, Missouri, Wisconsin
        and Ohio.
 
 **Recent
        Events**
  Significant
        accomplishments in the nine-month period ended December 31, 2005 included,
        among
        other achievements, expanding our voice services and wireless networks
        businesses through the consummation of four acquisitions, deploying a broadband
        wireless network in Tempe, Arizona, obtaining a controlling interest in a
        company that will supply broadband wireless services to customers of Sprint
        Communications Company (“Sprint”), being selected by the city of Sacramento,
        California, for the deployment, ownership and management of its planned
        broadband wireless network, and the refinancing of a $13 million acquisition
        bridge loan.
 
 26
 ***Wireless
        Networks***
 
 In
        April
        2005, we were selected by the city of Tempe, Arizona, to deploy, own and
        manage
        a city-wide broadband wireless access network covering 40 square miles and
        serving a population of approximately 160,000 people. The network is expected
        to
        reach approximately 65,000 households, 1,100 businesses, 50,000 students
        and the
        annual visitors to Tempe. The completed network will enable a range of free
        and
        fee-based services and provide secure high-speed access to data, voice and
        video
        throughout the coverage area. The network will also provide municipal services
        to the city’s police, fire, emergency, and administrative personnel, and the
        staff, faculty and students of Arizona State University. Subscription services
        will be offered on a monthly, daily and hourly basis and will allow access
        to
        multiple Internet service providers. We believe that the Tempe wireless
        networking project is one of the first of its kind by providing a cost-effective
        alternative to residential dial-up service and local area hot-spot wireless
        access and serving as an alternative and/or complement to DSL and cable.
        The
        network is scheduled to be completed in February 2006. In August 2005, we
        executed a definitive, fifteen-year agreement with the city, including a
        base
        period of five years and two five-year extensions, for the deployment, ownership
        and management of the wireless network. At December 31, 2005, we had
        approximately forty (40) customers paying monthly subscription
        fees.
 
 We
        intend
        that the Tempe network be an open platform, offering freedom of service choices
        to subscribers over a mixture of public, restricted and licensed bands. Our
        target customers are retail Internet service providers that would provide
        e-mail
        messaging, VoIP, web-hosting and emergency services to subscribers. Although
        we
        do not yet have any such agreements at this time, we expect to receive a
        majority of subscriptions pursuant to service agreements with major retail
        service providers that will, most likely, provide payments to us based on
        the
        actual amount of network usage. We plan to operate the network, and host
        the
        splash page, free service and hospitality. As a result, we expect low customer
        acquisition costs, rapid increases in the number of subscribers and reduced
        churn.
 
 The
        user
        start-up splash page for the Tempe network will be sponsored by the Arizona
        Republic pursuant to an agreement with us that was announced on October 11,
        2005. In summary, we have agreed to share any revenues related to the placement
        of advertising on the splash page on a 50/50 basis. Although no material
        revenues have yet been generated, we are hopeful that this agreement and
        other
        similar agreements that we may negotiate in the future will provide a
        significant new source of revenues.
 
 In
        May
        2005, the foundation of our operation in Tempe was obtained when NeoReach
        Wireless acquired Transcordia, LLC, d/b/a/ WazAlliance, a network of metro-wide
        commercial and residential wireless Internet access zones for a purchase
        price,
        subject to post closing adjustments, of $257,500, payable in the form of
        $188,500 in common stock and $69,000 cash. We have expanded this operation
        as it
        focuses its efforts on the design and deployment of the Tempe wireless
        network.
 
 Because
        of the increased pace in the emergence of municipal wireless networking
        opportunities, we have accelerated our business development efforts in this
        market. Including the operating costs being incurred to support the Tempe
        network, total operating expenses for NeoReach Wireless in the three months
        and
        nine months ended December 31, 2005 were $513,773 and $1,391,701, respectively.
        In order to complete the Tempe network, we estimate that capital expenditures
        will approximate $2,200,000 including the development of the deployment plan,
        networking equipment (i.e., antennas, transmitters and network routers) and
        equipment installation. To date, we have acquired networking equipment at
        a
        total cost of approximately $839,000 for the Tempe wireless
        network.
 
 In
        June
        2005, we acquired Evergreen Open Broadband (“Evergreen”), a wholesale wireless
        Internet service provider based in Boston, with the issuance of 1,505,360
        shares
        of our common stock, valued in the amount of approximately $231,000, and
        the
        assumption of approximately $30,000 in certain liabilities. Evergreen provides
        to us a developed scoring model that we now utilize to evaluate municipal
        wireless network opportunities. The model considers a variety of factors
        in the
        areas of demographics, climate and topography in rating a city as a desirable
        opportunity for our business development activities. Evergreen will operate
        as
        part of NeoReach Wireless. Evergreen actively participated in our bidding
        for
        Tempe and is involved with business development opportunities represented
        by
        numerous other city-wide wireless network projects that are pending or under
        consideration.
 
 27
 The
        city
        of Sacramento, California (population of approximately 465,000 people) and
        the
        cities of Chandler, Arizona; Farmers’ Branch, Texas; Akron, Ohio; and Cuyohoga
        Falls, Ohio, have also selected us for the proposed deployment, ownership
        and
        management of their planned wireless networks. Currently, we are negotiating
        definitive contracts and/or developing pilot deployments with these
        municipalities. We are aware of five other publicly-announced municipal wireless
        network projects that we have lost including Philadelphia, Pennsylvania,
        that
        was awarded to Earthlink, and Minneapolis, Minnesota, and Portland, Oregon,
        where we were not included as a finalist for the pending awards.
 
 In
        June
        2005, we invested $3,825,000 cash in connection with the formation
        of Kite Broadband, LLC (“Kite”) resulting in a 51% ownership
        percentage. On June 30, 2005, Kite executed a Master Agreement for Services
        with
        Sprint under which Kite shall provide services to Sprint’s broadband customers
        in fourteen (14) metropolitan markets for a period of three years utilizing
        the
        Sprint mark. The agreement covers, among other things, the provisioning of
        certain customer-facing services, such as customer operations and call center
        management, sales, marketing, billing, collection, installation and repair.
        Sprint continues to provide network support and transport services. The
        customers remain Sprint customers during the three-year term of the agreement.
        Upon expiration of the agreement, Kite will have the option to acquire the
        then
        existing customers pursuant to the terms of the agreement. All network and
        spectrum assets will remain the property of Sprint. Since June 30, 2005,
        Kite
        has generated revenues of approximately $6,584,680 and our 51% share of Kite’s
        net income for this period was $237,464. On January 31, 2006, we acquired
        the 49% minority interests in Kite for approximately 90,000,000 shares of
        our
        common stock.
 
 ***Voice
        Services***
 
 During
        the current year, activities at CloseCall America have been focused on the
        expansion of its telecommunications service offerings, and the securing of
        long-term agreements with local exchange carriers. CloseCall has also expanded
        its advertising programs in the current year. It uses print, signage, radio
        and
        television advertising to market services to customers of certain local
        professional sports teams including the Baltimore Ravens, Ripken Baseball,
        Aberdeen Ironbirds, Frederick Keys, Bowie Baysox, and the Delmarva
        Shorebirds.
 
 We
        offer
        our integrated communications services in a high-quality bundle to residential
        customers, and small to medium-sized businesses at attractive prices. When
        economically advantageous for us to do so, we seek to bundle our integrated
        communications services. Our targeted customers often will have multiple
        vendors
        for voice and data communications services, each of which may be billed
        separately. Unlike many of these vendors, we are able to provide a comprehensive
        package of local telephone, long distance, Internet access and other integrated
        communications services. Our future business strategy will focus on the
        establishment of effective cross-selling programs in order to leverage the
        combined customer base of the voice and Internet service provider business
        segments, the effective delivery of such services and the provision of excellent
        customer service. CloseCall's combined local and long distance churn measured
        by
        terminations of customer subscriber lines is approximately 2% per month compared
        to an industry average of approximately 5% per month.
 
 In
        the
        nine-month period ended December 31, 2005, we completed five-year commercial
        agreements with Verizon and SBC covering six and thirteen states, respectively.
        In addition, we executed a similar agreement with BellSouth covering nine
        states
        that runs through December 31, 2007. Completion of these agreements 1) allows
        the expansion of CloseCall’s overall geographic market, and the expansion and
        bundling of service offerings in these states including Florida, and 2) provides
        predictability of the pricing of wholesale services provided to us by these
        carriers during the terms of the agreements.
 
 During
        the nine-month period ended December 31, 2005, we completed two acquisitions
        intended to add revenues, profits and licensed coverage areas. On June 30,
        2005,
        we acquired AFN, a company licensed to provide local, long distance and/or
        Internet service throughout the United States that added approximately 15,000
        customer lines to our customer base. AFN is focused on four major customer
        segments - hotels and resorts, corporate housing, resort-area property
        management and other business services. The purchase consideration was
        $3,000,000, including 10,000,000 shares of our common stock and a cash payment
        of $1,500,000. Since its acquisition on June 30, 2005, AFN has provided revenue
        of approximately $3,458,286 and contributed net income of $810,176. This
        operating profit was favorably affected by the timing of costs and expenses
        incurred by AFN’s affiliated service company during 2005. The service agreement
        terminated on October 31, 2005. In September 2005, AFN acquired the assets
        of
        AllCom USA and their long distance and T-1 customers for $300,000 cash,
        providing an additional customer base for bundled services. This acquisition
        is
        expected to increase our annual revenues by approximately
        $1,200,000.
 
 28
 On
        September 30, 2005, Davel sold the majority of the payphones and certain
        related
        assets and liabilities of its Bronx, New York, field service office,
        representing 2,204 payphones, for a net selling price of $962,246. We recognized
        a $91,373 gain on the sale of the net assets, but we incurred $144,073 of
        exit
        and disposal activity costs associated with the closing of the field service
        office resulting in a net loss of $52,700. Davel also entered into agreements
        with the purchaser of its payphones to acquire certain of their payphones
        in
        Florida and to maintain, to service and to collect Davel’s remaining payphones
        in the New York City area. On September 30, 2005, Davel acquired 2,240 payphones
        located in Florida from the purchaser for a net purchase price of $784,000.
        We
        expect that the purchase of the payphones in Florida will allow us to maintain
        the level of revenues at a reduced level of operating expenses.
 
 ***Internet
        Services***
 
 During
        the current year, the activities of this operation have focused on the
        integration of the operations of the acquired companies comprising this business
        segment. The efforts are focused on combining service offerings, consolidating
        network operations and customer support locations, and reducing operating
        costs.
        As a result of this effort, we recorded a restructuring charge of $1,335,612
        in
        the three months ended December 31, 2005, including $902,306 related to the
        loss
        expected on the abandonment of leased facilities, $392,899 related to the
        loss
        expected upon the disposal of excess equipment, and $40,407 related to certain
        employees terminated in January 2006.  The
        success of our overall growth strategy depends, in part, on our ability to
        transition customers to new Internet access services, especially broadband
        wireless. However, at present, dial-up subscribers represent the largest
        group
        of customers of the Internet services group. The erosion of this customer
        base
        is likely to continue.
 
