**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 September 30, 2005**
 
 **Commission
        File Number** **000-51010**
 
 **MOBILEPRO
        CORP.**
 (Exact
        name of registrant as specified in charter)
  **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
oNo
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 November 10, 2005, the Company had
        421,861,236 outstanding shares of its common stock, $0.001 par value per
        share.
 
 1
 
  **TABLE
        OF CONTENTS**
 
 **ITEM
                  NUMBER AND CAPTION**
              **PAGE****PART
                  I**ITEM 1.
              
              FINANCIAL
                  STATEMENTS
              3NOTES
                  TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
              8ITEM 2.
              
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
                  CONDITION
              23ITEM 3
              
              CONTROLS
                  AND PROCEDURES
              38**PART
                  II**ITEM 1.
              
              LEGAL
                  PROCEEDINGS
              39ITEM 2.
              
              CHANGES
                  IN SECURITIES
              40ITEM 3.
              
              DEFAULTS
                  UPON SENIOR SECURITIES
              40ITEM 4.
              
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              40ITEM 5.
              
              OTHER
                  INFORMATION
              41ITEM 6.
              
              EXHIBITS
              41
   2
 
 **PART
        I**
 **FINANCIAL
        INFORMATION**
  **Item
        1. Financial Statements.**
  MOBILEPRO
        CORP. AND
        SUBSIDIARES
 CONDENSED
        CONSOLIDATED BALANCE
        SHEETS
 MARCH
        31, 2005 AND SEPTEMBER 30,
        2005
    **ASSETS****March
                  31,**
              
              **September
                  30,****2005**
              
              **2005****(audited)**
              
              **(unaudited)****CURRENT
                  ASSETS**Cash and cash equivalents
              
              $
              4,669,787
              
              $
              7,860,528Restricted cash
              
              
              429,954
              
              
              337,200Accounts receivable, net
              
              
              12,658,313
              
              
              13,325,598Prepaid expenses and other current assets
              
              
              2,511,697
              
              
              2,887,045**Total
                  Current Assets**
              
              
              20,269,751
              
              
              24,410,371FIXED
                    ASSETS, NET OF ACCUMULATED DEPRECIATION
              
              
              13,193,056
              
              
              13,690,178**OTHER
                  ASSETS**Goodwill, net of impairment
              
              
              32,579,099
              
              
              37,492,479Customer contracts and relationships, net of amortization
              
              
              2,965,456
              
              
              8,954,928Other intangible assets, net of amortization
              
              
              1,511,005
              
              
              572,415Deferred financing fees, net of amortization
              
              
              1,026,667
              
              
              586,667Other assets
              
              
              1,277,897
              
              
              1,453,78039,360,124
              
              
              49,060,269**TOTAL
                  ASSETS**
              
              $
              72,822,931
              
              $
              87,160,818




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






3




MOBILEPRO
          CORP. AND
          SUBSIDIARES
 CONDENSED
          CONSOLIDTED BALANCE SHEETS
          (CONTINUED)
 MARCH
          31, 2005 AND SEPTEMBER 30,
          2005
 **LIABILITIES
                  AND STOCKHOLDERS' EQUITY****March
                  31,**
              
              **September
                  30,****2005**
              
              **2005****(audited)**
              
              **(unaudited)****CURRENT
                  LIABILITIES**Current portion of convertible debenture
              
              $
              -
              
              $
              3,000,000Notes payable under the Standby Equity Distribution Agreement (
                  the
                  "SEDA")
              
              
              6,500,000
              
              
              2,950,000Current portion of other notes payable
              
              
              19,035,263
              
              
              4,466,124Accounts payable and accrued expenses
              
              
              19,863,088
              
              
              18,063,184Liability for common stock to be issued
              
              
              -
              
              
              422,513Deferred revenue
              
              
              3,470,731
              
              
              3,910,217**Total
                  Current Liabilities**
              
              
              48,869,082
              
              
              32,812,038**LONG-TERM
                  LIABILITIES**Convertible debenture, net of unamortized debt discount of $701,775
                  andcurrent
                  portion
              
              
              -
              
              
              11,798,225Notes payable and other long-term liabilities, net of current
                  maturities
              
              
              999,196
              
              
              821,725**Total
                  Long-Term Liabilities**
              
              
              999,196
              
              
              12,619,950**TOTAL
                  LIABILITIES**
              
              
              49,868,278
              
              
              45,431,988**MINORITY
                  INTERESTS**
              
              
              600,000
              
              
              3,817,708**STOCKHOLDERS'
                  EQUITY**Preferred stock, $.001 par value, 20,035,425 shares
                  authorizedand
                  35,378 shares issued and outstanding at March 31, 2005and
                  September 30, 2005
              
              
              35
              
              
              35Common stock, $.001 par value, 1,500,000,000 shares authorizedand
                  355,918,011 and 405,656,705 shares issued and outstandingat
                  March 31, 2005 and September 30, 2005
              
              
              355,918
              
              
              405,657Additional paid-in capital
              
              
              43,195,250
              
              
              57,758,888Accumulated deficit, beginning of period
              
              
              (15,836,828
              )
              
              (21,196,550
              )Net income (loss) for the period
              
              
              (5,359,722
              )
              
              943,092**Total
                  Stockholders' Equity**
              
              
              22,354,653
              
              
              37,911,122**TOTAL
                  LIABILITIES AND STOCKHOLDERS' EQUITY**
              
              $
              72,822,931
              
              $
              87,160,818




The
        accompanying notes are an integral part of the condensed consolidated financial
        statements.
 
 4
   **MOBILEPRO
        CORP. AND SUBIDIARIES**
 **CONDENSED
        CONSOLIDATED STATEMENTS OF OPERATIONS**
 **(unaudited)**
  
 **For
                  the Three Months Ended**
              
              **For
                  the Six Months Ended****September
                  30,**
              
              **September
                  30,****2004**
              
              **2005**
              
              **2004**
              
              **2005****REVENUES**
              
              $
              4,968,069
              
              $
              26,546,650
              
              $
              6,138,233
              
              $
              49,052,495**OPERATING
                  COSTS AND EXPENSES**Cost of services (exclusive of depreciation and
                  amortization)
              
              
              2,167,373
              
              
              11,654,395
              
              
              2,525,312
              
              
              22,676,257Payroll, professional fees and related expenses
              
              
              3,615,240
              
              
              5,520,895
              
              
              4,525,291
              
              
              9,199,547Advertising and marketing expenses
              
              
              111,259
              
              
              799,193
              
              
              166,637
              
              
              1,317,857Office rent and expenses
              
              
              125,121
              
              
              462,879
              
              
              152,530
              
              
              892,820Other general and administrative expenses
              
              
              215,368
              
              
              5,697,025
              
              
              449,784
              
              
              10,380,007Depreciation and amortization
              
              
              384,218
              
              
              1,047,319
              
              
              497,495
              
              
              1,869,696**Total
                  Operating Costs and Expenses**
              
              
              6,618,579
              
              
              25,181,706
              
              
              8,317,049
              
              
              46,336,184**OPERATING
                  INCOME (LOSS)**
              
              
              (1,650,510
              )
              
              1,364,944
              
              
              (2,178,816
              )
              
              2,716,311**INTEREST
                  EXPENSE, NET**
              
              
              (97,251
              )
              
              (698,335
              )
              
              (326,384
              )
              
              (1,630,510
              )**MINORITY
                  INTERESTS IN NET (INCOME)/LOSS OF****CONSOLIDATED SUBSIDIARIES**
              
              
              -
              
              
              (142,709
              )
              
              -
              
              
              (142,709
              )**NET
                  INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES**
              
              
              (1,747,761
              )
              
              523,900
              
              
              (2,505,200
              )
              
              943,092**Provision for Income Taxes**
              
              
              -
              
              
              -
              
              
              -
              
              
              -**NET
                  INCOME (LOSS) APPLICABLE TO COMMON SHARES**
              
              $
              (1,747,761
              )
              $
              523,900
              
              $
              (2,505,200
              )
              $
              943,092**NET
                  INCOME (LOSS) PER SHARE**Basic
              
              $
              (0.0067
              )
              $
              0.0014
              
              $
              (0.0102
              )
              $
              0.0025Diluted
              
              $
              (0.0067
              )
              $
              0.0012
              
              $
              (0.0102
              )
              $
              0.0023**WEIGHTED
                  AVERAGE NUMBER OF COMMON****SHARES OUTSTANDING**
              
              
              260,374,993
              
              
              388,001,055
              
              
              246,403,262
              
              
              374,464,022




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






5






**MOBILEPRO
        CORP. AND SUBSIDIARIES**
 **CONDENSED
        CONSOLIDATED STATMENTS OF CASH FLOWS**
 **(unaudited)**
  
 **For
                  the Six Months Ended****September
                  30,****2004**
              
              **2005****CASH
                  FLOWS FROM OPERATING ACTIVITIES**Net income (loss)
              
              $
              (2,505,200
              )
              $
              943,092**Adjustments to reconcile net income (loss) to net
                  cash****provided
                  by
                  (used in) operating activities:**Depreciation
                  and amortization
              
              
              497,495
              
              
              1,869,686Noncash
                  interest expense
              
              
              285,129
              
              
              352,597Minority
                  interests
              
              
              -
              
              
              142,709Investments
                  received for services
              
              
              (450,000
              )
              
              -Other
              
              
              15,000
              
              
              38,032**Changes in assets and liabilities**(Increase)
                  in
                  accounts receivable
              
