U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2006

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO
______________

COMMISSION FILE NUMBER: 0-30448

5G WIRELESS COMMUNICATIONS, INC.
(Exact Name of Company as Specified in Its Charter)

Nevada 20-0420885
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

4136 Del Rey Avenue, Marina del Rey, California 90292
(Address of Principal Executive Offices)

(310) 448-8022.
(Company's Telephone Number)

-----------------------------------------------------
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report)

Indicate by check mark whether the Company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Company
was required to file such reports), and (2) been subject to such filing
requirements for the past 90 days. Yes |X| No |_|.

Indicate by check mark whether the Company is a shell company (as defined
in Rule 12b-2 of the Exchange Act): Yes |_| No |X|.

As of August 15, 2006, the Company had 7,867,674 shares of common stock
issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes |_| No |X|.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION PAGE
----
ITEM 1. FINANCIAL STATEMENTS

CONDENSED BALANCE SHEET AS OF JUNE 30, 2006 (UNAUDITED)............... 3

CONDENSED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX
MONTHS ENDED JUNE 30, 2006 AND JUNE 30, 2005 (UNAUDITED).............. 5

CONDENSED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE
30, 2006 AND JUNE 30, 2005 (UNAUDITED)................................ 7

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)................... 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...................................... 35

ITEM 3. CONTROLS AND PROCEDURES........................................ 49

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.............................................. 50

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.... 51

ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................ 51

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............ 51

ITEM 5. OTHER INFORMATION.............................................. 51

ITEM 6. EXHIBITS....................................................... 52

SIGNATURES................................................................ 53

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCAL STATEMENTS.

5G WIRELESS COMMUNICATIONS, INC.
CONDENSED BALANCE SHEET
JUNE 30, 2006
(Unaudited)

ASSETS

Cash $ 246,251
Accounts receivable, net of allowance for
doubtful accounts of $33,857 81,820
Inventory 146,570
Deferred financing costs - current portion 51,187
Other current assets 31,086
----------
Total current assets 556,914
Property and equipment, net of accumulated
depreciation and amortization of $284,276 41,363
Deferred financing costs - non-current portion 54,589
----------
Total assets $ 652,866
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 852,740
Accrued interest 270,278
Other liabilities 5,267,348
Note payable 22,424
Related party notes and advances 42,960
Current portion of convertible notes payable,
net of discount of $419,994 635,966
----------
Total current liabilities 7,091,716
Non-current liabilities:
Non-current portion of convertible notes payable,
net of discount of $1,269,213 1,246,328
----------
Total non-current liabilities 1,246,328
----------
Total liabilities 8,338,044

5G WIRELESS COMMUNICATIONS, INC.
CONDENSED BALANCE SHEET
JUNE 30, 2006
(Unaudited)
(continued)

Stockholders' deficit:
Preferred Series A convertible stock, $0.001 par value; 3,000,000
shares authorized; 3,000,000 shares issued and outstanding 3,000
Preferred Series B convertible stock, $0.001 par value; 5,000,000
shares authorized; 540,000 shares issued and outstanding 540
Common stock, $0.001 par value; 5,000,000,000 shares authorized;
6,847,489 (1) shares issued and outstanding 6,848
Additional paid-in capital 21,021,246
Common stock held in escrow (1,016)
Unearned compensation (83,333)
Deferred consulting fees (92,418)
Accumulated deficit (28,540,045)
------------
Total stockholders' deficit (7,685,178)
------------
Total liabilities and stockholders' deficit $ 652,866
============

(1) Adjusted for a 1 for 350 reverse split of the common stock effective on
November 23, 2005.