 During
        the nine months ended December 31, 2005, through cash payments and the
        conversion of note amounts into shares of our common stock, we retired notes
        payable related to ISP acquisitions in the amount of approximately $1,608,000,
        including negotiated note reductions of approximately $220,000 relating to
        post
        closing purchase price adjustments.
 
 On
        November 1, 2005, we completed the acquisition of InReach. Besides adding
        annual
        revenues expected to approximate $5,700,000, InReach provides a base of
        operations for the Sacramento municipal wireless network. The purchase price
        for
        InReach, before any post closing adjustments, included $2,111,873 cash and
        4,357,798 shares of common stock valued at $950,000.
 
 ***Goodwill
        Impairment***
 
 At
        September 30, 2005, our balance sheet included intangible assets with a total
        carrying value of approximately $49,060,000, representing 56.3% of total
        assets
        and including approximately $37,492,000 in goodwill. Substantially, this
        goodwill has been recorded in connection with the series of acquisitions
        completed by us since April 1, 2004. In connection with acquisition of InReach,
        an additional $3,003,974 in goodwill was added to the balance sheet during
        the
        quarter ended December 31, 2005. Generally accepted accounting principles
        require that we assess the fair values of acquired entities at least annually
        in
        order to identify any impairment in the values. However, on a quarterly basis,
        we are alert for events or circumstances that would indicate, more likely
        than
        not, that the fair value of a reporting segment has been reduced below its
        carrying amount. If we determine that the fair value of an acquired entity
        is
        less than the net assets of the entity, including goodwill, an impairment
        loss
        would be identified and recorded at that time.
 
 During
        the three months ended December 31, 2005, both the Internet service provider
        segment and the voice services segments incurred operating losses that were
        not
        expected. As a result, we reviewed the carrying values of the assets of these
        segments and determined that an adjustment for goodwill impairment was
        appropriate at December 31, 2005. We recorded an impairment charge in the
        amount
        of $3,764,429, including $1,945,519 relating the Internet service provider
        companies and $1,818,910 related to Affinity Telecom (“Affinity”), a CLEC
        business located in the state of Michigan that was acquired in August 2004.
        The
        negative customer churn of dial-up ISP customers has exceeded our expectations,
        contributing to the net loss incurred by this segment during the most recent
        quarter. We have experienced a significant and steady loss of Affinity
        customers, and incurred bad debt losses at a greater rate than in our other
        CLEC
        companies. The impairment charges represented approximately 12.8% and 73.0%
        of
        the goodwill related to the ISP companies (excluding InReach) and Affinity,
        respectively.
  29
 Future
        assessments of the fair values of acquired companies could identify material
        impairment losses resulting in additional write-offs of goodwill. Such
        adjustments could have material adverse effects on our results of operations
        and
        our financial position, and could impede our ability to raise capital and/or
        to
        make acquisitions.
 
 ***Corporate
        Activities***
  Since
        the
        beginning of the current fiscal year, we have attempted to strengthen our
        balance sheet in order to provide capital for acquisitions, to fund our NeoReach
        Wireless operating needs (including the capital expenditures related to the
        build-out of municipal broadband wireless networks), and to improve our
        liquidity. We have increased stockholders’ equity to over $36 million with a
        cash balance of approximately $5 million at December 31, 2005. Total debt
        has
        been reduced from a balance of approximately $26,534,000 at March 31, 2005
        to a
        balance of $22,016,000 at December 31, 2005. We are looking for opportunities
        to
        further improve those positions.
 
 We
        extended debt maturities and reduced our interest cost in May 2005 when we
        issued a convertible debenture in the aggregate amount of $15,500,000 to
        Cornell Capital Partners, L.P. (“Cornell Capital”). We used a significant
        portion of the proceeds to pay in full the remaining $13,000,000 balance
        of a
        note payable that bore interest at the rate of 23% and was due on November
        15,
        2005. The retired note was the source of bridge financing for our acquisition
        of
        Davel. The debenture is payable in installments over a three-year period,
        with
        $3,500,000 classified as a current liability at December 31, 2005, and bears
        interest at an annual rate of 7.75%.
 
 In
        September 2005, the stockholders approved 1) an amendment to our certificate
        of
        incorporation that increased the authorized number of shares of common stock
        from 600 million to 1.5 billion shares and the authorized number of preferred
        shares from 5,035,425 to 20,035,425, and 2) an increase in the number of
        shares
        of our common stock available for award under our employee stock option plan
        from 1 million to 30 million.
 
 **Management
        Challenges**
 
 During
        the current fiscal year, management is concentrating its efforts on the business
        development and network deployment activities of NeoReach Wireless, the
        consolidation and integration of the Internet services and voice services
        businesses, and the identification and securing of additional sources of
        growth
        capital.
 
 We
        see
        opportunity for growth in the emerging market presented by municipally sponsored
        broadband wireless networks. Our acquisition strategy of the last two years
        has
        been executed, in part, with the objective of establishing a viable
        telecommunications company with sufficient credibility to be considered for
        selection by cities for the deployment, ownership and management of broadband
        wireless networks. The initial indication of the effectiveness of our business
        plan execution was the selection by Tempe, Arizona, of NeoReach Wireless
        for its
        network. Subsequently, we were selected by five other cities for the deployment,
        ownership and management of such networks. However, the ramp-up time from
        selection to the completion of deployment can exceed six months. As a result,
        we
        have incurred significant costs related to this business before the Tempe
        deployment is completed, and therefore before any significant revenues are
        expected. The capital equipment costs for the Tempe network are expected
        to
        approximate $2,200,000. Operating costs for NeoReach Wireless, currently
        running
        at a monthly rate of approximately $200,000, were approximately $1,392,000
        for
        the nine months ended December 31, 2005.
 
 Many
        of
        the companies that we have acquired are experiencing declining revenues as
        we
        expected. Over 80% of the customers of our Internet services business are
        subscribers to dial-up service. The revenues of this business segment have
        declined from approximately $4,580,000 for the three months ended March 31,
        2005
        to approximately $3,591,000 (before the addition of InReach revenues) for
        the
        three months ended December 31, 2005, a decline of approximately 22%. Likewise,
        the pay telephone business is declining due primarily to the public’s increasing
        usage of competitive technologies. Revenues for Davel for the nine months
        ended
        December 31, 2005 were $32,283,029 compared with revenues of approximately
        $44,007,674 for the corresponding period of the prior year. The declining
        revenues of these businesses and the operating costs of NeoReach Wireless
        discussed above are adversely affecting our operating profitability.
 
 30
 As
        a
        result, we are currently focused on the implementation of a company-wide
        plan of
        consolidation and integration of our operations. Primarily, the completion
        of
        this plan will result in the combination of the Internet service provider
        and
        CloseCall CLEC businesses and the combination of the Davel payphone business
        with AFN. The customer-facing activities of this combined business will be
        conducted by a retail operation organization that will conduct all marketing,
        provisioning, billing and customer support activities. Likewise, the network
        operations will be managed by a single organization. Simultaneously, we will
        consolidate all of our financial operations into a single organization. As
        a
        result, we expect to achieve improvements in the quality and consistency
        of our
        delivered services and customer support, while reducing our operating expenses.
        The execution of this plan will include the elimination of employment positions
        in a series of reductions and the closing of certain facilities. We have
        begun
        to record the anticipated costs associated with these restructuring activities
        in the current quarter. The consolidation of these businesses will significantly
        enhance our ability to cross-sell and bundle services in efforts to retain
        the
        subscriber base of the Internet service business and grow the revenues of
        our
        CLEC businesses at CloseCall and AFN.
 
 As
        discussed in detail below, we have relied on funds provided by Cornell Capital
        in order to finance the cost of our acquisitions and enable us to grow the
        Company. In the current fiscal year, we have also used these funds to invest
        in
        the business of Kite and to fund the operation of our municipal broadband
        wireless network business and the deployment of the network in Tempe. In
        order
        to reduce the cost of capital, to strengthen the balance sheet, to improve
        liquidity and to provide the financial flexibility to react quickly to future
        acquisition opportunities, we are focused on the establishment of alternative
        sources of growth capital. In this regard, during the current quarter, we
        announced a new association with an investment banking firm, Ryan Beck &
Co., to advise us on numerous items, including financing.
 
 **Critical
        Accounting Policies**
 
 We
        believe there have been no significant changes in our critical accounting
        policies during the nine-month period ended December 31, 2005 as compared
        to
        what was previously disclosed in our Annual Report on Form 10-KSB for the
        year
        ended March 31, 2005. During this period, because the $100 million Standby
        Equity Distribution Agreement with Cornell Capital (the “SEDA”) is providing
        equity financing to us, we began to amortize deferred financing costs related
        to
        the SEDA to additional paid-in-capital and we began to charge this account
        for
        the additional fees paid to Cornell Capital and other financial advisors
        in
        connection with making draws under the SEDA.
  We
        consider the accounting policies related to revenue and related cost
        recognition, the valuation of goodwill and other intangible assets and the
        accounting for transactions related to our debt and equity financing activity
        to
        be critical to the understanding of our results of operations. Critical
        accounting policies include the areas where we have made what we consider
        to be
        particularly subjective or complex judgments in making estimates and where
        these
        estimates can significantly impact our financial results under different
        assumptions and conditions. We prepare our financial statements in conformity
        with U.S. generally accepted accounting principles. As such, we are required
        to
        make certain estimates, judgments and assumptions that we believe are reasonable
        based upon the information available. These estimates, judgments and assumptions
        affect the reported amounts of assets and liabilities at the date of the
        financial statement and the reported amounts of revenue and expenses during
        the
        periods presented. Actual results could be different from these estimates.
 
 **New
        Accounting Pronouncements**
 
 In
        December 2004, the Financial Accounting Standards Board revised SFAS
        No. 123. The revision, referred to as SFAS 123R, was entitled “Share-Based
        Payment”. This revised pronouncement replaces SFAS 123 and supersedes APB
        No. 25, and its scope encompasses a wide range of share-based compensation
        arrangements including share options, restricted share plans, performance-based
        awards, share appreciation rights and employee share purchase plans.
 
 SFAS
        123R
        requires that the compensation cost relating to share-based payment transactions
        be recorded in financial statements. For each transaction, compensation cost
        is
        to be measured based on the fair value of the equity or liability instrument
        issued. The pro forma disclosures previously permitted under SFAS No. 123
        no longer will be an alternative to financial statement recognition of
        compensation expense. In accordance with a recently-issued Securities and
        Exchange Commission rule, small business registrants will be allowed to
        implement SFAS No. 123R as of the beginning of the first annual period that
        begins after December 15, 2005. We currently expect that we will adopt SFAS
        No. 123R for the fiscal quarter ending June 30, 2006.
 
 31
 Under
        SFAS No. 123R, we must determine the appropriate fair value model to be
        used for valuing share-based payments, the amortization method for compensation
        cost and the transition method to be used at date of adoption. The permitted
        transition methods include either retrospective or prospective adoption.
        Under
        the retrospective method, prior periods may be restated either as of the
        beginning of the year of adoption or for all periods presented. The prospective
        method requires that compensation expense be recorded for all unvested stock
        options at the beginning of the first quarter of adoption of SFAS No. 123R,
        while the retrospective methods would record compensation expense for all
        unvested stock options beginning with the first period presented. We are
        evaluating the requirements of SFAS No. 123R and expect that its adoption
        will have a material adverse impact on our consolidated financial position
        and
        consolidated results of operations including an increase in compensation
        expense
        for equity instruments issued to employees. We have not yet determined the
        method of adoption or the effect of adopting SFAS No. 123R, and we have not
        determined whether the adoption will result in amounts that are similar to
        the
        current pro forma disclosures that have been provided in accordance with
        SFAS
        No. 123.
 