              
              (490,467
              )
              
              (639,113
              )(Increase)
                  decrease in other current assets
              
              
              (110,210
              )
              
              435,625(Increase)
                  in
                  other assets
              
              
              (45,194
              )
              
              (687,992
              )Increase
                  (decrease) in accounts payable andand accrued expenses
              
              
              695,452
              
              
              (2,230,804
              )Increase
                  in
                  deferred revenue
              
              
              638,223
              
              
              439,486Total
                  adjustments
              
              
              1,035,428
              
              
              (279,774
              )**Net
                  cash provided by (used in) operating activities**
              
              
              (1,469,772
              )
              
              663,318**CASH
                  FLOWS FROM INVESTING ACTIVITIES**Acquisition of intangible assets
              
              
              -
              
              
              (6,778,129
              )Cash paid for acquisitions
              
              
              (11,535,500
              )
              
              (2,773,122
              )Cash received in acquisition of subsidiaries
              
              
              443,516
              
              
              748,476Capital expenditures, net
              
              
              (77,995
              )
              
              (1,641,539
              )**Net
                  cash (used in) investing activities**
              
              
              (11,169,979
              )
              
              (10,444,314
              )**CASH
                  FLOWS FROM FINANCING ACTIVITIES**Borrowings under convertible debenture
              
              
              -
              
              
              15,500,000Repayment of acquisition bridge loan
              
              
              -
              
              
              (13,000,000
              )Borrowings under the equity line of credit and the SEDA
              
              
              9,000,000
              
              
              4,200,000Investment by minority interests
              
              
              -
              
              
              3,675,000Borrowings/(payments) under other notes payable, net
              
              
              10,458,740
              
              
              3,744,341Debt financing fees
              
              
              -
              
              
              (1,295,000
              )SEDA conversion fees
              
              
              -
              
              
              (375,500
              )Increase in other long-term liabilities
              
              
              -
              
              
              522,896Proceeds from common stock issuances
              
              
              84,499
              
              
              -**Net
                  cash provided by financing activities**
              
              $
              19,543,239
              
              $
              12,971,737




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


6
 
   **MOBILEPRO
            CORP. AND SUBSIDIARIES**
 **CONDENSED
            CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)**
 **(unaudited)**
   **For
                      the Six Months Ended****September
                      30,****2004**
                  
                  **2005****NET
                      INCREASE IN CASH AND CASH EQUIVALENTS**
                  
                  $
                  6,903,488
                  
                  $
                  3,190,741**CASH
                      AND CASH EQUIVALENTS - BEGINNING OF YEAR**
                  
                  
                  1,955,607
                  
                  
                  4,669,787**CASH
                      AND CASH EQUIVALENTS - END OF PERIOD**
                  
                  $
                  8,859,095
                  
                  $
                  7,860,528**SUPPLEMENTAL
                      DISCLOSURE OF CASH FLOW****INFORMATION:**Cash
                      paid during the period for interest
                  
                  $
                  28,757
                  
                  $
                  1,034,928**SUPPLEMENTAL
                      DISCLOSURE OF NONCASH****ACTIVITIES:**Issuance
                      of
                      common stock for:Conversion of notes payable and accrued interest to common
                      stock
                  
                  $
                  5,200,000
                  
                  $
                  13,808,841Acquisition of Evergreen Broadband
                  
                  $
                  -
                  
                  $
                  231,073Acquisition of WazAlliance
                  
                  $
                  -
                  
                  $
                  135,333Conversion of payables to common stock
                  
                  $
                  90,000
                  
                  $
                  -Debt financing fees paid in common stock
                  
                  $
                  1,760,000
                  
                  $
                  -Transfer
                      of
                      notes payable to the SEDA
                  
                  $
                  -
                  
                  $
                  7,200,000Goodwill
                      recorded in acquisitions
                  
                  $
                  16,063,690
                  
                  $
                  2,277,840Liability
                      for
                      common stock to be issued
                  
                  $
                  500,000
                  
                  $
                  422,513Amortization
                      of
                      SEDA deferred financing fees
                  
                  $
                  -
                  
                  $
                  440,000Adjustment
                      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**
 **SEPTEMBER
          30, 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
          technology. 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
          and its
          acquired Internet service provider subsidiaries. The Company’s wireless networks
          operations are conducted primarily in Phoenix, Arizona, by a wholly owned
          subsidiary, NeoReach, Inc. (“NeoReach”), and its subsidiary, NeoReach Wireless,
          Inc.
 
 **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.
 
 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.
 
 8
 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 AFN, a CLEC that is licensed to provide local
          telephone, long distance and/or Internet services throughout the United
          States,
          for consideration of $3,000,000, including 10,000,000 shares of Mobilepro
          common
          stock and a cash payment of $1,500,000. The Company also assumed liabilities
          totaling $1,549,784 including $1,337,103 payable to a related party company
          that
          supplies 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.
 
 **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 12) 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 six
          months ended September 30, 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 September 30, 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
          from product sales that contain embedded software is recognized in accordance
          with the provisions of the American Institute of Certified Public Accountants
          Statement of Position 97-2, “Software Revenue Recognition.” Accordingly, revenue
          related to shipments to credit-worthy customers without the collection
          of any
          portion of the corresponding fees being dependent on a future event is
          recorded
          at the time of shipment. The Company may grant extended payment terms to
          customers without established credit. Revenue related to shipments to such
          customers is recorded only upon the receipt of cash until a significant
          portion
          of the sales price is received. The Company considers the recognition of
          revenue
          related to shipments to value-added-resellers to be dependent upon the
          occurrence of a future event. Accordingly, revenue is deferred until a
          significant portion of the sales price is received in cash. On certain
          transactions, payment by the customer is contingent upon installation or
          acceptance. Until it is accepted, the customer may have a right to return
          the
          product. The Company does not recognize revenue on these transactions until
          these related rights have lapsed. Certain of the Company’s product are sold with
          accompanying maintenance/service contracts. The Company allocates revenue
          to
          such maintenance/service contracts based on vendor-specific objective evidence
          of fair value as determined by the Company’s contract renewal rates. Revenue
          related to maintenance/service contracts 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 are adjusted based
          on
          actual receipts and/or the subsequent revision of prior estimates.
 
 **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 September 30, 2004 and 2005, respectively,
          and
          amortization of approximately $293,000 and $440,000 in the six-month periods
          ended September 30, 2004 and 2005, respectively. The 5% fee paid to Cornell
          Capital and others at the time that funds are drawn under the SEDA, amounting
          to
          $60,500 in the three-month period ended September 30, 2005, and amounting
          to
          $375,500 in the six-month period ended September 30, 2005, were charged
          to
          additional paid-in-capital. The 2% discount provided to Cornell Capital
          upon the
          conversion of SEDA notes payable to shares of common stock, $67,895 and
          $112,109
          in the three-month periods ended September 30, 2004 and 2005, respectively,
          and
          $285,129 and $207,067 in the six-month periods ended September 30, 2004
          and
          2005, respectively, were included in interest expense.
 
 10
 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 Partners
          and
          the early retirement of the bridge loan (see Note 5). These costs, including
          fees paid in cash to Cornell Partners, were charged to additional
          paid-in-capital.
 
 **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 income (loss) per
          share would have been stated at the following pro forma amounts for the
          six-month periods ended September 30, 2004 and 2005:
  **For
                        the Six Months Ended September 30,****2004**
                    
                    
                    **2005**Net
                        income (loss), as reported
                    
                    $
                    (2,505,200
                    )
                    
                    $
                    943,092Add:
                        Stock-based employee compensation expense included in reported
                        net income
                        (loss)
                    
                    
                    -
                    
                    
                    
                    -Deduct:
                        Total stock-based employee compensation expense determined
                        under fair
                        value based method for all awards
                    
                    
                    (6,004,019
                    )
                    
                    
                    (1,900,247
                    )Pro
                        forma net loss
                    
                    $
                    (8,509,219
                    )
                    
                    $
                    (957,155
                    )Net
                        income (loss) per share:Diluted,
                        as reported
                    
                    $
                    (0.0102
                    )
                    
                    $
                    0.0023Diluted,
                        pro forma
                    
                    $
                    (0.0345
                    )
                    
                    $
                    (0.0026
                    )
 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 September 30, 2004 and 2005:
 **2004**
                    
                    
                    **2005**Dividend
                        yield
                    
                    None
                    
                    NoneExpected
                        volatility
                    
                    
                    60
                    %
                    
                    
                    60
                    %Risk-free
                        interest rate
                    
                    
                    4.50
                    %
                    
                    
                    3.00
                    %Expected
                        term (in years)
                    
                    
                    10.00
                    
                    
                    
                    10.00
 
 For
          stock
          options granted during the six-month periods ended September 30, 2004 and
          2005,
          the weighted-average grant-date fair value was $0.19 per share and $0.20
          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 September 30, 2005, property, plant and equipment was as
            follows:
  **Estimated**
                      **Useful**
                      **Lives****(****in********years)**
                    
                    **March
                        31,**
                      **2005**
                    
                    **September
                        30,******
                      **2005**(audited)
                    
                    (unaudited)Furniture
                        and fixtures
                    
                    
                    7
                    
                    $
                    387,861
                    
                    $
                    422,177Machinery
                        and equipment
                    
                    
                    5
                    
                    
                    13,584,088
                    
                    
                    15,745,595Leasehold
                        improvements
                    
                    
                    7
                    
                    
                    263,452
                    
                    
                    343,077Vehicles
                    
                    
                    5
                    
                    
                    287,733
                    
                    
                    208,417Subtotals
                    
                    
                    
                    
                    
                    14,523,134
                    
                    
                    16,719,266Less
                        accumulated depreciation
                    
                    
                    
                    
                    
                    (
                        1,330,078
                    )
                    
                    (
                        3,029,088
                    )Fixed
                        assets, net
                    
                    
                    
                    
                    $
                    13,193,056
                    
                    $
                    13,690,178
 The
          Company recorded depreciation expense of $126,235 and $691,596 for the
          three-month periods ended September 30, 2004 and 2005, respectively, and
          depreciation expense of $166,179 and $1,329,000 for the six-month periods
          ended
          September 30, 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
          September 30, 2005, prepaid expenses and other assets included balances
          of
          $258,693 and $693,124, respectively, related to such contracts. The
          corresponding contract liability is paid typically in installments. At
          September
          30, 2005, accounts payable and long-term liabilities included balances
          of
          $341,384 and $547,941, respectively, that are payable under such contracts.
 