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

5G WIRELESS COMMUNICATIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)

Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
------------- ------------- ------------- ----------------

Revenues $ 89,302 $ -- $ 298,402 $ --
Cost of revenues 34,319 -- 146,793 --
----------- ----------- ----------- -----------
Gross profit 54,983 -- 151,609 --
Operating expenses:
General and administrative 599,613 117,834 935,905 164,788
Salaries and related 349,899 188,794 672,913 287,054
Research and development 4,405 -- 55,167 --
Professional/consulting services 117,333 172,735 329,638 563,874
Depreciation 9,372 -- 20,801 --
----------- ----------- ----------- -----------
Total operating expenses 1,080,622 479,363 2,014,424 1,015,716

Operating loss (1,025,639) (479,363) (1,862,815) (1,015,716)

Interest expense (including
amortization of financing
costs and debt discount) (658,959) (451,033) (1,237,033) (891,386)
Change in fair value of
derivative liabilities (1,951,810) -- (2,655,530) --
----------- ----------- ----------- -----------
Net loss $(3,636,408) $ (930,396) $(5,755,378) $(1,907,102)
Cumulative undeclared dividends
and deemed dividends on
preferred stock (1,010,471) -- (1,346,327) --
----------- ----------- ----------- -----------

5G WIRELESS COMMUNICATIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)
(continued)

Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
------------- ------------- ------------- -------------

Net loss applicable to common
stockholders $(4,646,879) $(930,396) $(7,101,705) $(1,907,102)
=========== =========== =========== ===========
Loss per common share applicable
to common stockholders:
Basic and diluted (1) $ (0.71) $ (0.34) $ (1.32) $ (0.73)
=========== ========== =========== ===========
Basic and diluted weighted
average common shares
outstanding (1) 6,589,318 2,729,480 5,376,689 2,610,881
=========== ========== =========== ===========

(1) Adjusted for a 1 for 350 reverse split of the common stock effective on
November 23, 2005.

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

5G WIRELESS COMMUNICATIONS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)

Six Months Six Months
Ended Ended
June 30, 2006 June 30, 2005
------------- -------------

Cash flows from operating activities:
Net loss $(5,755,378) $(1,907,102)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of unearned compensation 33,333 --
Amortization of debt discount on convertible notes 716,298 787,893
Amortization of deferred financing costs 3,402
Depreciation 20,800 --
Fair value of common stock and warrants issued for services 577,307 --
Bad debt expense 192,264 --
Change in fair value of derivative liabilities 2,655,530 --
Changes in operating assets and liabilities:
Accounts receivable 54,813 --
Inventory (26,089) --
Other current assets (14,461) --
Accounts payable and accrued liabilities 248,611 412,104
Accrued interest 113,240 --
Other liabilities 119,090 --
----------- -----------
Net cash used in operating activities (1,061,240) (707,105)
Cash flows from investing activities:
Transfer of cash to portfolio company -- (814,750)
Disposition of property and equipment 18,635 --
----------- -----------
Net cash provided by (used in) investing activities 18,635 (814,750)

5G WIRELESS COMMUNICATIONS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005
(Unaudited)

Six Six
Months Ended Months Ended
June 30, 2006 June 30, 2005
------------- -------------

Cash flows from financing activities:
Related party notes and advances 53,626 --
Repayments on notes payable -- (29,697)
Payment of deferred financing costs (109,178) --
Proceeds from issuance of convertible notes 669,000 1,000,000
Net proceeds from issuance of preferred Series B stock 475,328 --
Net proceeds from issuance of common stock 112,223 --
Net proceeds from exercise of warrants 2,500 --
---------- ----------
Net cash flows provided by financing activities 1,203,499 970,303
Net increase (decrease) in cash 160,894 (551,552)
Cash, beginning of period 85,357 636,904
---------- ----------
Cash, end of period $ 246,251 $ 85,352
========== ==========
Supplemental disclosure of non-cash investing and
financing activities:
Conversion of convertible notes and accrued interest into
common stock $ 418,843 $ 442,176
========== ==========
Debt discounts on convertible notes $ 669,000 $1,000,000
========== ==========
Reclassification of derivative liability $ 52,632 $ --
========== ==========
Imputed dividend on preferred Series B $1,331,389 $ --
========== ==========
Cumulative preferred Series B undeclared dividends $ 14,938 $ --
========== ==========

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

5G WIRELESS COMMUNICATIONS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5G Wireless Communications, Inc. ("Company"), is a developer and manufacturer of
wireless telecommunications equipment.