 **Results
        of Operations and Financial Condition**
 
 We
        realize that effective analysis of our operations with an approach of comparing
        results for a current period with the results of a corresponding prior period
        may be difficult due to the significant number of acquisitions and stock
        issues
        that we have completed. In order to analyze ourselves, we focus not only
        on
        achieving increasing amounts of net income and EBITDA, but emphasize the
        increase of net income per share.
  **The
        Three Months Ended December 31, 2005 and 2004**
 
 ***Total
        Revenues***
 
 We
        achieved consolidated revenues of $26,244,606 in the three-month period ended
        December 31, 2005 compared with revenues of $17,127,133 in the corresponding
        period of the prior fiscal year. Since April 1, 2004, we have completed the
        acquisition of seventeen companies that have provided significant revenues
        to
        us, particularly to our voice and Internet services operating segments. The
        most
        significant portions of our revenues are provided by our CloseCall and Davel
        subsidiaries that were acquired in October 2004 and November 2004, respectively.
        Revenues for these companies were included in our consolidated results of
        operations from the acquisition dates. In addition, major acquisitions in
        the
        current year include AFN, acquired on June 30, 2005, and InReach, acquired
        on
        November 1, 2005, and we obtained a 51% ownership of Kite on June 30, 2005.
        The
        revenues of these entities are included in our consolidated results of
        operations from those dates. Accordingly, the amounts of revenues included
        in
        our consolidated revenues for the three month periods ended December 31,
        2004
        and 2005 were as follows for Davel and CloseCall, Kite, AFN and
        InReach.
 
 **Acquired
                  Company**
              
              **2004**
              
              **2005**
              
              **Increase****Davel**
              
              $
              6,377,744
              
              $
              10,084,268
              
              $
              3,706,524**CloseCall
                  (includes Affinity and US1)**
              
              
              6,013,483
              
              
              6,509,269
              
              
              495,786**Kite**
              
              
              -
              
              
              3,199,366
              
              
              3,199,366**AFN**
              
              
              -
              
              
              1,906,635
              
              
              1,906,635**InReach**
              
              
              -
              
              
              943,138
              
              
              943,138**Total
                  Revenues**
              
              $
              12,391,227
              
              $
              22,642,676
              
              $
              10,251,449
 
 ***Revenues
        by Segment***
 
 **Voice
        Services.** We
        deliver voice communications services to end users on a retail basis principally
        though this business segment. Revenues from our voice services for the current
        quarter ended December 31, 2005 were $18,505,132, representing approximately
        71%
        of consolidated revenues. The revenues of this segment were $12,391,227 in
        the
        third quarter last year. The current year revenues were attributable primarily
        to CloseCall, Davel and AFN, all of which were acquired subsequent to last
        year’s second quarter. This group derives most of its operating revenues from
        recurring monthly charges, coin revenue and “dial-around” revenues (intercarrier
        compensation paid to us by the providers of 800 numbers at the rate of 49.4
        cents per call) that are generated by our communications services. Our local
        and
        long distance service revenues are being negatively affected in the current
        year
        by a continued decline in rates and competitive pressures to bundle long
        distance minutes of use within local service product offerings. Our existing
        base of business of long distance minutes is also subject to increasing
        competition from both VoIP and competing wireless service offerings.
 
 32
 **Internet
        Services.** We
        deliver data communications services to end users on a retail basis principally
        though this business segment. Revenues from Internet services for the current
        quarter ended December 31, 2005 were $4,534,617, representing approximately
        17%
        of consolidated revenues and including $943,138 in revenues attributable
        to
        InReach. We reported Internet service revenues of $4,735,906 for the prior
        year
        quarter ended December 31, 2004. The current year and prior year results
        included a full quarter of operating results for each of the eight data services
        companies acquired during the fiscal year ended March 31, 2005. As a result,
        revenues determined on a “same company” basis declined by $1,144,427 between
        years, or approximately 24%. As stated above, the loss of customers by this
        business, that includes mostly dial-up Internet access subscribers, has exceeded
        our expectations, contributing to the goodwill impairment loss recorded in
        the
        current quarter. In order to attempt to reverse the loss of revenues, we
        have
        consolidated the retail operations of the voice and Internet service provider
        businesses in order to promote the cross selling of CLEC services to our
        Internet access subscribers.
 
 **Wireless
        Networks.** The
        revenues of this operating segment principally relate to Kite. As indicated
        above, Kite’s revenues for the current quarter were $3,199,366, representing
        12.2% of consolidated revenues. To date, the revenues earned by NeoReach
        Wireless are insignificant. This segment did not generate any revenues for
        the
        fiscal quarter ended December 31, 2004.
 
 **Corporate.** From
        time
        to time, the corporate segment generates miscellaneous revenues. No such
        revenues were generated by this segment in the current year or prior year
        quarters.
 
 ***Operating
        Costs and Expenses***
 
 Total
        operating costs and expenses for the three months ended December 31, 2005,
        including depreciation and amortization, were $32,567,755, including charges
        for
        goodwill impairment and restructuring costs of $3,764,429 and $1,335,612,
        respectively. Excluding these charges, total operating costs and expenses
        represented approximately 105% of consolidated revenues for the three months
        ended December 31, 2005. Operating costs and expenses for the three months
        ended
        December 31, 2004 were $19,176,127, or 112% of consolidated revenues. Operating
        costs and expenses have increased, but decreased as a percentage of consolidated
        revenues, as we acquire companies and increase the size of our businesses.
        The
        cost of services (excluding depreciation and amortization) was $13,790,195
        in
        the three months ended December 31, 2005, or 52.5% of revenues, compared
        with
        $8,633,278, or 50.4% of revenues, in the prior year quarter. Compensation
        expenses, professional fees paid to attorneys, accountants and other advisors,
        and other general and administrative expenses comprises a major portion of
        operating costs and expenses. Such expenses represented 90.4% and 89.5% of
        total
        operating costs and expenses (before impairment and restructuring charges)
        in
        the three-month periods ended December 31, 2004 and 2005, respectively.
 
 Our
        current year operating expenses include the operating costs being incurred
        to
        start-up the municipal wireless network business and to support the deployment
        of the Tempe network. Total operating costs for the current quarter included
        $513,773 in operating expenses of NeoReach Wireless. There were no such costs
        in
        the corresponding prior year period. Spending by NeoReach Wireless has
        accelerated in the current year as we see increased interest in municipal
        wireless projects, as measured by the number of municipalities issuing requests
        for proposals. This activity and our own success in being selected for such
        projects convinced us to increase the pace of our investment in this business.
        In order to respond to the growing number of opportunities, we have increased
        staff in this group and expanded our business development activities resulting
        in increased compensation costs, tradeshow attendance costs and other travel
        expenses.
 
 33
 ***Interest
        Expense***
 
 Interest
        expense, net, was $582,785 for the three-month period ended December 31,
        2005
        compared with $905,896 in the comparable period of the prior year. During
        the
        prior year period, we closed two significant acquisitions resulting in a
        significant increase in borrowings from Cornell Capital and Airlie. Most
        significantly, the purchase consideration for the acquisition of Davel in
        November 2004 included $14 million cash. These funds were provided by the
        proceeds of the acquisition bridge loan from Airlie. We used funds borrowed
        from
        Cornell Capital to provide the $8 million cash portion of the CloseCall purchase
        consideration. Since the end of last year’s quarter, significant amounts of the
        Cornell Capital borrowings have been converted to common stock and the proceeds
        provided by the Debenture allowed us to retire the Airlie bridge loan in
        May
        2005. The effect of this financing activity on interest expense for the quarter
        ended December 31, 2004 was interest related to notes payable to Cornell
        Capital
        and the bridge loan in the amounts of $470,639 and $389,211, respectively.
        Interest expense for the current quarter included interest expense related
        to
        notes payable to Cornell Capital of only $149,266. Interest expense for the
        current quarter related to the Debenture, including the debt discount
        amortization, was approximately $397,000.
 
 ***Net
        Income (Loss)***
  We
        reported a net loss of $6,955,732 for the three-month period ended December
        31,
        2005, or $0.0165 per share, compared with a net loss of $2,954,890, or $0.0093
        per share, for the corresponding quarter of the prior year. The charges for
        goodwill impairment and restructuring costs that were recorded in the current
        quarter totaled $5,100,041, or $0.0121 per share. As a result, all segments
        incurred net losses for the current quarter. In the comparable quarter of
        the
        prior year, the voice and Internet services segments provided net income
        amounts
        of $581,781 and $287,254, respectively, which were not sufficient to offset
        the
        combined operating loss of the wireless networks and corporate segments of
        approximately $3,823,925. The prior year net loss for the quarter included
        amortization expense of approximately $220,000 related to SEDA deferred
        financing fees. Consistent with our practice of converting funds drawn under
        the
        SEDA to common stock, we have charged current year amortization to additional
        paid-in capital.
  ***Consecutive
        Quarter Results***
 
 On
        a
        consecutive quarter basis, consolidated revenues decreased by 1.1% from
        $26,546,650 reported for the three-month period ended September 30, 2005,
        despite the acquisition of InReach during the current quarter that added
        revenues of $943,138. For the prior quarter, we reported net income of $523,900.
        As described above, the current quarter net loss included goodwill impairment
        and restructuring costs of $5,100,041. However, the current quarter results
        were
        also adversely affected by the seasonal decline of Davel’s revenues, the
        continuing negative churn of dial-up ISP customers, and increased bad debt
        expenses recorded by the ISP group and CloseCall. Cost of services, expressed
        as
        a percentage of corresponding revenues, increased from 43.9% in the prior
        quarter to 52.5% in the current quarter. Benefiting prior quarter results
        were
        favorable adjustments resulting from the settlement of disputes with vendors
        recorded by Davel and CloseCall that reduced cost of services by $563,000.
        The
        total amount of other operating expenses, depreciation, amortization and
        interest expense increased by $34,657 from the prior quarter total amount
        of
        $14,225,645.
 
 ***EBITDA
        Presentation***
 
 EBITDA
        represents net income (loss) before interest, taxes, depreciation and
        amortization. EBITDA is not a measurement of financial performance under
        GAAP.
        However, we have included data with respect to EBITDA because we evaluate
        and
        project the performance of our business using several measures, including
        EBITDA. The computations of EBITDA for the preceding quarter ended September
        30,
        2005, and for the three-month periods ended December 31, 2005 and 2004 were
        as
        follows.
 