 **Customer
          Contracts and Relationships**
 
 In
          order
          to acquire 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. The
          purpose of the up-front payment was to acquire the existing customers and
          related revenue base, increasing the Company’s opportunity to leverage its
          broadband wireless market share. Accordingly, the entire opportunity payment,
          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 September 30, 2005, amortization
          expense
          was $165,351.
 
 This
          account also includes location contracts with net balances of $2,965,456
          and
          $2,492,501 at March 31, 2005 and September 30, 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 September 30, 2005 was
          $267,586
          and $554,203, respectively. Amortization related to location contracts
          was
          $160,317 and $320,609 for the three-month and six-month periods ended September
          30, 2005.
 
 **Goodwill
          and Other Intangible Assets**
 
 The
          Company accounts for goodwill and other intangible assets in accordance
          with
          SFAS No. 142, “Goodwill and Other Intangible Assets”. Through September 30,
          2005, the Company has recorded goodwill in the aggregate amount of $37,492,479
          in connection with its acquisitions, including $4,913,380 recorded in the
          six-month period ended September 30, 2005. The Company has also recorded
          certain
          other intangible assets in connection with the acquisitions of CloseCall,
          Davel
          and certain Internet service provider companies. The Company performs its
          annual
          impairment tests for goodwill at fiscal year-end. 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 fallen below its
          carrying amount. If the Company concludes that the fair value of an acquired
          entity is less than the net assets of the entity, including goodwill, an
          impairment loss would be determined and recorded at that time. As of September
          30, 2005, management does not believe that the Company has suffered impairment
          of goodwill.
 
 12
 **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 prepaid
          and
          other current asserts at March 31, 2005 and September 30, 2005.
 
 **Accounts
          Payable and Accrued Liabilities**
 
 At
          March
          31, 2005 and September 30, 2005 accounts payable and accrued liabilities
          consisted of the following:
 
 **March
                    31,**
                
                **September
                    30,****2005**
                
                **2005**(audited)
                
                (unaudited)Accounts
                    payable
                
                $
                16,911,370
                
                $
                12,449,588Accrued
                    compensation
                
                
                1,675,124
                
                
                1,416,110Accrued
                    interest expense
                
                
                937,378
                
                
                671,641Other
                    accrued liabilities
                
                
                339,216
                
                
                3,525,845Totals
                
                $
                19,863,088
                
                $
                18,063,184
 
 **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 six
          months
          ended September 30, 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-**  **THE
          FORMATION OF KITE BROADBAND LLC**
 
 In
          June
          2005, Kite Broadband, LLC (“Kite”) was funded with the Company making an
          investment of $3,825,000 cash and receiving 51% ownership. Minority interests
          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 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. The Company is
          entitled
          to have Sprint remit collected customer revenues in exchange for these
          services
          and is required to remit a monthly fee back to Sprint for network support
          and
          transport services. The customers remain Sprint customers during the three-year
          term of the Agreement. Upon expiration of the Agreement, the Company will
          have
          the option to acquire the then existing customers pursuant to the terms
          of the
          Agreement. All network and spectrum assets will remain Sprint property.
          Should
          the bargain purchase option be exercised, Sprint has a right of first refusal
          to
          acquire the customer base back at estimated fair value. At September 30,
          2005,
          the 49% minority ownership of Kite was included in the condensed consolidated
          balance sheet in minority interests in the amount of $3,853,354.
 
 **NOTE
          4-**  **THE
          ACQUISITION OF AFN**
 
 The
          acquisition of AFN has been accounted for under the purchase method of
          accounting. Accordingly, AFN will be treated as a wholly owned subsidiary
          of the
          Company. The following unaudited pro forma information for the three and
          six
          months ended September 30, 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
          operations.
 
 ****
  **Three
                    Months Ended September
                    30,**
                
                **Six
                    Months Ended September
                    30,****2004**
                
                **2005**
                
                **2004**
                
                **2005**Revenues
                
                $
                6,678,415
                
                $
                26,546,650
                
                $
                9,601,372
                
                $
                50,615,263Net
                    income (loss)
                
                
                (1,606,759
                )
                
                523,900
                
                
                (2,320,027
                )
                
                1,053,263Net
                    income (loss) per share:Basic
                
                
                (0.0059
                )
                
                0.0014
                
                
                (0.0090
                )
                
                0.0028Diluted
                
                
                (0.0059
                )
                
                0.0012
                
                
                (0.0090
                )
                
                0.0025
 
 **NOTE
          5-**  **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 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 the Company’s acquisition of Davel. Interest expense
          related to the retired note was $381,225 in the six-month period ended
          September
          30, 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 is due on
          November
          15, 2005; $1,500,000 is due on May 15, 2006; $1,000,000 is due on each
          of August
          15, 2006, November 15, 2006 and February 15, 2007; $2,000,000 is due on
          each of
          May 15, 2007, August 15, 2007, November 15, 2007 and February 15, 2008;
          and the
          remaining $2,500,000 is 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. 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
          will
          adjust 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
          six-month periods ended September 30, 2005, the amount of interest expense
          related to the Debenture, based on the stated interest rate, was $302,780
          and
          $460,753, respectively; the cumulative amount of the interest was included
          in
          accrued liabilities at September 30, 2005.
 
 14
 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
          Partners exceeds $4,000,000, the parties will enter 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.
 
 The
          face
          amount of the Debenture is reflected in the balance sheet at September
          30, 2005,
          net of unamortized debt discount of $701,775. 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
          six-month
          periods ended September 30, 2005 included debt discount amortization in
          the
          amounts of $100,950 and $151,425, respectively.
 
 **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 September 30, 2005, Cornell did not hold more than 9.9% of the
          then
          outstanding common stock of the Company.
 
 In
          the
          six-month periods ended September 30, 2004 and 2005, the Company transferred
          borrowings under existing notes payable to Cornell Capital to the SEDA
          in the
          amounts of $7,000,000 and $7,200,000, respectively, and advanced 35,000,000
          shares of its common stock to the escrow agent in each period in accordance
          with
          the terms of the SEDA. In the six-month periods ended September 30, 2004
          and
          2005, the Company converted $1,400,000 and $12,750,000 in borrowings under
          the
          SEDA, respectively, into 6,060,712 and 54,010,042 shares of common stock,
          respectively, that were issued to Cornell Capital by the escrow agent.
          At March
          31, 2005 and September 30, 2005, borrowings under the SEDA of $6,500,000
          and
          $2,950,000 were outstanding, respectively, and were classified in the
          accompanying balance sheets 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 $10 million
          in
          equity financing to the Company. In the six months ended September 30,
          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 six months ended September 30, 2004, 18,298,438 shares of common stock
          were
          issued to Cornell Capital under this arrangement. At March 31, 2005 and
          September 30, 2005, the equity line of credit arrangement was no longer
          in place
          and there were no outstanding borrowed amounts under this
          arrangement.
 
 **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.
 
 15
 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, is 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.
 
 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
 
 During
          the three-month and six-month periods ended September 30, 2005, the interest
          expense, including conversion discount amounts, on the notes payable to
          Cornell
          Capital, including amounts transferred to the SEDA, was $310,158 and $639,429,
          respectively. Accrued and unpaid interest at September 30, 2005 related
          to these
          notes was $460,753.
  **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 September 30, 2005, the aggregate balances due
          under
          the acquisition notes payable were $1,723,201 and $156,410, respectively.
          At
          March 31, 2005 and September 30, 2005, accrued interest amounts related
          to these
          notes were $43,066 and $2,973, respectively. During the three-month periods
          ended September 30, 2004 and 2005, interest expense amounts related to
          these
          notes payable were $29,356 and $8,434, respectively. During the six-month
          periods ended September 30, 2004 and 2005, interest expense amounts related
          to
          these notes payable were $41,255 and $14,591, 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. Accordingly, this total balance was reclassified to
          liability
          for common stock to be issued at September 30, 2005. 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.
 
 **Other
          Notes Payable and Long-Term Liabilities**
 
 The
          Company has other notes and long-term liabilities payable to banks and
          various
          other creditors and with aggregate balances due at March 31, 2005 and September
          30, 2005 of $209,357 and $1,031,440, respectively.
 