The Company was incorporated as Tesmark, Inc. in September 1979. In November
1998, it changed its state of incorporation from Idaho to Nevada and in January
2001 changed the name to 5G Wireless Communications, Inc. In March 2001, the
Company acquired 5G Partners, a Canadian partnership, and changed its business
to provide wireless technology systems through high speed Internet access and
data transport systems. In April 2002, it acquired Wireless Think Tank, Inc., a
developer of high-speed long distance wireless technologies. In July 2003, it
shifted its strategy from that of a service provider to an equipment
manufacturer, or OEM. 5G Partners and Wireless Think Tank, Inc. are inactive.

On October 19, 2004, the Company elected, by the filing of a Form N-54A with the
Securities and Exchange Commission ("SEC") to be regulated as a business
development company ("BDC") under the Investment Company Act of 1940 ("1940
Act"). On December 31, 2004, certain assets and certain liabilities of the
Company were transferred into 5G Wireless Solutions, Inc., a newly formed
subsidiary, in exchange for 100% of its outstanding common shares.

On June 3, 2005, the Company' board of directors unanimously determined that it
would be in the best interests of the Company and its stockholders to seek
stockholder approval on certain matters. Pursuant to a definitive Schedule 14A
proxy statement filed with the SEC on September 19, 2005, the Company sought
approval from the stockholders, at the annual stockholders' meeting on October
20, 2005, for the following (among other things): (a) to terminate the Company'
status as a BDC under the 1940 Act and to file a Form N-54C with the SEC to
terminate this status, and (b) to file a new registration statement with the
SEC.

On October 20, 2005, the Company' stockholders approved (among other things) (a)
the termination of the Company' status as a BDC under the 1940 Act and the
filing of a Form N-54C with the SEC, and (b) the filing of a new registration
statement. Based on this approval, on October 21, 2005, the Company filed a Form
N-54C with the SEC terminating its status as a BDC.

On November 3, 2005, the Company's Board of Directors approved a 1 for 350
reverse stock split of the Company's common stock. Common shares outstanding
prior to and after the reverse stock split totaled 1,169,494,405 and 3,341,419
shares, respectively. The November 23, 2005 reverse stock split has been
retroactively reflected in the accompanying financial statements for all periods
presented. Unless otherwise indicated, all references to outstanding common
shares, including common shares to be issued upon the exercise of warrants and
convertible notes payable, refer to post-split shares.

On January 19, 2006, 5G Wireless Solutions, Inc. was merged with and into the
Company.

Basis of Presentation.

The accompanying unaudited interim condensed financial statements have been
prepared by the Company, pursuant to the rules and regulations of the SEC.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been omitted pursuant to such SEC rules and
regulations; nevertheless, the Company believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements and the notes hereto should be read in conjunction with the financial
statements, accounting policies and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2005, filed with the
SEC. In the opinion of management, all adjustments necessary to present fairly,
in accordance with accounting principles generally accepted in the United States
of America, the Company's financial position as of June 30, 2006, and the
results of operations and cash flows for the interim periods presented, have
been made. Such adjustments consist only of normal recurring adjustments. The
results of operations for the three and six months ended June 30, 2006 are not
necessarily indicative of the results for the full year.

Going Concern Basis

The accompanying financial statements have been prepared assuming that the
Company continues as a going concern that contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. However,
the ability of the Company to continue as a going concern on a longer-term basis
will be dependent upon its ability to generate sufficient cash flow from
operations to meet its obligations on a timely basis, to retain its current
financing, to obtain additional financing, and ultimately attain profitability.

During the three months ended June 30, 2006, the Company incurred net losses
totaling $3,636,408 had net cash used in operating activities totaling
$1,061,240 and had an accumulated deficit of $28,540,045 as of June 30, 2006.
These factors raise substantial doubt as to the Company's ability to continue as
a going concern. If the Company is unable to generate sufficient cash flow from
operations and/or continue to obtain financing to meet its working capital
requirements, it may have to curtail its business sharply or cease business
altogether.