 **For
                  the Three Months Ended September 30,**
              
              **For
                  the Three Months Ended December 31**,
              
              **For
                  the Nine Months Ended December 31,****2005**
              
              **2005**
              
              **2004**
              
              **2005****Net
                  Income (Loss)**
              
              $
              523,900
              
              $
              (6,955,732
              )
              $
              (2,954,890
              )
              $
              (6,012,640
              )**Add
                  non-EBITDA items included in net results:****Depreciation
                  and amortization**
              
              
              1,047,319
              
              
              1,293,993
              
              
              792,717
              
              
              3,163,689**Interest
                  expense, net**
              
              
              698,335
              
              
              582,785
              
              
              905,896
              
              
              2,213,295**Goodwill
                  impairment and restructuring costs**
              
              
              -
              
              
              5,100,041
              
              
              -
              
              
              5,100,041**EBITDA**
              
              $
              2,269,554
              
              $
              21,087
              
              $
              (1,256,277
              )
              $
              4,464,385
   34
  The
        significant decline in EBITDA from September 30 to December 31, 2005 was
        due to
        the loss incurred from operations in the current quarter before the nonrecurring
        charges. Our negative EBITDA in the third quarter of the prior fiscal year
        was
        primarily attributable to acquisition costs and the smaller scale of operations
        in the prior year.
 
 We
        consider EBITDA to be an important supplemental indicator of our operating
        performance, particularly as compared to the operating performance of our
        competitors, because this measure eliminates many differences among companies
        in
        financial, capitalization and tax structures, capital investment cycles and
        ages
        of related assets, as well as certain recurring non-cash and non-operating
        items. We believe that consideration of EBITDA should be supplemental, because
        EBITDA has limitations as an analytical financial measure. These limitations
        include the following: EBITDA does not reflect our cash expenditures, or
        future
        requirements for capital expenditures or contractual commitments; EBITDA
        does
        not reflect the interest expense, or the cash requirements necessary to service
        interest or principal payments, on our indebtedness; although depreciation
        and
        amortization are non-cash charges, the assets being depreciated and amortized
        will often have to be replaced in the future, and EBITDA does not reflect
        any
        cash requirements for such replacements; EBITDA does not reflect the effect
        of
        earnings or charges resulting from matters we consider not to be indicative
        of
        our ongoing operations; and not all of the companies in our industry may
        calculate EBITDA in the same manner in which we calculate EBITDA, which limits
        its usefulness as a comparative measure.
  Management
        compensates for these limitations by relying primarily on its GAAP results
        to
        evaluate its operating performance and by considering independently the economic
        effects of the foregoing items that are not reflected in EBITDA. As a result
        of
        these limitations, EBITDA should not be considered as an alternative to net
        income (loss), as calculated in accordance with generally accepted accounting
        principles, as a measure of operating performance, nor should it be considered
        as an alternative to cash flows as a measure of liquidity.
 
 Further,
        we realize that effective analysis of our operations with an approach of
        comparing results for a current period with the results of a corresponding
        prior
        period may be difficult due to the significant number of acquisitions and
        stock
        issues that we have completed. In order to analyze ourselves, we focus not
        only
        on achieving increasing amounts of net income and EBITDA, but strive to increase
        net income per share.
 
 **The
        Nine Months Ended December 31, 2005 and 2004**
 
 ***Revenues***
 
 Consolidated
        revenues were $75,297,101 in the nine-month period ended December 31, 2005
        compared with revenues of $23,265,366 in the corresponding period of the
        prior
        fiscal year. The most significant portion of the increase in revenues is
        the
        combined revenues of CloseCall and Davel, subsidiaries that were acquired
        in
        October and November 2004, respectively. As a result, the voice business
        segment
        reported revenues of $56,301,164 for the current year compared with revenues
        of
        only $13,346,798 in the prior year. Full period revenues for all of the ISPs
        that were acquired in the prior year plus the addition of InReach resulted
        in
        the increase in Internet services revenues to $12,395,635 for the current
        year
        from revenues of $9,303,568 reported for the prior year. The current year
        revenues also benefited from the acquisitions of AFN and Kite. The schedule
        below presents a comparison of revenues included in our consolidated revenues
        for the quarters ended December 31, 2004 and 2005 for the most significant
        companies added since October 1, 2004 (the beginning of last year’s
        quarter).
 
 **Acquired
                  Company**
              
              **2004**
              
              **2005**
              
              **Increase****Davel**
              
              $
              6,377,744
              
              $
              32,283,029
              
              $
              25,905,285**CloseCall
                  (includes Affinity and US1)**
              
              
              6,969,054
              
              
              20,479,012
              
              
              13,509,958**Kite**
              
              
              -
              
              
              6,584,680
              
              
              6,584,680**AFN**
              
              
              -
              
              
              3,539,123
              
              
              3,539,123**InReach**
              
              
              -
              
              
              943,138
              
              
              943,138**Total
                  Revenues**
              
              $
              13,346,798
              
              $
              63,828,982
              
              $
              50,482,184
   35
 ***Operating
        Costs and Expenses***
 
 Total
        operating costs and expenses for the nine months ended December 31, 2005
        (including depreciation and amortization,) were $78,903,939, including charges
        for goodwill impairment and restructuring costs of $3,764,429 and $1,335,612,
        respectively. Excluding these charges, total operating costs and expenses
        represented approximately 98% of consolidated revenues for the nine months
        ended
        December 31, 2005. Operating costs and expenses for the nine months ended
        December 31, 2004 were $27,493,176, or 118% of consolidated revenues. Operating
        costs and expenses have increased significantly, but decreased as a percentage
        of consolidated revenues, as we acquire companies, increasing the size of
        our
        business and leveraging the corporate-level functions, and begin to combine
        operations. The cost of services (excluding depreciation and amortization)
        was
        $36,466,453 in the nine months ended December 31, 2005, or 48.4% of revenues,
        compared with $11,158,590, or 48.0% of revenues, in the prior year period.
        Compensation expenses, professional fees paid to attorneys, accountants and
        other advisors, and other general and administrative expenses in total
        represented 90.4% and 90.6% of total operating costs and expenses (before
        impairment and restructuring charges) in the nine-month periods ended December
        31, 2004 and 2005, respectively.
 
 Operating
        expenses for the current year are running at a higher rate than we had planned
        at the beginning of the fiscal year, with the excess occurring substantially
        in
        the voice services segment. Operating expenses for the year for corporate,
        the
        Internet services segment and NeoReach Wireless are at or below plan. As
        we
        continue with our organizational integration project, combining many functions
        of the Internet services and voice services segments, the current level of
        operating expenses should decline. For example, the employee terminations
        that
        occurred in January 2006 as part of our restructuring are expected to save
        approximately $150,000 in compensation costs in the fourth quarter. Additional
        reductions are expected to occur in the fourth quarter. By the time we complete
        the consolidation of facilities contemplated by our current quarter
        restructuring charge, operating expenses next year will benefit from a reduction
        of occupancy costs in excess of $100,000 per quarter. The cost of services
        for
        the year, expressed as a percentage of consolidated revenues, are within
        expectations.
 
 ***Interest
        Expense***
 
 Interest
        expense, net, was $2,213,295 for the nine-month period ended December 31,
        2005
        compared with $1,232,280 in the comparable period of the prior year. Since
        the
        end of last year’s quarter, we have continued to use funds provided by Cornell
        Capital, enabling us to acquire AFN and InReach, to invest in Kite and to
        the
        fund the operations of NeoReach Wireless. In addition, as described above,
        we
        issued a Debenture to Cornell Capital in the amount of $15,500,000 in May
        2005,
        retiring the Airlie bridge loan. As a result of the financing activity, the
        major components of interest expense for the current year included approximately
        $874,000 related to notes payable to Cornell Capital (including $291,956
        in draw
        conversion discounts), $381,225 related to the retired bridge loan, and
        approximately $1,009,000 related to the Debenture (including $250,748 in
        debt
        discount accretion). In the comparable quarter of the prior year, the major
        components of interest expense included approximately $845,000 related to
        notes
        payable to Cornell Capital (including $375,150 in draw conversion discounts)
        and
        $389,211 related to the bridge loan.
 
 ***Net
        Income (Loss)***
  We
        reported a net loss of $6,012,640 for the nine-month period ended December
        31,
        2005, or $0.0154 per share. Excluding the effects of the goodwill impairment
        and
        restructuring charges recorded in the current quarter, the net loss was
        $912,599, or $0.0023 per share, compared with a net loss of $5,460,090, or
        $0.0202 per share, for the corresponding period of the prior year. As in
        the
        prior year, both the voice and Internet service business segments contributed
        net income (before the effects of the goodwill impairment and restructuring
        charges) in the current year, totaling approximately $4,390,935, more than
        offsetting the net loss incurred by the wireless networks segment of $1,368,920
        and corporate expenses of $3,934,614. In the comparable period of the prior
        year, the Internet services and voice segments provided net income of
        approximately $1,474,811 that was not sufficient to offset the combined
        operating loss of the wireless networks and corporate segments of approximately
        $6,934,901. The prior year corporate expenses included SEDA deferred financing
        fee amortization expense of approximately $513,000 and SEDA draw fees of
        approximately $1,135,000.
 
 Despite
        the current year net loss, we have generated EBITDA, as calculated above,
        in the
        amount of $4,464,385 for the nine months ended December 31, 2005.
 
 36
 **Liquidity
        and Capital Resources**
  During
        the nine-month period ended December 31, 2005, our balance of unrestricted
        cash
        and cash equivalents increased by $290,916 to $4,960,703.
 
 Net
        cash
        used in operations during the nine months ended December 31, 2005 was
        $1,441,193. We have used net cash of $13,380,044 in connection with investing
        activities. We paid $6,778,129 in cash for the acquisition of intangible
        assets,
        including $6,578,550 for the acquisition of certain customer rights under
        the
        Sprint Agreement, and we paid $3,927,011 in net cash in connection with
        acquisitions during the current year, including the acquisitions of AFN and
        InReach. We made capital expenditures during the current year totaling
        $2,674,904.
 
 Our
        financing activities during the current year provided net cash of $15,112,153.
        The net proceeds of the Debenture with Cornell Capital, in the amount of
        $14,205,000, enabled us to retire the Airlie bridge loan in May 2005 with
        the
        payment of the principal amount of $13,000,000. Funding provided to us under
        the
        SEDA during the current fiscal year, net of draw fees of $503,000, totaled
        $10,297,000. In addition, $3,612,525 in cash was contributed by the minority
        interests in June 2005 in connection with the formation of Kite.
 
 In
        the
        corresponding period of the prior year, the balance of cash and cash equivalents
        increased by $3,710,917. Cash was provided by operations in the amount of
        $1,935,934, primarily due to an increase in accounts payable and accrued
        liabilities of $4,069,833. In the current year, the balance of accounts payable
        and accrued liabilities has been reduced by $4,142,706.
 
 Financing
        activities during the prior year provided net cash of $30,292,948. In connection
        with our investing activities during the same prior year period, we used
        $28,517,965 in cash. From Cornell Capital, we obtained $21,200,000 in funding
        in
        the prior-year, including $9,200,000 transferred to the equity lines of credit
        and a total of $12,000,000 under separate notes payable. In addition, the
        Company received $15,200,000 in funds under an acquisition bridge loan (with
        $2,200,000 repaid subsequent to closing) that were used to provide most of
        the
        $14,000,000 in cash that was paid to the former owners of Davel at closing.
        In
        addition, the Company used cash in the amount of $8,000,000 in order to close
        the acquisition of CloseCall, and a total of $10,960,500 in connection with
        the
        acquisition of Affinity, US1 and eight ISPs. In total, the Company obtained
        $5,827,223 in cash with the acquisitions during the period. The Company spent
        $1,384,688, net, in capital expenditures during the period.
 