 16
 
 **Debt
            Maturities**
  A
            summary
            of the balances of notes payable and other debts at September 30, 2005
            was as
            follows (unaudited):
 
 Convertible
                    debenture payable to Cornell Capital
                
                $
                15,500,000Notes
                    payable to Cornell Capital under the SEDA
                
                
                2,950,000Notes
                    payable to Cornell Capital
                
                
                4,100,000Notes
                    payable related to acquisitions
                
                
                156,410Other
                    notes payable and long-term obligations
                
                
                1,031,44023,737,850Less:
                    Unamortized debt discount on convertible debenture
                
                
                (701,775
                )Less:
                    Amounts due within one year
                
                
                (10,416,125
                )Long-term
                    portion of debt
                
                $
                12,619,950
  At
          September 30, 2005, a summary of the future scheduled payments of the long-term
          portion of debt was as follows (unaudited):
 
 The
                    twelve-month period ending--September
                    30, 2007
                
                $
                6,489,462September
                    30, 2008
                
                
                6,810,274September
                    30, 2009
                
                
                21,989September
                    30, 2010
                
                
                -13,321,725Less
                    - Unamortized debt discount on convertible debenture
                
                
                (701,775
                )Long-term
                    portion of debt
                
                $
                12,619,950
 
 **NOTE
          6-**  **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.
 
 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.
 
 17
 **Common
          Stock Transactions in the Six-Month Period Ended September 30,
          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.
 
 During
          the six months ended September 30, 2005, the Company issued 35,000,000
          shares of
          common stock to the escrow agent for use in the conversion of borrowings
          made
          under the SEDA, and converted $12,750,000 of SEDA debt into 54,010,042
          shares of
          common stock.
 
 **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 six months ended June 30, 2005 (unaudited):
 
 **Number
                    of**
                
                **Weighted-Average****Stock
                    Options****--**
                
                **Options**
                
                **Exercise
                    Price**Outstanding
                    - March 31, 2005
                
                
                1,725,000
                
                $
                0.192Granted
                
                
                2,000,000
                
                $
                0.270Exercised
                
                
                -
                
                $
                -Cancelled
                
                
                -
                
                $
                -Outstanding
                    - September 30, 2005
                
                
                3,725,000
                
                $
                0.234Exercisable
                    - September 30, 2005
                
                
                985,416
                
                $
                0.174
 **Number
                      of**
                  
                  **Weighted-Average****Stock
                      Warrants****--**
                  
                  **Warrants**
                  
                  **Exercise
                      Price**Outstanding
                      - March 31, 2005
                  
                  
                  61,232,500
                  
                  $
                  0.117Granted
                  
                  
                  19,600,000
                  
                  $
                  0.290Exercised
                  
                  
                  -
                  
                  $
                  -Cancelled
                  
                  
                  -
                  
                  $
                  -Outstanding
                      - September 30, 2005
                  
                  
                  80,832,500
                  
                  $
                  0.159Exercisable
                      - September 30, 2005
                  
                  
                  63,281,313
                  
                  $
                  0.160
 
 **NOTE
          7-**  **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 been issued. The $422,513 liability for common stock
          to be
          issued at September 30, 2005, reflecting an obligation to issue 2,213,399
          shares
          in the aggregate, includes $53,167 relating to the acquisition of WazAlliance
          and $369,346 relating to the conversion of notes payable to the former
          owners of
          The River.
 
 18
 **NOTE
          8-**  **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. Options
          and warrants to purchase 84,557,500 shares were outstanding at September
          30,
          2005. The dilutive effect of these agreements resulted in the addition
          of
          41,914,293 and 40,930,727 shares in the computations of diluted income
          per share
          for the three and six months ended September 30, 2005, respectively. The
          dilutive effect of convertible notes payable resulted in the addition of
          8,216,171 shares in the computation of diluted income per share for the
          three
          months ended September 30, 2005. The effect of such notes for the six months
          ended September 30, 2005 was antidilutive. The effects of the assumed conversion
          of the Debenture and other convertible notes payable for the three and
          six
          months ended September 30, 2005 were also antidilutive. The computations
          of
          diluted income per share for the three-month and six-month periods ended
          September 30, 2005 was as follows (unaudited):
 
 **Three
                    Months Ended September 30, 2005**
                
                **Six
                    Months Ended September 30, 2005**Net
                    income
                
                $
                523,900
                
                $
                943,092Weighted
                    average number of shares outstanding during the period
                
                
                388,001,055
                
                
                374,464,022Add:
                    the treasury stock effect of stock options and warrants
                
                
                41,914,293
                
                
                40,930,727Add:
                    the effect of the assumed conversion of SEDA notes payable to
                    common
                    stock
                
                
                8,216,171
                
                
                -Diluted
                    number of shares outstanding
                
                
                438,131,519
                
                
                415,394,749Net
                    income per share:Basic
                
                $
                0.0014
                
                $
                0.0025Diluted
                
                $
                0.0012
                
                $
                0.0023
 
 As
          the
          Company incurred net losses for the three and six months ended September
          30,
          2004, the effects of options, warrants and convertible debt were antidilutive
          for those periods.
 
 **NOTE
          9-**  **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 quarter ended September 30, 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
          10-**  **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
          technology 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.
 
 19
 **NOTE
          11-**  **CONTINGENCIES**
 
 During
          the fiscal year ended March 31, 2005, management concluded that uncertainty
          pertaining to the Company’s ability to operate as a going concern should be
          eliminated. The events and factors considered by management in reaching
          its
          decision included the ability of the Company to obtain short-term and bridge
          loans, the commitment received from Cornell Capital to provide the Company
          with
          up to $100 million in equity financing through the SEDA, and the ability
          of the
          Company to consummate a series of fourteen acquisitions in the fifteen-month
          period ended March 31, 2005. The acquired Internet and voice service providers
          are expected to generate revenues and to provide cash flow from operations.
          In
          the six-month period ended September 30, 2005, the Company refinanced a
          high
          interest, short-term bridge loan in the amount of $13 million with the
          proceeds
          of the Debenture that is scheduled to be paid over a three-year term (see
          Note
          3) bearing an annual interest rate 7.75%, established or extended the employment
          arrangements with the Company’s key executives, and achieved net income of
          $943,092.
 
 **Litigation
          and Other Legal Proceedings**
 
 As
          of
          September 30, 2005, the Company was party to the following material legal
          proceeding.
 
 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,
          and it 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.
 
 In
          September 2005, pending court approval of the agreements and formal dismissal
          of
          the case, Davel settled with the plaintiffs in the following
          matter.
 
 On
          or
          about October 15, 2002, Davel was served with a complaint, in an action
          captioned Sylvia Sanchez et al. v. Leasing Associates Service, Inc., Armored
          Transport Texas, Inc., and Telaleasing Enterprises, Inc. On or about January
          8,
          2002, the Plaintiffs filed their first amended complaint adding a new defendant,
          LAI Trust, and on or about January 21, 2002 filed their second amended
          complaint
          adding new defendants including Davel and certain of its subsidiaries.
          Davel’s
          insurance company has agreed to pay the settlement amount that is not material
          to the Company’s financial statements.
 
 **NOTE
          12-**  **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
          September 30, 2004 and 2005 were as follows (unaudited):
 
 20
 
 
 
 
 **The
                    Three Month Period**
                
                **Voice**
                
                **Internet**
                
                **Wireless****Ended
                    September 30, 2004**
                
                **Services**
                
                **Services**
                
                **Networks**
                
                **Corporate**
                
                **Total**Revenues
                
                $
                955,571
                
                $
                3,547,498
                
                $
                -
                
                $
                465,000
                
                $
                4,968,069Cost
                    of revenues
                
                
                (466,235
                )
                
                (1,701,138
                )
                
                -
                
                
                -
                
                
                (2,167,373
                )Other
                    operating expenses
                
                
                (365,883
                )
                
                (1,363,825
                )
                
                (255,091
                )
                
                (2,082,189
                )
                
                (4,066,988
                )Depreciation
                    and amortization
                
                
                (27,920
                )
                
                (132,651
                )
                
                (7,294
                )
                
                (216,353
                )
                
                (384,218
                )Interest,
                    net
                
                
                -
                
                
                (29,356
                )
                
                -
                
                
                (67,895
                )
                
                (97,251
                )Net
                    income (loss)
                
                $
                95,533
                
                $
                320,528
                
                $
                (262,385
                )
                $
                (1,901,437
                )
                $
                (1,747,761
                )Total
                    assets
                
                $
                4,278,743
                
                $
                17,967,490
                
                $
                18,986
                
                $
                12,410,455
                
                $
                34,675,674Fixed
                    assets, net of accumulated depreciation
                
                $
                71,140
                
                $
                1,290,511
                
                $
                14,587
                
                $
                -
                
                $
                1,376,238Goodwill,
                    net of impairment
                
                $
                3,057,405
                
                $
                13,818,288
                
                $
                -
                
                $
                -
                
                $
                16,875,693
  **The
                    Three Month Period**
                
                **Voice**
                
                **Internet**
                
                **Wireless****Ended
                    September 30, 2005**
                
                **Services**
                
                **Services**
                
                **Networks**
                
                **Corporate**
                
                **Total**Revenues
                
                $
                19,333,581
                
                $
                3,823,619
                
                $
                3,389,450
                
                $
                -
                
                $
                26,546,650Cost
                    of revenues
                
                
                (8,197,761
                )
                
                (1,782,707
                )
                
                (1,673,927
                )
                
                -
                
                
                (11,654,395
                )Other
                    operating expenses
                
                
                (8,290,359
                )
                