Management plans to continue raising additional capital through a variety of
fund raising methods during 2006 and 2007, and to pursue all available
fundraising alternatives in this regard. Management may also consider a variety
of potential partnership or strategic alliances to strengthen its financial
position. In addition, the Company will continue to seek additional funds to
ensure its successful growth strategy and to allow for potential investments
into a diverse portfolio of companies with strategic information and
communications technologies or applications. Whereas the Company has been
successful in the past in raising capital, no assurance can be given that these
sources of financing will continue to be available to the Company and/or that
demand for the Company's equity/debt instruments will be sufficient to meet its
capital needs. The financial statements do not include any adjustments relating
to the recoverability and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.

If funding is insufficient at any time in the future, the Company may not be
able to take advantage of business opportunities or respond to competitive
pressures, or may be required to reduce the scope of its planned product
development and marketing efforts, any of which could have a negative impact on
its business and operating results. In addition, insufficient funding may have a
material adverse effect on the Company's financial condition, which could
require the Company to:

o curtail operations significantly;

o sell significant assets;

o seek arrangements with strategic partners or other parties that may
require us to relinquish significant rights to products, technologies or
markets or;

o explore other strategic alternatives including a merger or sale of the
Company.

To the extent that the Company raises additional capital through the sale of
equity or convertible debt securities, the issuance of such securities will
result in dilution to existing stockholders. If additional funds are raised
through the issuance of debt securities, these securities may have rights,
preferences and privileges senior to holders of common stock and the terms of
such debt could impose restrictions on the Company's operations. Regardless of
whether the Company's cash assets prove to be inadequate to meet its operational
needs, the Company may seek to compensate providers of services by issuing stock
in lieu of cash, which will also result in dilution to existing shareholders.

Use of Estimates.

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Significant estimates include the allowance for
doubtful accounts, inventory and warranty reserves, the fair value of equity
instruments and derivative liabilities and the deferred tax valuation allowance.
Actual results could differ from those estimates.

Cash and Cash Equivalents.

The Company considers all highly liquid fixed income investments with maturities
of three months or less at the time of acquisition, to be cash equivalents. At
June 30, 2006, the Company had no cash equivalents.

Inventory.

Inventories are stated at the lower of cost (first-in, first-out) or market.
Cost is determined on a standard cost basis that approximates the first-in,
first-out method. Market is determined by comparison with recent sales or net
realizable value.

Such net realizable value is based on management's forecasts for sales of the
Company's products or services in the ensuing years. The industry in which the
Company operates is characterized by technological advancement, change and
certain regulations. Should the demand for the Company's products prove to be
significantly less than anticipated, the ultimate realizable value of the
Company's inventories could be substantially less than amounts shown in the
accompanying consolidated balance sheets.

Property and Equipment.

Property and equipment are stated at cost and are depreciated using the
straight-line method over their estimated useful lives of 5-7 years for
furniture and fixtures and 2-3 years for computers and software. Leasehold
improvements are amortized over the shorter of their estimated useful lives or
the term of the lease.

Concentrations of Credit Risk.

Financial instruments that potentially subject the Company to concentrations of
credit risk include cash and accounts receivable. The Company maintains its cash
funds in bank deposits in highly rated financial institutions. At times, such
investments may be in excess of the Federal Deposit Insurance Corporation
insurance limit. At June 30, 2006, there was $146,251 in funds in excess of the
FDIC limits.

The Company's customers are located in the United States and other countries.
The Company provides an allowance for losses on trade receivables based on a
review of the current status of existing receivables and management's evaluation
of periodic aging of accounts. The Company charges off accounts receivable
against the allowance for losses when an account is deemed to be uncollectible.
It is not the Company's policy to accrue interest on past due receivables.