 Our
        primary liquidity and capital resource needs are to finance the costs of
        our
        acquisitions, to fund the operating costs and equipment requirements of our
        emerging wireless networks business, to support our other operating activities,
        to make capital expenditures and to service our debt. Over the last twenty-one
        months, we have depended primarily on funds provided by Cornell Capital to
        meet
        our financing needs. Under a series of transactions with Cornell Capital,
        we
        have obtained approximately $34,600,625 in financing since April 1, 2004,
        including $28,000,625 converted to common stock pursuant to the provisions
        of
        the Cornell Capital SEDA and the terminated equity line of credit. In addition,
        proceeds of $15,500,000 were provided to us in the current year through the
        issuance of the convertible debenture to Cornell Capital. As discussed above,
        we
        used a substantial portion of these proceeds to complete the acquisition
        of
        seventeen (17) companies since April 1, 2004. and to retire the remaining
        $13,000,000 million balance of the acquisition bridge loan. We have also
        used
        our common stock as consideration in connection with a number of acquisitions.
        In the last twenty-one months, we have issued common stock valued at
        approximately $14,556,406 in connection with our acquisitions.
 
 37
 As
        of
        December 31, 2005, the actual amount of funds available for future needs
        under
        the SEDA is determined as follows:
 
 **SEDA
                  Activity and Availability**
              
              **Amounts**Amounts
                  drawn under the SEDA to date (includes interest)
              
              $
              26,623,129Less
                  -- SEDA draws and interest converted to common stock to
                  date
              
              
              (26,623,129
              )Notes
                  payable under the SEDA at December 31, 2005
              
              
              -Other
                  notes payable to Cornell Capital at December 31, 2005
              
              
              6,600,000Outstanding
                  amount available for conversion
              
              
              6,600,000Accrued
                  interest at December 31, 2005
              
              
              269,184Total
                  amounts available for conversion
              
              $
              6,869,184Total
                  number of shares of common stock registered for the SEDA
              
              
              250,000,000Less
                  -- Number of shares of common stock issued to date upon the conversion
                  of
                  draws and interest
              
              
              (130,057,147
              )Less
                  -- Number of shares of common stock issuable upon the conversion
                  of
                  outstanding draws ($6,600,000) and accrued interest ($269,184)
                  at December
                  31, 2005 based on the closing stock price of $0.23 per share on
                  February
                  3, 2006
              
              
              (29,866,017
              )Total
                  number of shares of common stock available for the conversion of
                  future
                  draws and borrowings
              
              
              90,076,836Funds
                  available under the SEDA based on the number of shares of common
                  stock
                  available (90,076,836 shares) and a price per share of
                  $0.23
              
              $
              20,717,672
 
 Although
        we have drawn $26,623,129 in funds under the $100 million SEDA, based on
        the
        remaining number of shares registered for the benefit of Cornell Capital
        and
        assuming the conversion of the $6,600,000 in notes payable to Cornell Capital
        and the accrued interest of $269,184, there were $20,717,672 in additional
        funds
        available for draws under the SEDA for future needs. Draws and conversions
        subsequent to December 31, 2005 (through February 3, 2006) have reduced the
        funds available under the SEDA to $19,410,133. The term of the current SEDA
        expires on May 19, 2006. The Debenture agreement requires that, if the total
        amount of debt payable to Cornell Capital exceeds $4,000,000 at the SEDA
        expiration date, we must renew the SEDA. Failure to renew the SEDA would
        represent a default of the terms of the Debenture.
 
 We
        expect
        that our future cash flows from operations, together with the funds that
        are
        available under our existing SEDA facility, will be adequate to meet our
        anticipated cash needs through the remainder of our current fiscal year,
        including the completion of the wireless network in Tempe. We currently expect
        that capital expenditures for the Tempe network will approximate $2,200,000;
        as
        of December 31, 2005, we had incurred costs of approximately $839,000 for
        the
        Tempe network. However, in order to complete the deployment of additional
        municipal wireless networks, to pursue one or more significant strategic
        acquisitions and to repay the balance owed to Cornell Capital under the
        Debenture, we will most likely need to incur additional debt or issue additional
        equity to finance those acquisitions. As stated above, we have selected Ryan
        Beck & Co., an investment banking firm, to advise us on financing
        alternatives and other items. Should we fail to obtain alternative capital
        financing, we may be required to curtail operations, in particular the
        deployment of additional municipal wireless networks.
 
 38
 **Inflation**
 
 Our
        monetary assets, consisting primarily of cash and receivables, and our
        non-monetary assets, consisting primarily of intangible assets and goodwill,
        are
        not affected significantly by inflation. We believe that replacement costs
        of
        equipment, furniture and leasehold improvements will not materially affect
        our
        operations. However, the rate of inflation affects our expenses, such as
        those
        for employee compensation and costs of network services, which may not be
        readily recoverable in the price of services offered by us.
 
 **Risks
        Related To Our Business**
 
 Investing
        in our securities involves a high degree of risk. Before investing in our
        securities, you should consider the following discussion of risk factors,
        other
        information contained in this Quarterly Report on Form 10-QSB, and the extensive
        discussion of “Risks Related to Our Business” contained in our Annual Report on
        Form 10-KSB for the fiscal year ended March 31, 2005. Our
        future results may also be impacted by other risk factors listed from time
        to
        time in our future filings with the SEC, including, but not limited to, our
        Quarterly Reports on Form 10-QSB and our Annual Report on Form
        10-KSB.
 
 **We
        Have Lost Money Historically Which Means That We May Not Be Able to Maintain
        Profitability**
 
 We
        have
        historically lost money. For the nine months ended December 31, 2005, we
        incurred a net loss of $6,012,640. In the years ended March 31, 2005 and
        2004,
        we sustained net losses of $5,359,722 and $2,157,844, respectively. Future
        losses may occur. Accordingly, we may experience liquidity and cash flow
        problems if we are not able to improve our operating performance or raise
        additional capital as needed and on acceptable terms. Despite our reporting
        net
        income in the three consecutive quarters ended September 30, 2005, there
        can be
        no assurance that we will achieve profitable operating results again, or
        maintain them if achieved.
 
 **Our
        Operations Are Recently Acquired Which Means That We Have a Limited
        Operating History upon Which You Can Base Your Investment Decision**
 
 Prior
        to
        January 2004, we were a development stage company. Although we were incorporated
        only five years ago, we have undergone a number of changes in our business
        strategy and organization.
 
 We
        have
        had several major shifts in our business strategy. In June 2001, we focused
        our
        business on the integration and marketing of complete mobile information
        solutions that satisfy the needs of mobile professionals. In April 2002,
        we
        acquired and shifted our focus toward solutions supporting the third generation
        wireless market. We shifted our business strategy again in December 2003
        by
        beginning to expand significantly the scope of our business activity to include
        Internet access services, local and long distance telephone services and
        the
        ownership and operation of payphones. In 2005, we began to invest in the
        business of deploying wireless broadband networks and providing wireless
        network
        access services in wireless access zones to be primarily located in
        municipality-sponsored areas. We entered these businesses primarily through
        the
        acquisition of established companies. These operations have all been acquired
        subsequent to January 1, 2004.
 
 Accordingly,
        the Company has a limited operating history upon which an evaluation of its
        prospects can be made.
 
 Our
        strategy is unproven and the revenue and income potential from our strategy
        is
        unproven. We may encounter risks and difficulties frequently encountered
        by
        companies that have grown rapidly through acquisition, including the risks
        described elsewhere in this section. Our business strategy may not be successful
        and we may not be able to successfully address these risks.
 
 If
        we are
        unsuccessful in the execution of our current strategic plan, we could be
        forced
        to reduce or cease our operations.
 
 **We
        Have Limited Experience Running Our Businesses Which May Hamper Our Ability
        to
        Make Effective Management Decisions**
 
 Virtually
        all of our operations have been acquired or started in the last 24 months.
        Therefore, our experience in operating the current business is limited. Further,
        we intend to pursue additional acquisitions to further the development of
        our
        Internet services business, competitive local exchange and wireless broadband
        businesses.
 
 39
 Mr.
        Jay
        O.   Wright became our President and Chief Executive Officer in December
        2003. In February 2004, Mr. Kurt Gordon became our Chief Financial Officer.
          Prior to Mr. Gordon joining the Company, Messrs. Wright and Gordon had no
        experience working together.  Since Mr. Wright joined our Company we have
        completed numerous acquisitions and integrated various different management
        teams into our operations.   Prior to closing those acquisitions, Messrs.
        Gordon and Wright had not previously worked with management at any of our
        subsidiaries and divisions. The other senior executives, including the general
        managers of each of the three operating business segments, have joined the
        Company in connection with acquisitions or been recently hired. None of these
        executives has significant experience working with the others. Consequently,
        internal communication and business-decision making processes are evolving.
        We
        may react too slowly or incorrectly to trends that may emerge and affect
        our
        business. Our future success depends on the ability of the senior executives
        to
        establish an effective organizational structure and to make effective management
        decisions despite their limited experience.
 
 **The
        Success of Our Business Is Based on Unproven Revenue Generation Models Which
        Means That We May Not Achieve Anticipated Revenues**
 
 Our
        revenue models, especially for our municipal wireless network business, are
        new
        and evolving. Our ability to generate revenue depends, among other things,
        on
        our ability to provide quality wireless technology, telecommunications,
        broadband and integrated data communication services to our customers utilizing
        new technologies, new products and innovative bundled service packages. Because
        our businesses are either newly acquired, based on emerging opportunities
        and
        technologies, or based on new bundled services with new price packages, we
        have
        limited experience with our revenue models.
 
 Our
        ability to achieve organic revenue growth is dependent upon the success of
        long-term projects, such as our wireless initiatives, that require us to
        incur
  significant up-front costs.  We expect to confront multiple
        challenges in reaching the point where significant revenues are provided
        by this
        business. For example, the securing of a city contract is a multi-step process
        that can take over six months to complete, including a pilot demonstration,
        the
        RFP preparation, response and evaluation, contract negotiation, development
        of
        the deployment plan, and equipment installation and testing. Although we
        attempt
        to minimize development risks by carefully analyzing demographics, topography,
        climate and other factors, each project includes the utilization of newly
        developed transmission equipment. For example, operating costs incurred by
        NeoReach Wireless in the current year approximate $1,392,000, and we expect
        that
        the cost of the equipment required for the completion of the Tempe network
        will
        approximate $2,200,000 million. Further, in order to generate revenues from
        these projects, we will be required to successfully complete marketing efforts
        to obtain individual subscribers willing to pay us for wireless Internet
        service
        and negotiate contracts with large Internet service providers allowing them
        use
        of the network.
 