                (1,683,449
                )
                
                (1,926,127
                )
                
                (580,057
                )
                
                (12,479,992
                )Depreciation
                    and amortization
                
                
                (775,316
                )
                
                (85,129
                )
                
                (183,228
                )
                
                (3,646
                )
                
                (1,047,319
                )Interest,
                    net
                
                
                (7,491
                )
                
                4,849
                
                
                9,128
                
                
                (704,821
                )
                
                (698,335
                )Minority
                    interests
                
                
                35,645
                
                
                -
                
                
                (178,354
                )
                
                -
                
                
                (142,709
                )Net
                    income (loss)
                
                $
                2,098,299
                
                $
                277,183
                
                $
                (563,058
                )
                $
                (1,288,524
                )
                $
                523,900Total
                    assets
                
                $
                55,190,207
                
                $
                17,897,818
                
                $
                10,712,861
                
                $
                3,359,932
                
                $
                87,160,818Fixed
                    assets, net of accumulated depreciation
                
                $
                11,740,439
                
                $
                1,277,848
                
                $
                668,216
                
                $
                3,675
                
                $
                13,690,178Goodwill,
                    net of impairment
                
                $
                21,925,741
                
                $
                15,072,519
                
                $
                494,219
                
                $
                -
                
                $
                37,492,479
 
 Results
          of operations relating to the Company’s business segments for the six-month
          periods ended September 30, 2004 and 2005 were as follows
          (unaudited):
  **The
                    Six Month Period**
                
                **Voice**
                
                **Internet**
                
                **Wireless****Ended
                    September 30, 2004**
                
                **Services**
                
                **Services**
                
                **Networks**
                
                **Corporate**
                
                **Total**Revenues
                
                $
                955,571
                
                $
                4,567,662
                
                $
                -
                
                $
                615,000
                
                $
                6,138,233Cost
                    of revenues
                
                
                (466,235
                )
                
                (2,059,077
                )
                
                -
                
                
                -
                
                
                (2,525,312
                )Other
                    operating expenses
                
                
                (365,883
                )
                
                (1,788,139
                )
                
                (778,711
                )
                
                (2,361,509
                )
                
                (5,294,242
                )Depreciation
                    and amortization
                
                
                (27,920
                )
                
                (168,948
                )
                
                (7,294
                )
                
                (293,333
                )
                
                (497,495
                )Interest,
                    net
                
                
                -
                
                
                (41,255
                )
                
                -
                
                
                (285,129
                )
                
                (326,384
                )Net
                    income (loss)
                
                $
                95,533
                
                $
                510,243
                
                $
                (786,005
                )
                $
                (2,324,971
                )
                $
                (2,505,200
                )
 
 **The
                    Six Month Period**
                
                **Voice**
                
                **Internet**
                
                **Wireless****Ended
                    September 30, 2005**
                
                **Services**
                
                **Services**
                
                **Networks**
                
                **Corporate**
                
                **Total**Revenues
                
                $
                37,796,032
                
                $
                7,861,019
                
                $
                3,395,444
                
                $
                -
                
                $
                49,052,495Cost
                    of revenues
                
                
                (17,251,793
                )
                
                (3,738,731
                )
                
                (1,685,733
                )
                
                -
                
                
                (22,676,257
                )Other
                    operating expenses
                
                
                (15,231,270
                )
                
                (3,436,254
                )
                
                (2,154,076
                )
                
                (968,631
                )
                
                (21,790,231
                )Depreciation
                    and amortization
                
                
                (1,511,859
                )
                
                (166,928
                )
                
                (183,616
                )
                
                (7,293
                )
                
                (1,869,696
                )Interest,
                    net
                
                
                (8,040
                )
                
                (13,616
                )
                
                9,202
                
                
                (1,618,056
                )
                
                (1,630,510
                )Minority
                    interests
                
                
                35,645
                
                
                -
                
                
                (178,354
                )
                
                -
                
                
                (142,709
                )Net
                    income (loss)
                
                $
                3,828,715
                
                $
                505,490
                
                $
                (797,133
                )
                $
                (2,593,980
                )
                $
                943,092
 
 21
 **NOTE
          13-**  **SUBSEQUENT
          EVENTS**
 
 Subsequent
          to September 30, 2005, The Company converted $500,000 of the $2,950,000
          balance
          of outstanding SEDA debt at September 30, 2005 into 2,476,061 shares
          of its
          common stock. The remaining balance of $2,450,000 in SEDA borrowings is
          scheduled to convert into shares of common stock in installments by December
          30,
          2005.
 
 On
          October 24, 2005, the Company announced that its subsidiary CloseCall reached
          a
          commercial agreement with the incumbent local exchange carrier (ILEC)
          subsidiaries of SBC Communications, Inc. The agreement runs through September
          29, 2010 and covers all 13 states that the SBC ILECs serve.
 
 On
          October 26, 2005, the Company borrowed $2,500,000 from Cornell Capital
          in order
          to close on the acquisition of InReach Internet, LLC (“InReach”), an Internet
          service provider located in Stockton, California. The note payable is due
          in 5
          months and bears interest at an annual rate of 8%.
 
 On
          November 1, 2005 the Company completed the acquisition of InReach for a
          total
          purchase price of $3,066,873, including $2,116,873 cash and 4,357,798 shares
          of
          the Company’s common stock with a value of $950,000.
 
 In October 2005,
          the Company completed the conversion of a majority of notes payable to
          former
          owners of The River with the issuance of 1,846,733 shares of common stock
          of
          Mobilepro.
 
 On
          October 28, 2005, the Company issued 10,000,000 shares of its common stock
          to
          the escrow agent for 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 six-month periods ended September 30, 2004 and 2005, our
        financial condition at September 30, 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
        communication 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, acquiring and growing profitable
        telecommunications and broadband companies, and forging strategic alliances
        with
        well positioned companies with complementary product lines and in complementary
        industries.
 
 We
        market
        and sell our integrated communications services through 11 branch offices
        in 8
        states and we service over 222,000 equivalent subscriber
        lines including approximately 142,000 local, long-distance and/or
        cellular
        telephone lines, 50,000 dial-up lines, 5,000 broadband lines, and over 25,000
        broadband wireless lines. 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., and its subsidiary, NeoReach
                  Wireless, Inc. (“NeoReach Wireless”). This operation is concentrating its
                  efforts on the deployment of municipally sponsored wireless access
                  zones.
                  This segment also includes the operations of our 51%-owned subsidiary,
                  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”) 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.**Internet Services**
              Our
                  internet services segment is led by DFW Internet Services, Inc.
                  (“DFW”,
                  doing business as Nationwide Internet), an Internet services provider
                  based in Irving, Texas, and its acquired Internet service provider
                  subsidiaries. Our Internet services segment provides broadband
                  and dial-up
                  internet access, web-hosting services and related Internet services
                  to
                  business and residential customers in over 40 states.**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 six months ended
        September 30, 2004 and 2005 were as follows:
 
 
 
 **Three Months Ended**
                **September 30,**
              
              **Six Months Ended**
                **September 30,****Business
                  Segment**
              
              **2004**
              
              **2005**
              
              **2004**
              
              **2005****Voice**
              
              $
              955,571
              
              $
              19,333,581
              
              $
              955,571
              
              $
              37,796,032**Internet
                  Services**
              
              
              3,547,498
              
              
              3,823,619
              
              
              4,567,662
              
              
              7,861,019**Wireless
                  Networks**
              
              
              -
              
              
              3,389,450
              
              
              -
              
              
              3,395,444**Corporate**
              
              
              465,000
              
              
              -
              
              
              615,000
              
              
              -**Total
                  Revenues**
              
              $
              4,968,069
              
              $
              26,546,650
              
              $
              6,138,233
              
              $
              49,052,495
 
 Cost
        of
        network services is 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.
   24
   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. 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. We entered these businesses primarily through
        the acquisition of established companies. These operations have been acquired
        within the last twenty-four months. Accordingly, our experience in operating
        our
        current businesses is limited. Although we have reported net income for three
        consecutive quarters, our Company has lost money historically. In the years
        ended March 31, 2005 and 2004, we incurred net losses of $5,359,722
        and $2,157,844, respectively.
 
 **Recent
        Events**
  Significant
        accomplishments in the six-month period ended September 30, 2005 included,
        among
        other achievements, expanding our voice services and wireless networks
        businesses through the consummation of four acquisitions, beginning the
        deployment of the 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.
 
 ***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 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.
 
 In
        May
        2005, the core 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
        of $257,500, paid in the form of common stock and cash. We have expanded
        this
        operation as it focuses its efforts on the design and deployment of the Tempe
        wireless network. We believe that the WazTempe 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. We have begun to acquire paying customers
        and the initial phase of deployment is scheduled to be completed by February
        2006. In August 2005, we executed a definitive, five-year agreement, also
        including two five-year extensions, with the city for the deployment and
        management of the 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 ended September 30, 2005 were $677,052
        compared to operating expenses of $200,876 for this operation in the previous
        quarter. We have acquired networking equipment at a total cost of approximately
        $430,000 to date for the Tempe wireless network.
 