In determining the allowance for doubtful accounts, management evaluated the
future collectibility of customer receivable balances, on a customer by customer
basis, including an individual assessment of the customer's credit quality,
financial standing, and the customer's ability to meet current or future
commitments and the industry and general economic outlook. Based on the severity
of the likely loss, the Company provides an allowance for doubtful accounts
against outstanding balances over 60 days. In the event collection efforts are
unsuccessful for a customer, the receivable is written off and the related
allowance is removed. At June 30, 2006, the Company carried an allowance for
doubtful accounts of $33,857. In addition, during the three and six months ended
June 30, 2006, the Company recorded bad debt expense totaling $127,656 and
$192,264, respectively.

For the six months ended June 30, 2006, there were four customers that accounted
for 17%, 17%, 14% and 11% of the Company's revenues.

The Company operates in a highly competitive industry that is subject to intense
competition, government regulation and rapid technological change. The Company's
operations are subject to significant risks and uncertainties including
financial, operational, technological, regulatory and other business risks
associated with such a company.

Discount on Convertible Notes.

Convertible instruments are evaluated to determine if they are within the scope
of EITF No. 00-19 and SFAS No. 133. In the event that they are not, discounts on
convertible notes are attributable to the relative fair value of the beneficial
conversion feature that allows holders of the debenture to convert into shares
of the Company's common stock at prices lower than the market value and the
discount associated with detachable warrants. These discounts are accounted for
in accordance with Emerging Issues Task Force ("EITF") No. 00-27, "Application
of EITF No. 98-5 To Certain Convertible Instruments" and EITF No. 98-5,
"Accounting For Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios."

Derivative Liabilities.

The Company evaluates the conversion feature of convertible notes and
free-standing instruments such as warrants (or other embedded derivatives)
indexed to its common stock to properly classify such instruments within equity
or as liabilities in its financial statements, pursuant to the requirements of
the EITF No. 00-19, "Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company's Own Stock," EITF No. 01-06, "The Meaning
of Indexed to a Company's Own Stock," EITF No. 05-04, "The Effect of a
Liquidated Damages Clause on a Freestanding Financial Instrument Subject to EITF
No. 00-19," and Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended.

The Company accounts for the effects of registration rights and related
liquidated damages pursuant to EITF No. 05-04, View C, subject to EITF No.
00-19. Pursuant to EITF No. 05-04, View C, liquidated damages payable in cash or
stock are accounted for as a separate derivative, which requires a periodical
valuation of its fair value and a corresponding recognition of liabilities
associated with such derivative. The Company accounts for certain embedded
conversion features and free-standing warrants pursuant to SFAS No. 133 and EITF
No. 00-19, which require corresponding recognition of liabilities associated
with such derivatives at their fair values and changes in fair values to be
charged to results of operations.

Revenue Recognition.

Revenues result principally from the sale and installation of wireless radio
equipment to customers. Equipment sales are recognized when products are
shipped. The Company recognizes revenues in accordance with SEC Staff Accounting
Bulleting ("SAB") No. 104, "Revenue Recognition," when all of the following
conditions exist: (a) persuasive evidence of an arrangement exists in the form
of an accepted purchase order; (b) delivery has occurred, based on shipping
terms, or services have been rendered; (c) the Company's price to the buyer is
fixed or determinable, as documented on the accepted purchase order; and (d)
collectibility is reasonably assured.

Orders delivered to the Company by phone, fax, mail or email are considered
valid purchase orders and once accepted by the Company are deemed to be the
final understanding between the Company and its customer as to the specific
nature and terms of the agreed-upon sale transaction. Products are shipped and
are considered delivered when (a) for FOB factory orders, they leave the
Company's shipping dock or (b) for FOB customer dock orders upon confirmation of
delivery. The creditworthiness of customers is generally assessed prior to the
Company accepting a customer's first order.

The Company offers installation services to customers and charges separately
when such services are purchased. Installation by the Company is not required
for the functionality of the equipment. Consequently, installation services are
considered a separate unit of accounting under EITF No. 00-21,"Revenue
Arrangements with Multiple Deliverables."