 In
        addition, during the current fiscal year, the activities of the Internet
        services operation have focused on the integration of the acquired companies.
        The efforts are focused on combining service offerings, consolidating network
        operations and customer support locations, and reducing operating expenses.
        The
        success of our overall growth strategy depends, in part, on our ability to
        transition customers to new Internet access services, especially broadband
        wireless, and/or to sell additional voice services to the existing customer
        base. However, at present, dial-up subscribers represent a significant number
        of
        our Internet service customers. The erosion of this customer base is likely
        to
        continue until our new efforts to transition these customers to enhanced
        services become more effective.
 
 There
        can
        be no assurance that the projects will be successfully completed or that
        the
        completed projects will provide the anticipated revenues. Accordingly, there
        can
        be no assurance that our business revenue models will be successful or that
        we
        can sustain revenue growth or maintain profitability.
 
 **If
        We Are Not Able to Compete Effectively in Our Markets That Are Highly
        Competitive, We May Be Forced to Reduce or Cease Operations**
 
 We
        believe that our ability to compete successfully in our markets depends on
        a
        number of factors, including market presence; the adequacy of our member
        and
        technical support services; the capacity, reliability and security of our
        network infrastructures; the ease of access to and navigation of the Internet
        provided by our services; our pricing policies and those of our competitors
        and
        suppliers; the timing of introductions of new services by us and our
        competitors; our ability to support existing and emerging industry standards;
        and general industry and economic trends. Other specific factors that could
        impact our ability to compete successfully include the following items, among
        others:
 
 40
 •
              our
                  success in withstanding the continued shift from dial-up ISP service
                  to
                  broadband ISP service;•
              the
                  performance of our products, services and technology in a manner
                  that
                  meets customer expectations;•
              the
                  success of our efforts to develop effective channels of distribution
                  for
                  our products;•
              our
                  ability to price our products that are of a quality and at a price
                  point
                  that is competitive with similar or comparable products offered
                  by our
                  competitors;•
              the
                  success of our efforts to develop, improve and satisfactorily address
                  any
                  issues relating to our technology;•
              our
                  ability to effectively compete with companies that have substantially
                  greater market presence and financial, technical, marketing and
                  other
                  resources than us including (i) local ISPs, (ii) national and regional
                  ISPs, (iii) established online services; (iv) nonprofit or educational
                  ISPs; (v) national telecommunications companies; (vi) Regional
                  Bell
                  Operating Companies (“RBOCs”); (vii) competitive local exchange carriers;
                  and (viii) cable operators;•
              our
                  ability to adapt to the consolidation of existing ISPs with or
                  into larger
                  entities, or entry of new entities into the Internet services market,
                  would likely result in greater competition for the
                  Company;•
              our
                  ability to collect dial around compensation owed to our pay telephone
                  business from third party payors; and•
              the
                  continued erosion of coin revenues in our pay telephone business
                  resulting
                  from the penetration of wireless technologies and prepaid calling
                  cards.
 
 There
        can
        be no assurance that the Company will have the financial resources, technical
        expertise or marketing and support capabilities to compete successfully.
        Failure
        to do so could harm our business and operating results in a material way
        and
        could cause us to reduce or cease operations.
 
 **Recent
        Industry Trends Could Adversely Affect Our Ability to Compete in the Wireless
        Communications Industry and Significantly Reduce the Likelihood of Our Success**
 
 The
        wireless communications industry has experienced consolidation of participants,
        and this trend may continue. If wireless carriers consolidate with companies
        that utilize technologies that are similar to or compete with our wireless
        technology, our proportionate share of the emerging market for wireless
        technologies may be reduced or eliminated. This reduction or elimination
        of our
        market share could reduce our ability to obtain profitable operations and
        could
        even cause us to reduce or cease operations.
 
 In
        addition, the increasing number of municipally sponsored wireless network
        opportunities is attracting the interest of very large competitors. For example,
        competitors for the Philadelphia network included Verizon, Comcast and
        Earthlink. According to a published report, the city of San Francisco received
        plans from 26 companies in response to a request for proposals, including
        Cingular Wireless, Earthlink and Google.
 
 The
        activity of these competitors, with resources far greater than ours, could
        adversely affect our ability to obtain additional awards for the deployment
        and
        management of wireless networks and significantly reduce the likelihood of
        success for our emerging wireless network and other businesses.
 
 **Our
        Payphone Division is Subject to Intense Competition That May Result in Future
        Revenue Declines**
 
 Through
        our Davel subsidiary, we compete with other independent pay telephone providers
        and large local exchange carriers for the locations where we install and
        operate
        pay telephones. Many of these competitors have substantially greater financial,
        marketing and other resources than us.
 
 41
 Additionally,
        Davel indirectly competes with other telecommunications providers,
        including providers of wireless services and prepaid calling card companies,
        for
        end users to utilize our pay telephones to make local and long distance calls.
        The proliferation of wireless communication devices has continued to reduce
        the
        use of pay telephones. For example, the cellular telephone business of CloseCall
        represents indirect competition for Davel.   Furthermore, certain providers
        of wireless communication devices have continued to introduce rate plans,
        including pre-paid rate plans, that are competitively priced with certain
        of the
        products offered by us and have negatively impacted the usage of pay telephones
        throughout the nation. The effect on our business is that revenues of Davel
        are
        steadily declining. Davel’s revenues were $32,283,029 for the nine months ended
        December 31, 2005 compared with $44,007,674 (including the pre-acquisition
        portion) for the corresponding period of the prior year.
 
 If
        we are
        unsuccessful in increasing revenues from other sources, the declining payphone
        business may contribute to declines in consolidated revenues and the incurring
        of operating losses.
 
 **Davel’s
        Reliance on Third Party Providers Could Delay the Timely Receipt of Accounts
        Receivable**
 
 Davel
        relies on third party providers to provide local access, long distance and
        operator services to its pay telephones. The uncertainty with the greatest
        potential negative financial impact relates to revenue from and collectibility
        of access code calls and toll-free dialed calls, or dial around compensation
        (i.e., intercarrier compensation paid to us by the providers of 800 numbers
        at
        the rate of 49.4 cents per call). In current quarters, Davel initially
        recognizes revenue related to non-coin dial-around calls that are initiated
        from
        a Company payphone in order to gain access to a long distance company or
        to make
        a standard toll free cal l based on estimates.   The inter-exchange
        carriers have historically paid for fewer dial-around calls than are actually
        made and the collection period for dial-around revenue is generally four
        to six
        months, but can be in excess of a year.   The estimates of revenue are
        based on the historical analysis of calls placed and amounts collected. These
        analyses are updated on a   quarterly basis.   Recorded amounts of
        revenue relating to prior periods may be adjusted based on the amounts of
        actual
        receipts and/or an unexpected change in the historical trends of calls and/or
        collections.
 
 Dial
        around compensation represents a material percentage of our consolidated
        revenues. Dial around revenue was approximately $ 8,082,691 in the nine months
        ended December 31, 2005, representing approximately 10.7% of consolidated
        revenues for the period. The amount of dial-around revenue estimated to be
        collectible and included in the balance of accounts receivable at December
        31,
        2005 was $5,453,041.   We depend on the third-party service providers to
        quickly and accurately report and pay amounts owed to us as dial around
        compensation.   Our inability to obtain such reports and/or our inability
        to collect amounts owed to us could result in material reductions in accounts
        receivable with   material adverse effects to future consolidated revenues
        and net income.
 
 **If
        We Are Unable to Raise Additional Capital, We May Be Unable to Make Acquisitions
        or to Fund Our Future Operations**
 
 We
        have
        relied almost entirely on external financing to fund our operations and
        acquisitions to date. We have been particularly reliant on funds provided
        by
        Cornell Capital. Such financing has historically come from a combination
        of
        borrowings and sale of common stock. As of February 3, 2006, we have drawn
        a
        total of $34,423,129 in funds under the SEDA. Draws in the amount of $27,823,129
        have been converted to common stock. To this date, the conversion of draws
        and
        related interest has resulted in the issuance of approximately 135,547,132
        shares of our common stock to Cornell Capital. We registered 250,000,000
        shares
        of our common stock for resale by Cornell Capital in May 2004. Based on the
        closing price of our common stock on February 3, 2006 ($0.230 per share),
        approximately 30,060,987 shares of our common stock would be issued in
        connection with the conversion of outstanding draws and accrued interest
        at
        December 31, 2005, and approximately 84,391,881 shares would be available
        for
        the conversion of future draws, representing approximately $19,410,133 in
        remaining funds available under the SEDA. At December 31, 2005, we believe
        that
        Cornell Capital owned approximately 1.2% of our outstanding common stock.
 
Future funding from Cornell Capital under the SEDA may be unavailable if
        Cornell
        Capital holds more than 9.9% of our outstanding common stock at the time
        financing is needed. In addition, the term of the current SEDA expires in
        May
        2006.
 
 Over
        the
        next two years we anticipate that, in addition to the funds available to
        us
        under the SEDA with Cornell Capital, we may need to raise additional or
        alternative capital to fund major acquisitions and to grow our emerging
        businesses.   We anticipate that these additional funds will be in the
        range of $10 million to $50 million, depending on the pace of growth and
        /or the
        size of future acquisitions.
 
 42
 If
        our
        ability to draw funds under the SEDA in the future is limited, our efforts
        to
        negotiate an extension to the SEDA on acceptable terms are unsuccessful,
        or we
        are unable to obtain capital from alternative sources when needed on favorable
        terms, we may be unable to adequately fund our future operations and continuing
        expansion; to successfully promote our brand name, products and services;
        to
        develop or enhance our service offerings; to take advantage of business
        opportunities; or to respond to competitive market pressures. Any resulting
        reduction in our operations may result in a lower stock price. In addition,
        the
        issuance of any additional shares will reduce the percentage ownership of
        a
        stockholder with a fixed number of shares of our common stock.
 
 **We
        May Not Successfully Execute or Integrate Our Acquisitions Which Could Harm
        Our
        Business**
 
 Our
        business model is dependent upon growth through acquisition of other
        telecommunication service providers. We have completed 17 acquisitions during
        the 21 month period ended December 31, 2005. We expect to continue making
        acquisitions that will enable us to build our Internet services, competitive
        local exchange carrier and wireless broadband businesses. Acquisitions involve
        numerous risks, including the following:
 
 •
              Difficulties
                  in integrating the operations, technologies, products and personnel
                  of the
                  acquired companies;•
              Diversion
                  of management’s attention from normal daily operations of the business;•
              Difficulties
                  in entering markets in which we have no or limited direct prior
                  experience
                  and where competitors in such markets have stronger market
                  positions;•
              Initial
                  dependence on unfamiliar partners;•
              Insufficient
                  revenues to offset increased expenses associated with acquisitions;
                  and•
              The
                  potential loss of key employees of the acquired companies.
 
 Acquisitions
        may also cause us to:
 
 •
              Issue
                  common stock that would dilute our current stockholders’ percentage
                  ownership;•
              Assume
                  liabilities;•
              Record
                  goodwill and non-amortizable intangible assets that will be subject
                  to
                  impairment testing on a regular basis and potential periodic impairment
                  charges;•
              Incur
                  amortization expenses related to certain intangible assets;•
              Incur
                  large and immediate write-offs, and restructuring and other related
                  expenses; or•
              Become
                  subject to litigation.
 