 In
        June
        2005, we acquired Evergreen Open Broadband, a wholesale wireless Internet
        service provider based in Boston, for 1,505,360 shares of our common stock
        valued in the amount of approximately $231,000 and the assumption of certain
        liabilities, in order to cultivate and manage relationships with regional
        and
        national ISPs targeting retail wireless customers. Evergreen's wholesale
        business model provides an open, competitively priced wireless platform for
        local, regional and national ISPs to market their services. Under this model,
        retail customers receive service and a bill from their preferred ISP while
        Evergreen bills the ISP for the value of wholesale services provided. Evergreen
        will operate as part of NeoReach Wireless. Evergreen has actively participated
        in our bidding for Tempe and approximately 20 other city-wide wireless network
        opportunities that are either pending or under consideration.
   25
   In
        June
        2005, we acquired a 51% ownership interest in Kite Broadband, LLC (“Kite”) with
        the investment of $3,825,000 cash. 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. Kite is entitled to have Sprint remit collected
        customer revenues in exchange for these services and remit a monthly fee
        back to
        Sprint for 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 $3,385,000; our 51% share of Kite’s net income for the quarter
        was $185,633.
 
 Finally,
        we completed the quarter with the announcement of our second major municipal
        wireless network award. On September 20, 2005, we reported that a selection
        committee for the city of Sacramento, California (a city with a population
        of
        approximately 465,000 people), chose NeoReach Wireless to design, deploy,
        own
        and operate a metro-wide broadband wireless network. We have signed a memorandum
        of understanding covering a pilot deployment and we have begun the negotiation
        of a definitive contract covering the entire project. The proposed network
        will
        initially cover Sacramento's downtown, Old Town and state capital areas,
        about
        10 square miles, and will grow to cover other areas of the city in future
        phases. Wireless Internet access will be available in these areas on a fixed
        and
        mobile basis, to residents, businesses, students and visitors. 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.
        Subscription services will be offered on an annual, monthly, daily and hourly
        basis and will allow access to multiple Internet service providers. Two other
        small cities have also selected us for the deployment, ownership and management
        of their planned wireless networks. Currently, we are negotiating definitive
        contracts with these municipalities.
  ***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.
 
 In
        the
        six-month period ended September 30, 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.
 
 In
        June
        2005, CloseCall launched a new cellular service called TommyWireless. This
        service targets teen, pre-teen and other prepaid cell-phone users combining
        many
        features in a basic service package, including parent/user controls, and
        offering enhanced packages including free nights and weekends and anytime
        minutes, and provides parents with the ability to manage the cell phone usage
        of
        their children. Recently, CloseCall announced that it has begun to sell its
        nationwide cellular service in nine new markets bringing the total to twenty
        states plus the District of Columbia. Included in this announcement was an
        offer
        of a bundled service package called CloseKnit Wireless that would provide
        free
        cellular service for two years for a bundled monthly rate to customers who
        switch their local and long distance services to CloseCall America or other
        Mobilepro affiliate. This program has been enhanced to include, as an
        alternative, the offer of free DSL installation and service for one year
        to
        customers who choose the CloseKnit bundled service package. 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.
   26
   During
        the six-month period ended September 30, 2005, we completed two acquisitions
        intended to add revenue profitably 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 adds 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 $1,632,000 and
        contributed operating profit of $590,914. 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.
 
 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, service and 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. These integration efforts are now being led by James L. Magruder,
        an
        experienced telecommunications executive who joined us in September 2005.
        The
        efforts are focused on combining service offerings, consolidating network
        operations and customer support locations, and reducing operating costs.
        An
        indication of progress in this area is that the Internet services segment
        reported an operating profit of $277,183 for the current quarter, a 21% increase
        over the previous quarter, despite a net 5% downward churn in
        revenues.  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 until our new efforts to transition these customers
        to
        enhanced services become more effective.
 
 During
        the six months ended September 30, 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.
 
 Subsequent
        to the end of the quarter, on November 1, 2005, we announced the acquisition
        of
        InReach Internet, an Internet services provider located in Stockton California.
        Besides adding annual revenue and EBITDA expected to approximate $5,700,000
        and
        $1,000,000, respectively, InReach provides a base of operations for the
        Sacramento municipal wireless network. The purchase price for InReach, before
        any post closing adjustments, included $2,116,873 cash and 4,357,798 shares
        of
        common stock valued at $950,000.
 
 ***Corporate
        Activities***
  Since
        the
        beginning of the current fiscal year, we have continued to strengthen our
        balance sheet in order to provide capital for acquisitions, for 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 $37,000,000 with a
        cash balance of $7,860,528 at September 30, 2005. Total debt has been reduced
        from a balance of approximately $26,534,000 at March 31, 2005 to a balance
        of
        $23,036,000 at September 30, 2005. We are looking for opportunities to further
        improve those positions.
   27
 
 We
        significantly improved our financial position and reduced our costs in May
        2005
        when we issued a convertible debenture in the aggregate amount of
        $15,500,000 million 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 only $3,000,000 classified as a current liability
        at September 30, 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.
 
 **Critical
        Accounting Policies**
  We
        believe there have been no significant changes in our critical accounting
        policies during the six-month period ended September 30, 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.
  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.
   28
   **Results
        of Operations and Financial Condition**
  **The
        Three Months Ended September 30, 2005 and 2004**
 
 ***Total
        Revenues***
 
 We
        generated consolidated revenues of $26,546,650 in the three-month period
        ended
        September 30, 2005 compared with revenues of $4,968,069 in the corresponding
        period of the prior fiscal year. Since April 1, 2004, we have completed the
        acquisition of sixteen 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
        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 September 30, 2005 were $19,333,581, representing 72.8% of
        consolidated revenues. The revenues of this segment were only $955,571 in
        the
        second 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.
 
 **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 September 30, 2005 were $3,823,919, representing approximately
        14.4% of consolidated revenues. We reported Internet service revenues of
        $3,547,498 for the prior year quarter ended September 30, 2004. The current
        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 of the additions to revenues of the voice group as discussed above,
        we
        derived a decreasing percentage of our consolidated revenues from Internet
        services.
 
 **Wireless
        Networks.** The
        revenues of this operating segment principally relate to Kite. As indicated
        above, Kite’s revenues for the current quarter were $3,385,314, representing
        12.8% 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 September 30, 2004. In the second quarter, our
        profitability was adversely affected by an acceleration of spending by NeoReach
        Wireless. Increased interest in municipal wireless projects, as measured
        by the
        number of municipalities issuing requests for proposals, has 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. By the end of
        the
        fiscal year, we expect to be chosen by one or more other municipalities to
        deploy and manage wireless networks.
   29
   **Corporate.** From
        time
        to time, the corporate segment generates miscellaneous revenues. No such
        revenues were generated by this segment in the current year quarter. During
        the
        quarter ended September 30, 2004, we reported $465,000 in miscellaneous
        revenues.
 
 ***Operating*** ***Costs
        and Expenses***
 
 Total
        operating costs and expenses for the three months ended September 30, 2005,
        including depreciation and amortization, were $25,181,706, representing 94.9%
        of
        consolidated revenues, compared with $6,618,579 in the corresponding period
        of
        the prior year, representing 133.2% 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 $11,654,395
        in
        the three months ended September 30, 2005, or 43.9% of revenues, compared
        with
        $2,167,373, or 43.6% 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 44.5% of total operating
        costs and expenses in the three-month period ended September 30, 2005.
 
 ***Interest
        Expense***
 
 Interest
        expense, net, was $698,335 for the three-month period ended September 30,
        2005
        compared with only $97,251 in the comparable period of the prior year. The
        amount of our debt has increased substantially between years as we have used
        debt financing to consummate certain major acquisitions. 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 that was refinanced in May 2005 with funds provided by the issuance
        of the convertible debenture to Cornell Capital. In addition, we used funds
        borrowed from Cornell Capital to provide the $8 million cash portion of the
        CloseCall purchase consideration and the combined total of $5,325,000 in
        cash
        required to consummate the acquisition of AFN and to make our investment
        in
        Kite. The major components of interest expense for the current year quarter
        included approximately $310,000 related to notes payable to Cornell Capital,
        and
        approximately $404,000 related to the convertible debenture including
        approximately $101,000 in debt discount accretion. In the comparable quarter
        of
        the prior year, the interest expense of $97,251 primarily related to notes
        payable to Cornell Capital.
 
 ***Net
        Income (Loss)***
  We
        reported net income of $523,900 for the three-month period ended September
        30,
        2005, or $0.0012 per share on a diluted basis, compared with a net loss of
        $1,747,761, or $(0.0067) per share, for the corresponding quarter of the
        prior
        year. Both the voice and Internet service business segments contributed
        operating profits in the current year quarter totaling approximately $2,375,000,
        more than offsetting an operating loss incurred by the wireless networks
        segment
        of approximately $563,058 and corporate expenses of $1,288,524. In the
        comparable quarter of the prior year, the Internet services and voice segments
        provided operating income of approximately $416,000 that was not sufficient
        to
        offset the combined operating loss of the wireless networks and corporate
        segments of approximately $2,164,000. 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 increased by 17.95% from
        $22,505,845 reported for the three-month period ended June 30, 2005. We
        increased net income to $523,900 for the current quarter from $419,192 reported
        for the previous quarter, representing an increase of 24.98%. Significantly
        benefiting current quarter results were the revenues and profits provided
        by AFN
        and Kite; these operations contributed combined revenues of approximately
        $5,017,000 and operating profit of approximately $777,000. Operating costs
        and
        expenses increased by approximately $4,027,000 from the prior quarter due
        primarily to the addition of these operations and the increased pace of spending
        at NeoReach Wireless as explained above. Slightly offsetting the effect of
        these
        increases was the decline in operating expenses incurred by the Internet
        services segment, also described above. EBITDA, as displayed below, increased
        by
        4.4% on a consecutive quarter basis from $2,173,744 for the prior quarter
        to
        $2,269,554 for the current quarter.
   30
 
 ***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 three-months periods ended September
        30, 2004, June 30, 2005 and September 30, 2005 are as follows.
 