 Mergers
        and acquisitions are inherently risky, and no assurance can be given that
        our
        previous or future acquisitions will be successful and will not materially
        adversely affect our business, operating results or financial condition. **** In
        order
        to achieve the critical mass of business activity necessary to successfully
        execute our business plan, we plan to continue making strategic acquisitions
        and
        significantly increase the number of strategic partners and customers that
        use
        our technology and services. This growth has placed, and will continue to
        place,
        significant strain on our personnel, systems and resources. We expect that
        we
        will continue to hire employees, including technical, management-level
        employees, and sales staff, in the foreseeable future. This growth will require
        us to improve management, technical, information and accounting systems,
        controls and procedures. We may not be able to maintain the quality of our
        operations, control our costs, continue complying with all applicable
        regulations and expand our internal management, technical information and
        accounting systems in order to support our desired growth. We cannot be sure
        that we will manage our growth effectively, and our failure to do so could
        cause
        us to reduce or cease operations.
 
 43
 Many
        of
        the companies that we have acquired have been very small and/or privately
        held.
        Consequently, we have made acquisition decisions based on historical information
        that has not been audited. Generally, we structure our merger agreements
        to give
        us the right to make subsequent adjustments to the purchase consideration
        based
        on the subsequent discovery of inaccuracies. However, the process requires
        that
        senior management spend significant amounts of time resolving disputes with
        former owners of the acquired companies. In addition, we have been confronted
        with the challenges of managing many remotely located operations and combining
        different systems. Although we have been successful in retaining key managers
        and other employees of our major acquired companies, the lack of employee
        retention at certain smaller acquired companies has adversely affected the
        integration of operations and the retention of customers.
 
 Failure
        to manage and successfully integrate acquisitions we make could harm our
        business and operating results in a material way.
 
 **We
        May Not Be Successful in Obtaining and Retaining Key Employee s Which Could
        Adversely Affect Our Ability to Operate, Grow and Manage Our Businesses**
 
 We
        have
        been successful in making important additions to our management, including
        not
        only members of the management teams of certain acquired companies but new
        hires
        as well. For example, our executive management team has been expanded to
        include
        senior executive officers for each of our three operating business segments,
        an
        executive vice president focused on the integration of our acquired operations,
        and a general counsel. In addition, employment contract extensions were
        negotiated with our chief executive and other key officers. Our future success
        depends in a large part upon the continued service of key members of our
        senior
        management team. In particular, our chief executive officer, Mr. Jay O. Wright,
        is critical to the overall management of our Company as well as the development
        and implementation of our business strategy. Although we have designed
        employment agreements with Mr. Wright and other key executives that we believe
        provide incentives to perform at high levels and to fulfill the terms of
        their
        agreements with us, each executive, or any other employee, may terminate
        their
        employment with us at an y time. Our future success also depends on our ability
        to identify, attract, hire, retain and motivate other well-qualified managerial,
        technical, sales and marketing personnel. There can be no assurance that
        these
        professionals will be available in the market or retained, or that we will
        be
        able to meet or to continue to meet their compensation requirements. Failure
        to
        establish and maintain an effective management team and work force could
        adversely affect our ability to operate, to grow and to manage our businesses.
 
 **Impairment
        of Goodwill Could Result in Significant Future Charges That Could Impede
        Our
        Ability to Raise Capital**
 
 At
        December 31, 2005, our balance sheet included intangible assets with a total
        carrying value of approximately $46,403,998, representing 56% of total assets
        and including approximately $37,310,829 in goodwill. Substantially, this
        goodwill has been recorded in connection with the series of acquisitions
        completed by us since January 1, 2004. GAAP requires that we assess the fair
        values of acquired entities at least annually in order to identify any
        impairment in the values. We perform our annual impairment tests for goodwill
        at
        fiscal year-end. However, on a quarterly basis, we are alert for events or
        circumstances that would more likely than not reduce the fair value of a
        reporting segment below its carrying amount. If we determine that the fair
        value
        of an acquired entity is less than the net assets of the entity, including
        goodwill, an impairment loss would be identified and recorded at that time.
 
 During
        the three months ended December 31, 2005, both the Internet and voice services
        segments incurred operating losses that were not expected. As a result,
        management reviewed the carrying values of the assets of these segments and
        determined that an adjustment for goodwill impairment was appropriate at
        December 31, 2005. The Company recorded an impairment charge in the amount
        of
        $3,764,429, including $1,945,519 relating the Internet service companies
        and
        $1,818,910 related to Affinity. The negative customer churn of dial-up Internet
        access customers has exceeded management’s expectations, contributing to the net
        loss incurred by this segment during the most recent quarter. The Company
        has
        experienced a significant and steady loss of Affinity customers, and incurred
        bad debt losses at a greater rate than in our other CLEC companies. The
        impairment charge represented approximately 12.8% and 73.0% of the goodwill
        related to the Internet service companies (excluding InReach) and Affinity,
        respectively.
 
 44
 Future
        assessments of the acquisition fair values could identify material impairment
        losses resulting in substantial write-offs of goodwill. Such adjustments
        could
        have material adverse effects on our results of operations and our financial
        position, and could impede our ability to raise capital and/or to make
        acquisitions.
 
 **If
        We Are Unable to Successfully Acquire the Necessary Equipment, the Deployment
        and Management of Our Wireless Networks Could Be Delayed**
 
 The
        successful deployment and management of a broadband wireless network, like
        the
        Tempe network, depends on our ability to obtain the necessary technical
        equipment and to acquire such equipment when needed at prices and on terms
        acceptable to us. Required equipment includes antennas, transmitters and
        network
        routers. For the Tempe network, we have been able to successfully obtain
        such
        equipment. We currently expect that capital expenditures for the Tempe network
        will approximate $2,200,000; as of December 31, 2005, we had incurred such
        costs
        of approximately $839,000. However, there can be no assurance that our
        purchasing efforts will continue to be successful. If we are unable to acquire
        the remainder of the equipment necessary for the successful completion of
        the
        Tempe wireless network when needed, or are unable to purchase equipment for
        future networks, all at prices and on terms acceptable to us, the deployment,
        ownership and management of broadband wireless networks could be delayed.
 
 **The
        Unavailability of Telecommunication Lines Could Threaten Our Business**
 
 Our
        ability to deliver good quality services at competitive prices depends on
        our
        ability to obtain access to T-l and dial-up lines pursuant to pricing and
        other
        terms that are acceptable to us. Access to these lines necessary for providing
        services to a significant portion of our subscribers is obtained from incumbent
        local exchange carriers like Verizon, SBC and Bell South. In 2005, we have
        been
        successful in reaching certain important agreements with each of these carriers
        providing us with opportunities to expand services and the geographic coverage
        of such services and predictable prices, avoiding any interruption in service
        to
        our customers. In the event that any of the carriers would b e unable or
        unwilling to provide service to us, even if legally required to do so, our
        ability to service existing customers or add new customers could be adversely
        impaired in a material manner.
 
 **Our
        Payphone Division’s Revenue Is Subject to Seasonal Variations**
 
 Davel's
        revenue from pay telephone operations is affected by seasonal variations.
        Since
        many of its pay telephones are installed outdoors, weather patterns have
        differing effects on our revenue depending upon the region of the country
        where
        the pay telephones are located. For example, the pay telephones installed
        and
        operated throughout the Midwestern and eastern United States produce their
        highest call volumes during the second and third calendar quarters, when
        the
        climate tends to be more favorable. Currently, approximately 22% of our 36,000
        payphones are located in these regions of the country. Unusually severe weather
        in these regions could exacerbate the seasonal variations in revenues resulting
        in adverse effects on our business. In addition, changes in the geographic
        distribution of Davel's pay telephones in the future may result in differing
        seasonal variations in our operating results.
 
 **Item
        3. Controls and Procedures.**
 
 Under
        the
        supervision and with the participation of our management, including our Chief
        Executive Officer (CEO) and Chief Financial Officer (CFO), we conducted an
        evaluation of our disclosure controls and procedures (as defined in Rules
        13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of
        the end
        of the period covered by this Quarterly Report on Form 10-QSB. Based upon
        that
        evaluation, our CEO and our CFO have concluded that the design and operation
        of
        our disclosure controls and procedures were effective to ensure that information
        required to be disclosed by us in reports that we file or submit under the
        Exchange Act is recorded, processed, summarized and reported within the time
        periods specified in the rules and forms of the Securities and Exchange
        Commission and that information required to be disclosed in the reports that
        we
        file or submit under the Exchange Act is accumulated and communicated to
        management, including our principal executive and financial officers, to
        allow
        timely decisions regarding required disclosure.
 
 There
        have been no changes in our internal controls over financial reporting that
        occurred during the period covered by this Quarterly Report on Form 10-QSB
        that
        have materially affected, or are reasonably likely to materially affect,
        our
        internal controls over financial reporting.
 
 45
  
 **PART
        II**
 **OTHER
        INFORMATION**
 
 **Item
        1. Legal Proceedings.**
 
 As
        of
        December 31, 2005, the Company was party to the following material legal
        proceedings.
 
 1)
        At the
        time that we acquired Davel, there was existing litigation brought against
        Davel
        and other defendants regarding a claim associated with certain alleged patent
        infringement. Davel has been named as a defendant in a civil action captioned
        Gammino v. Cellco Partnership d/b/a Verizon Wireless, et al., C.A. No. 04-4303
        filed in the United States District Court for the Eastern District of
        Pennsylvania. The plaintiff claims that Davel and other defendants allegedly
        infringed its patent involving the prevention of fraudulent long-distance
        telephone calls. Davel continues to review and investigate the allegations
        set
        forth in the complaint, continues to assess the validity of the Gammino Patents
        and is in the process of determining whether the technology purchased by
        Davel
        from third parties infringes upon the Gammino Patents. The plaintiff is seeking
        monetary relief of at least $7,500,000. The case is in the discovery phase
        of
        the litigation.
 
 According
        to the terms of the Davel acquisition, the former secured lenders of Davel,
        subject to certain limitations addressed below , have agreed to reimburse
        the
        Company for the litigation cost and any losses resulting from the Gammino
        lawsuit. The former secured lenders have agreed to fund such costs from future
        Regulatory Receipts that were assigned to them by Davel. The Regulatory Receipts
        are being deposited into a third-party escrow account and used to reimburse
        the
        Company for costs incurred in connection with the litigation. The secured
        lenders are not required to fund the escrow account or otherwise reimburse
        the
        Company for amounts, if any, in excess of actual Regulatory Receipts collected.
        Any amount remaining in the escrow account at the conclusion of the litigation
        is to be distributed to the former secured lenders. Subsequent to March 31,
        2005, the Company has received significant Regulatory Receipts, which are
        being
        held in escrow. These funds can be used to reimburse the Company for costs
        incurred in defending or settling the litigation matter. We believe that
        there
        are sufficient funds in the escrow account to pay our costs associated with
        this
        litigation. There is a potential exposure of the Company to the $7,500,000
        claim
        in the event that the Regulatory Receipts that are being held in escrow are
        insufficient to cover any potential judgment against the Company should it
        be
        found liable for the full monetary amount the plaintiff is seeking.
 
 2)
        On
        September 10, 2004, CloseCall was served a complaint in an action captioned
        Verizon Maryland Inc., Verizon New Jersey Inc., and Verizon Delaware Inc.
        in the
        Circuit Court for Montgomery County, Maryland. Verizon has sued for “in excess
        of $1,000,000” based on alleged unpaid invoices for services provided to
        CloseCall. Verizon asserts that CloseCall has underpaid the Federal Subscriber
        Line Charges billed by Verizon, by applying an uncollectible factor to the
        amounts charged by Verizon. In addition, Verizon contends that CloseCall
        has
        underpaid the amounts owed to Verizon by misapplying the terms of the “merger
        discount” offered to CLECs, including CloseCall, as a result of the merger
        between Bell Atlantic and GTE. CloseCall filed an Answer and Counterclaims
        against Verizon on November 1, 2004. In response to the Complaint filed by
        Verizon, CloseCall has asserted two primary defenses. First, CloseCall contends
        that its resale agreements with Verizon allow CloseCall to either (a) pay
        Verizon the Subscriber Line Charges billed or (b) collect the Subscriber
        Line
        Charges from CloseCall’s customers and remit those collections to Verizon.
        CloseCall has opted to collect the Subscriber Line Charges from its customers
        and remit those sums to Verizon. As with payments made to taxing authorities,
        CloseCall applies its uncollectible factor to the amounts billed by Verizon
        for
        the Subscriber Line Charges to account for the portion of CloseCall’s subscriber
        base that does not pay for the services billed. Second, with regard to the
        merger discount, CloseCall has calculated the amounts owed to Verizon for
        resold
        telecommunications services by applying the terms of the promotional discount
        set forth on Verizon’s website at the time CloseCall opted into the discount in
        January 2001. At that time, CloseCall’s account manager at Verizon represented
        that the website included the applicable merger discount provisions.
        Subsequently, and without notice to CloseCall, Verizon added new and different
        conditions that attempted to limit the application of the merger discount
        to
        CloseCall.
 
 46
 CloseCall
        has also filed counterclaims against Verizon. The first claim stems from
        Verizon’s refusal to resell certain bundled telecommunications services to
        CloseCall, despite repeated requests by CloseCall and the requirements of
        the
        Communications Act of 1934, as amended. In addition, CloseCall has asserted
        damages as a result of Verizon’s entry into secret resale agreements with two
        CLECs, offering those companies deep discounts on telecommunications services
        not offered to other CLECs, including CloseCall. The basis for this counterclaim
        is SEC regulations that prohibit an incumbent carrier from offering different
        rates or different levels of discounts to similarly situated CLECS. The damages
        associated with this claim will be determined by data and information that
        has
        not yet been produced by Verizon. CloseCall has asserted damages as a result
        of
        Verizon’s failure to provide dialing parity to CloseCall’s customers. The
        damages claimed will depend on data that has not yet been produced by Verizon.
        CloseCall has asserted a claim for tortious interference with business relations
        as a result of Verizon’s policy of blocking local service change orders for any
        customer that also receives DSL service from or through Verizon. CloseCall
        has
        also made a declaratory judgment claim for inaccurate and improper billings
        by
        Verizon, including carrier access billing service charges. Currently, the
        parties are in discovery. While CloseCall believes that its counterclaims
        against Verizon are valid and that it has meritorious defenses to the
        allegations contained in the complaint and intends to vigorously prosecute
        the
        claims as well as defend itself, CloseCall cannot at this time predict its
        likelihood of success on the merits.
 
 **Item
        2. Changes in Securities.**
  In
        October 2005, the Company completed the conversion of debentures and other
        amounts owed to the former owners of The River with the issuance of 1,846,733
        shares of common stock to the note holders.
 
 In
        November 2005, the Company issued 4,357,798 shares of its common stock in
        connection with its acquisition of InReach.
 
 In
        December 2005, the Company issued 300,000 shares of its common stock, valued
        at
        $58,500, in connection with the receipt of investment banking
        services.
 
 During
        the nine months ended December 31, 2005, the Company issued 55,000,000 shares
        of
        common stock to the escrow agent for use in the conversion of borrowings
        made
        under the SEDA.
 
 In
        November 2005 and pursuant to our 2001 Equity Performance Plan, we awarded
        options to purchase 6,696,000 shares of our common stock to our employees.
        The
        stock options are exercisable at a purchase price of $0.22 per share. 50%
        of the
        stock options will vest in equal installments on March 31, 2006, 2007 and
        2008;
        the remaining 50% will vest depending on our achievement of a certain EBITDA
        amount and the employees achieving certain other objectives during the fiscal
        year ending March 31, 2007.
 
 **Item
        3. Defaults upon Senior Securities.**
 
 There
        were no defaults upon senior securities during the three months ended December
        31, 2005.
 
 **Item
        4. Submission of Matters to a Vote of Security Holders.**
  There
        were no matters submitted to the stockholders for a vote during the three
        months
        ended December 31, 2005.
 
 **Item
        5. Other Information.**
  Not
        applicable.
 
 47
 **Item
        6. Exhibits.**
  **Exhibit
                No.**
              **Description**
              
              **Location**2.1
              Agreement
                  and Plan of Merger by and among Registrant, Neoreach, Inc., Transcordia
                  Acquisition Corp., Transcordia, LLC and its Unit Holders, dated
                  April
                  2005
              
              Incorporated
                  by reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed August
                  15, 2005.2.2
              Agreement
                  and Plan of Merger by and among Registrant, Neoreach, Inc., Neoreach
                  Wireless, Inc., Evergreen Open Broadband Corporation, and Certain
                  Shareholders
              
              Incorporated
                  by reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed August
                  15, 2005.2.3
              Agreement
                  and Plan of Merger, dated June 30, 2005, by and among the Registrant,
                  AFN
                  Acquisition Corp., American Fiber Network, Inc. and the Bethell
                  Family
                  Trust
              
              Incorporated
                  by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K
                  filed on July 6, 2005.10.1
              Amendment
                  No. 1 to Employment Agreement between Davel Communications, Inc.
                  and Tammy
                  L. Martin, dated April 20, 2005
              
              Incorporated
                  by reference to Exhibit 10.29 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.2
              Amendment
                  No. 2 to Employment Agreement between Davel Communications, Inc.
                  and Tammy
                  L. Martin, dated May 26, 2005
              
              Incorporated
                  by reference to Exhibit 10.30 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.3
              Amended
                  and Restated Executive Employment Agreement, dated June 16, 2005
                  between
                  Jay O. Wright and the Company
              
              Incorporated
                  by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
                  8-K filed on June 20, 2005.10.4
              Amended
                  and Restated Executive Employment Agreement, dated June 16, 2005
                  between
                  Kurt Gordon and the Company
              
              Incorporated
                  by reference to Exhibit 10.32 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.5
              Amended
                  and Restated Executive Employment Agreement, dated June 16, 2005
                  by and
                  among the Company, CloseCall America, Inc. and Tom
                  Mazerski
              
              Incorporated
                  by reference to Exhibit 10.33 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.6
              Amended
                  and Restated Executive Employment Agreement, dated June 16, 2005,
                  between
                  Geoffrey Amend and the Company
              
              Incorporated
                  by reference to Exhibit 10.34 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.7
              Securities
                  Purchase Agreement, dated as of May 13, 2005, by and between the
                  Company
                  and Cornell Capital
              
              Incorporated
                  by reference to Exhibit 10.35 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.8
              Secured
                  Convertible Debenture, issued on May 13, 2005 by the Company to
                  Cornell
                  Capital
              
              Incorporated
                  by reference to Exhibit 10.36 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.9
              Amended
                  and Restated Collateral Assignment of Intellectual Property Rights,
                  made
                  as of May 13, 2005, by and among the Company, the Company subsidiaries
                  identified therein and Cornell Capital
              
              Incorporated
                  by reference to Exhibit 10.37 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.10
              Amended
                  and Restated Security Agreement, dated as of May 13, 2005, by and
                  among
                  the Company, the Company subsidiaries identified therein and Cornell
                  Capital
              
              Incorporated
                  by reference to Exhibit 10.38 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.11
              Investor
                  Registration Rights Agreement, dated as of May 13, 2005 by and
                  between the
                  Company and Cornell Capital
              
              Incorporated
                  by reference to Exhibit 10.39 to the Registrant’s Form 10-KSB filed June
                  28, 2005.
   48
   10.12
              Amended
                  and Restated Guaranty Agreement, dated as of May 13, 2005, made
                  by each of
                  the direct and indirect subsidiaries of the Company in favor of
                  Cornell
                  Capital
              
              Incorporated
                  by reference to Exhibit 10.40 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.13
              Warrant
                  issued by the Company to Cornell Capital dated May 13,
                  2005
              
              Incorporated
                  by reference to Exhibit 10.41 to the Registrant’s Form 10-KSB filed June
                  28, 2005.10.14
              Master
                  Agreement for Services between Sprint Communications Company L.P.
                  and Kite
                  Broadband, LLC, dated May 20, 2005*
              
              Incorporated
                  by reference to Exhibit 2.1 to the Registrant’s Form 10-QSB filed August
                  15, 2005.10.15
              Executive
                  Employment Agreement dated September 1, 2005, between James L.
                  Magruder,
                  Jr. and the Company
              
              Incorporated
                  by reference to Exhibit 10.1 to the Registrant’s Current Report on Form
                  8-K filed September 9, 2005.10.16
              Executive
                  Employment Agreement dated February 1, 2006, between Jerry M. Sullivan,
                  Jr. and the Company
              
              Incorporated
                  by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed February
                  13, 2006.20.1
              Letter
                  from Jay O. Wright, President and Chief Executive Officer of the
                  Company
                  to the Stockholders, dated April 21, 2005
              
              Incorporated
                  by reference to Exhibit 99.1 to the Registrant’s Current Report on Form
                  8-K filed on April 26, 200521.1
              Subsidiaries
                  of Registrant
              
              Provided
                  herewith.31.1
              Certification
                  by Jay O. Wright, Chief Executive Officer, pursuant to Rule
                  13a-14(a)
              
              Provided
                  herewith.31.2
              Certification
                  by Kurt Gordon, Chief Financial Officer, pursuant to Rule
                  13a-14(a)
              
              Provided
                  herewith.32.1
              Certification
                  by Jay O. Wright and Kurt Gordon, pursuant to 18 U.S.C. Section
                  1350, as
                  adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002**
              
              Provided
                  herewith.
 
 *
        Confidential treatment has been requested for certain portions of this document
        pursuant to an application for confidential treatment sent to the Securities
        and
        Exchange Commission. Such portions are omitted from this filing and filed
        separately with the Securities and Exchange Commission.
 
 *
        * These
        certifications are not deemed filed by the SEC and are not to be incorporated
        by
        reference in any filing of the Registrant under the Securities Act of 1933
        or
        the Securities Exchange Act of 1934, irrespective of any general incorporation
        language in any filings.
 
 49
 
 
 **SIGNATURES**
 
 In
        accordance with the requirements of the Exchange Act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 **MOBILEPRO
                CORP.**Date: February
                14, 2006
              By:
              /s/ Jay
                O.
                WrightJay
                O.
                Wright, Chief Executive Officer
 Date: February
                14, 2006
              By:
              /s/ Kurt
                GordonKurt
                Gordon, Chief Financial Officer
  
 50