 **For
                  the Three**
                **Months
                  Ended**
                **June
                  30,**
              
              **For
                  the Three Months Ended**
                **September
                  30**,**2005**
              
              **2004**
              
              **2005****Net
                  Income (Loss)**
              
              $
              419,192
              
              $
              (1,747,761
              )
              $
              523,900**Add
                  non-EBITDA items included in net**
                **results:****Depreciation
                  and amortization**
              
              
              822,377
              
              
              384,218
              
              
              1,047,319**Interest
                  expense, net**
              
              
              932,175
              
              
              97,251
              
              
              698,335**EBITDA**
              
              $
              2,173,744
              
              $
              (1,266,292
              )
              $
              2,269,554
  Our
        negative EBITDA in the second 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 do 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.
 
 **The
        Six Months Ended September 30, 2005 and 2004**
 
 ***Revenues***
 
 Consolidated
        revenues were $49,052,495 in the six-month period ended September 30, 2005
        compared with revenues of $6,138,233 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 $37,796,032 for the current year compared with revenues
        of
        only $955,571 in the prior year. As indicated above, the recent acquisitions
        of
        AFN and Kite added combined revenues of approximately $5,017,000 to current
        year
        results. Full period revenues for all of the acquired ISPs resulted in the
        increase in Internet services revenues to $7,861,019 for the current year
        from
        revenues of $4,567,662 reported for the prior year.
   31
 
 ***Operating*** ***Costs
        and Expenses***
 
 Our
        costs
        and operating expenses for the six months ended September 30, 2005, including
        depreciation and amortization, were $46,336,184, representing 94.5% of
        consolidated revenues, compared with $8,317,049 in the corresponding period
        of
        the prior year, representing 135.5% 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
        businesses and leveraging the corporate-level functions, and begin to combine
        operations. The cost of services (excluding depreciation and amortization)
        was
        $22,676,257 in the six months ended September 30, 2005, or 46.2% of revenues,
        compared with $2,525,312, or 41.1% of revenues, in the corresponding prior
        year
        period. We anticipate that cost of services as a percentage of consolidated
        revenues may increase in the future as the revenues of our voice segment
        become
        a greater portion of consolidated revenues. Compensation expenses, professional
        fees paid to attorneys, accountants and other advisors, and other general
        and
        administrative expenses, a major element of consolidated operating costs
        and
        expenses, represented 42.3% of total operating costs and expenses in the
        six-month period ended September 30, 2005.
 
 ***Interest
        Expense***
 
 Interest
        expense, net, was $1,630,510 for the six-month period ended September 30,
        2005
        compared with $326,384 in the comparable period of the prior year. As discussed
        above, the amount of our debt has increased substantially between years as
        we
        have used debt financing to consummate certain major acquisitions. The major
        components of interest expense for the current year included approximately
        $381,000 related to the retired bridge loan, approximately $639,000 related
        to
        notes payable to Cornell Capital, and approximately $612,000 related to the
        convertible debenture including approximately $151,000 in debt discount
        accretion. In the comparable quarter of the prior year, interest expense
        primarily related to notes payable to Cornell Capital.
 
 ***Net
        Income (Loss)***
  We
        reported net income of $943,092 for the six-month period ended September
        30,
        2005, or $0.0023 per share on a diluted basis, compared with a net loss of
        $2,505,200, or $(0.0102) per share, for the corresponding period of the prior
        year. Both the voice and Internet service business segments contributed
        operating profit in the current year quarter totaling approximately $4,334,000,
        more than offsetting an operating loss incurred by the wireless networks
        segment
        of $797,133 and corporate expenses of $2,593,980. In the comparable period
        of
        the prior year, the Internet services and voice segments provided operating
        profit of approximately $606,000 that was not sufficient to offset the combined
        operating loss of the wireless networks and corporate segments of approximately
        $3,111,000. The prior year net loss included amortization expense of
        approximately $293,000 related to SEDA deferred financing fees.
 
 **Liquidity
        and Capital Resources**
  During
        the six-month period ended September 30, 2005, our balance of unrestricted
        cash
        and cash equivalents increased by $3,190,741 to $7,860,528.
 
 Net
        cash
        provided by operations was $663,318 for the first half of the current fiscal
        year. Our financing activities during the current year provided net cash
        proceeds of $12,971,737, including $1,205,000 from the refinancing of the
        bridge
        loan and $8,300,000 from borrowings under additional notes payable to Cornell
        Capital. Net cash paid in connection with the consummation of acquisitions
        and
        investments during the current quarter was $8,802,775, and we made capital
        expenditures during the current year totaling $1,641,539.
 
 In
        the
        corresponding period of the prior year, the balance of cash and cash equivalents
        increased by $6,903,488 despite net cash used in operations of $1,469,772.
        From
        Cornell Capital, we borrowed $9,000,000 in the prior-year under the equity
        lines
        of credit and a total of $12,200,000 under separate notes payable. Proceeds
        of
        these fundings were used to fund operations and to consummate the acquisition
        of
        ISPs; $8,000,000 cash was used in October 2004 to close the acquisition of
        CloseCall.
   32
 
 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 eighteen
        months, despite our improving profitability, we have depended primarily on
        funds
        provided by Cornell Capital to meet our needs. Under a series
        of transactions with Cornell Capital, we have obtained approximately
        $33,550,000 in financing since January 1, 2004, including $26,500,000
        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 retire the remaining $13 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 eighteen months, we have issued
        common stock valued at approximately $14,142,000 in connection with our
        acquisitions.
 
 As
        of
        September 30, 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
              
              $
              24,900,000Less
                  -- SEDA draws converted to common stock
              
              
              (21,950,000
              )Notes
                  payable under the SEDA
              
              
              2,950,000Other
                  notes payable to Cornell Capital
              
              
              4,100,000Outstanding
                  amounts available for conversion
              
              
              7,050,000Accrued
                  interest
              
              
              210,757Total
                  amounts available for conversion
              
              $
              7,260,757Total
                  number of shares of common stock registered for the SEDA
              
              
              250,000,000Less
                  -- Number of shares of common stock issued upon the conversion
                  of draws
                  ($21,950,000) and interest ($531,666)
              
              
              (108,075,663
              )Less
                  -- Number of shares of common stock issuable upon the conversion
                  of
                  outstanding amounts ($7,050,000) and accrued interest ($210,757)
                  based on
                  the closing stock price of $0.214 per share on November 4,
                  2005
              
              
              (34,621,194
              )Total
                  number of shares of common stock available for the conversion of
                  future
                  draws and borrowings
              
              
              107,303,143Funds
                  available under the SEDA based on the number of shares of common
                  stock
                  available (107,303,143 shares) and a price per share of $0.214
              
              $
              22,503,615
 
 Although
        we have drawn $24,900,000 from Cornell Capital 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 $4,100,000 in notes payable to
        Cornell capital at September 30, 2005 and the accrued interest of $210,757,
        there are $22,503,615 in additional funds available under the SEDA for future
        needs.
 
 However,
        we expect that our future cash flows from operations, together with the funds
        that we are able to obtain under our existing SEDA facility, will be adequate
        to
        meet our anticipated cash needs for the foreseeable future. To the extent
        we
        decide to pursue one or more significant strategic acquisitions, we will
        likely
        need to incur additional debt or issue additional equity to finance those
        acquisitions. We currently have no significant purchase commitments. We do
        expect to continue to engage in capital spending in the ordinary course of
        business, including the completion of our contractual commitment to complete
        the
        build-out of broadband wireless networks in Tempe and other cities. For example,
        we currently expect that capital expenditures for the Tempe network will
        approximate $1,800,000; as of September 30, 2005, we had incurred costs of
        approximately $430,000 for the Tempe network.
   33
 
 We
        have
        had, and continue to have, discussions with several investment banks about
        establishing a long-term relationship with a view toward a substantial private
        placement, future secondary offering and/or Nasdaq listing. We are also still
        looking at a possible AIM listing. We have received interest in doing a
        flotation in London in January and are evaluating the merits of such an option
        in lieu of or as a  complement
        to a private or public offering here in the United States. We believe that
        such
        a listing could serve as a useful intermediate step between listing our common
        stock on the OTC Bulletin Board and the Nasdaq.
 
 During
        the fiscal year ended March 31, 2005, we concluded that uncertainty pertaining
        to our ability to operate the Company as a going concern should be eliminated.
        The events and factors considered by us in reaching this conclusion included
        our
        ability to obtain short-term and bridge loans, the commitment received from
        Cornell Capital to provide us with up to $100 million in equity financing
        through the SEDA, and our ability to consummate a series of fourteen
        acquisitions in the fifteen-month period ended March 31, 2005. The acquired
        Internet and voice service providers are expected to generate revenues and
        to
        provide cash flow from operations. In addition, as discussed above, in May
        2005,
        we refinanced the short-term bridge loan in the amount of $13 million, bearing
        interest at an annual rate of 23%, with the proceeds of the $15.5 million
        debenture that is scheduled to be paid over a three-year term and that bears
        an
        annual interest rate of 7.75%.
 
 **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. 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 most
        recent three consecutive quarters, no assurances can be given that we will
        be
        successful in maintaining profitable operations.
 
 **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. Accordingly, the Company has a limited
        operating history upon which an evaluation of its prospects can be made.
 
 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 NeoReach, Inc. 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.
   34
 
 We
        intend
        to pursue additional acquisitions to further the development of our Internet
        services business, competitive local exchange and wireless broadband businesses.
        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**
 
 Virtually
        all of our operations have been acquired or started in the last twenty-three
        months. Therefore, our experience in operating the current business is limited.
 
 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. Further, because of the resulting inward focus
        of
        management, 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 So
        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.
 
 In
        addition, 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. There can be no assurance that the projects
        will be successfully completed or that the completed projects will provide
        the
        anticipated revenues required to recoup the up-front costs. Accordingly,
        we
        cannot assure you that our business revenue models will be successful or
        that we
        can sustain revenue growth or maintain profitability.
 
 **Recent
        Industry Trends Could Adversely Affect Our Ability to Compete in the Wireless
        Communications Industry**
 
 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.
   35
 
 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 twenty-six 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.
 
 **We
        Will Need to Raise Additional Capital to Continue Our Operations and Continue
        Making Acquisitions, or We May Be Unable to Fund Our Operations, Promote
        Our
        Products or Develop Our Technology**
 
 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. 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 additional
        acquisitions and 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 and size of our acquisitions. We cannot assure you
        that
        financing whether from external sources or related parties will be available
        if
        needed or on favorable terms.
 
 To
        date,
        we have drawn a total of $24,900,00 in funds under the SEDA. Draws in the
        amount
        of $21,950,000 have been converted to common stock. To date, the conversion
        of
        draws and related interest has resulted in the issuance of approximately
        108,076,000 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 November 4, 2005
        ($0.214
        per share), approximately 34,621,000 shares of our common stock would be
        issued
        in connection with the conversion of outstanding draws and accrued interest
        at
        September 30, 2005, and approximately 107,303,000 shares would be available
        for
        the conversion of future draws. Based on the response to our recent inquiry,
        we
        believe that Cornell Capital currently owns approximately 5.0% 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. Assuming that Cornell Capital does
        not
        dispose of its currently owned common stock, the conversion of the currently
        outstanding draws and accrued interest would result in ownership greater
        than
        9.9%, making future draws unavailable. In addition, the term of the current
        SEDA
        expires in May 2006.
 
 If
        we are
        unable to obtain other capital funds or negotiate an extension to the SEDA
        on
        acceptable terms, our access to the capital markets may be limited and we
        may be
        unable to fund our operations and expansion, successfully promote our brand
        name, products or services, develop or enhance our technology, take advantage
        of
        business opportunities or respond to competitive market pressures, any of
        which
        could make it more difficult for us to continue operations. Any reduction
        in our
        operations may result in a lower stock price.
  **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 seventeen acquisitions
        during the eighteen-month period ended September 30, 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.
   36
   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.
 
 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 do structure our merger agreements
        giving us the right to make subsequent adjustments to the purchase consideration
        based on the subsequent discovery of inaccuracies. However, the process does
        require that senior management spent 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. Our experience has been that retention of employees
        at the smaller companies has been poor making integration of the small companies
        more difficult.
 
 Failure
        to overcome these challenges and to manage successfully the integration of
        our
        acquisitions could harm our business and operating results in a material
        way.
  **Impairment
        of Goodwill Could Result in Significant Future Charges That Could Jeopardize
        Our
        Ability to Raise Capital**
 
 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. 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. As of September 30, 2005, we do not believe that we
        have
        suffered impairment of goodwill.
 
 Future
        assessments of the acquisition fair values could identify material impairment
        losses resulting in substantial write-offs of goodwill. Such adjustments
        would
        likely have material adverse effects on our results of operations and our
        financial position, and could jeopardize our continuing ability to raise
        capital
        and make acquisitions.
 
 **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.
   37
 
 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
        declining. Davel’s revenues were $11,171,380 for the quarter ended June 30, 2005
        and $11,015,672 for the current quarter,
 
 If
        we are
        unsuccessful in increasing revenues from other sources, the declining payphone
        business may contribute to future declines in consolidated revenues and the
        incurring of operating losses.
 
 **Davel's
        Reliance on Third Party Providers Could Delay the Timely Payment 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 revenues from and collectibility
        of access code calls and toll-free dialed calls, or dial around compensation.
        Davel 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 are
        adjusted based on actual receipts and/or the subsequent revision of prior
        estimates.
 
 Dial
        around compensation represents a material percentage of our consolidated
        revenues. Dial around revenue was approximately $5,555,000 in the current
        year,
        representing approximately 11.3% of consolidated revenues. The amount of
        dial-around revenue estimated to be collectible and included in the balance
        of
        accounts receivable at September 30, 2005 was $6,049,000. 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 profits.
 
 **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 timely 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.
 
 
 38
  
 **PART
        II**
 **OTHER
        INFORMATION**
 
 **Item
        1. Legal Proceedings.**
 
 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, 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.
 
 On
        or
        about October 15, 2002, Davel was served with a complaint, in an action
        captioned Sylvia Sanchez et al. v. Leasing Associates Service, Inc., Armored
        Transport Texas, Inc., and Telaleasing Enterprises, Inc. On or about January
        8,
        2002, the Plaintiffs filed their first amended complaint adding a new defendant,
        LAI Trust, and on or about January 21, 2002 filed their second amended complaint
        adding new defendants including Davel Communications, Inc. and certain
        subsidiaries of Davel. In September 2005, pending court approval of the
        agreements and formal dismissal of the case, Davel settled with the plaintiffs;
        Davel’s insurance company has agreed to pay the settlement amount that is not
        material.
 
 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.
   39
 
 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 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.**
  On
        July
        13, 2005 and August 24, 2005, in separate transactions, we issued 6,000,000
        shares and 4,000,000 shares, respectively, to the prior owner of American
        Fiber
        Network, Inc. The issuance was made pursuant to an exemption from registration
        provided by Section 4(2) of the Securities Act.
 
 On
        September 12, 2005, we issued 173,334 shares of our common stock to the prior
        owners of Transcordia, LLC. This issuance was made pursuant to an exemption
        from
        registration provided by Section 4(2) of the Securities Act.
 
 On
        September 1, 2005, we entered into an Executive Employment Agreement with
        James
        L. Magruder, Jr. pursuant to which we granted Mr. Magruder an option to purchase
        2,000,000 shares of our common stock under our 2001 Equity Performance
        Plan.
 
 On
        September 30, 2005, we issued 1,505,360 shares of our common stock to the
        prior
        owners of Evergreen Open Broadband Corporation. This issuance was made pursuant
        to an exemption from registration provided by Section 4(2) of the Securities
        Act.
 
 **Item
        3. Defaults upon Senior Securities.**
 
 There
        were no defaults upon senior securities during the period ended September
        30,
        2005.
 
 **Item
        4. Submission of Matters to a Vote of Security Holders.**
 On
        September 17, 2005 at our annual meeting, the stockholders submitted the
        following number of shares in favor of the proposals (“FOR”), against and as
        abstentions:
  1.
              Election
                of Directors:FOR
              
              
              AGAINST
              
              
              ABSTAINJack
                  W. Beech
              
              
              211,982,567
              
              
              454,324
              
              
              1,206,912Chris
                  MacFarland
              
              
              212,421,890
              
              
              195,001
              
              
              1,206,912Michael
                  G. O’Neil
              
              
              212,309,890
              
              
              127,001
              
              
              1,206,912Don
                  Sledge
              
              
              212,231,790
              
              
              205,101
              
              
              1,206,912Jay
                  O. Wright
              
              
              212,306,391
              
              
              130,500
              
              
              1,206,912
   40
 
 2.
        Proposal to approve an increase in the number of shares available under our
        2001
        Equity Performance Plan from 1,000,000 to 30,000,000.
 
 FOR:
              192,761,179
              AGAINST:
              20,319,865
              ABSTAIN:
              562,759
 
 3.
        Proposal to amend our certificate of incorporation to increase the authorized
        number of shares of common stock from 600,000,000 to 1,500,000,000 and the
        authorized number of preferred shares from 5,035,425 to 20,035,425.
 
 FOR:
              192,340,467
              AGAINST:
              20,266,987
              ABSTAIN:
              1,036,349
 
 4.
        Proposal to approve the ratification of the appointment of Bagell, Josephs,
        & Company LLC as our independent registered public accounting firm for the
        fiscal year ending March 31, 2006.
 
 FOR:
              212,386,147
              AGAINST:
              674,232
              ABSTAIN:
              583,424
 
 5.
        Proposal to adjourn or postpone the annual meeting to August 31, 2005 to
        permit
        further solicitation of proxies in the event that an insufficient number
        of
        shares is present in person or by proxy to approve the proposals presented
        at
        the annual meeting.
 
 FOR:
              200,467,967
              AGAINST:
              12,224,339
              ABSTAIN:
              951,497
 
 
 **Item
        5. Other Information.**
  Not
        applicable.
 
 **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.
   41
   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, 2005.10.12
                  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, 2005.20.1
                  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, 2005
   42
   21.1
                  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.
 
 
 43
 **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:November
                14, 2005
              By:
              /s/
                Jay O. WrightJay
                O. Wright, Chief Executive Officer
 Date:November
                14, 2005
              By:
              /s/ Kurt
                GordonKurt
                Gordon, Chief Financial Officer