The Company recognizes revenue from maintenance and support contracts ratably
over the service period. The Company uses the residual method for
multiple-element arrangements.

Basic and Diluted Loss Per Common Share.

Under SFAS No. 128, "Earnings Per Share," basic earnings per common share is
computed by dividing income available to common stockholders by the
weighted-average number of common shares assumed to be outstanding during the
period of computation. Diluted earnings per share is computed similar to basic
earnings per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. Because the Company has incurred net losses, basic and diluted loss
per share are the same since additional potential common shares would be
anti-dilutive. The calculated diluted loss per share does not take into account
the effect of 35,698,114 potential common shares, such as restricted shares,
convertible securities and warrants, considered to be potentially dilutive.

Fair Value of Financial Instruments.

The carrying value of cash, accounts receivable, accounts payable and accrued
liabilities approximate their fair value due to their short-term maturities. The
fair value of the convertible notes amount to $1,882,294, based on the Company's
incremental borrowing rate. The carrying value of the embedded derivative
liabilities associated with the convertible notes and related warrants, and
convertible preferred stock approximate their fair value based on assumptions
using the Black-Scholes model for the warrants and embedded option pricing
models.

Management has concluded that it is not practical to determine the estimated
fair value of amounts due to related parties. SFAS No. 107 requires that for
instruments for which it is not practicable to estimate their fair value,
information pertinent to those instruments be disclosed, such as the carrying
amount, interest rate, and maturity, as well as the reasons why it is not
practicable to estimate fair value. Information related to these related party
instruments is included in Note 6. Management believes it is not practical to
estimate the fair value of these related-party instruments because the
transactions cannot be assumed to have been consummated at arm's length, the
terms are not deemed to be market terms, there are no quoted values available
for these instruments, and an independent valuation would not be practicable due
to the lack of data regarding similar instruments, if any, and the associated
potential costs.

Stock-Based Compensation Arrangements.

Effective January 1, 2006, the Company adopted the provisions of SFAS No.
123(R), "Share-Based Payments." SFAS No. 123(R) requires employee stock options
and rights to purchase shares under stock participation plans to be accounted
for under the fair value method and requires the use of an option pricing model
for estimating fair value. Accordingly, share-based compensation is measured at
grant date, based on the fair value of the award. The Company previously
accounted for awards granted under its equity incentive plans under the
intrinsic value method prescribed by Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations,
and provided the required pro forma disclosures prescribed by SFAS No. 123,
"Accounting for Stock-Based Compensation," as amended.

Employee Stock Based Compensation.

The Company incurred approximately zero and $156,000, respectively in
stock-based employee compensation during the three and six months ended June 30,
2006. There was no unvested portion of previous grants for which the requisite
service had not been rendered as of December 31, 2004. Accordingly, there is no
pro-forma compensation expense for the interim periods presented.

On January 1, 2006, the Company adopted SFAS No. 123(R), "Share-Based Payment,"
which establishes standards for the accounting of transactions in which an
entity exchanges its equity instruments for goods or services, primarily
focusing on accounting for transactions where an entity obtains employee
services in share-based payment transactions. SFAS No. 123(R) requires a public
entity to measure the cost of employee services received in exchange for an
award of equity instruments, including stock options, based on the grant-date
fair value of the award and to recognize it as compensation expense over the
period the employee is required to provide service in exchange for the award,
usually the vesting period. SFAS No. 123(R) supersedes Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees" for
periods beginning in fiscal 2006. In March 2005, the Securities and Exchange
Commission issued Staff Accounting Bulletin ("SAB") No. 107 relating to SFAS No.
123(R). The Company has applied the provisions of SAB No. 107 in its adoption of
SFAS No. 123(R).

The Company adopted SFAS 123(R) using the modified prospective transition
method, which requires the application of the accounting standard as of January
1, 2006, the first day of the Company's fiscal year 2006. The Company's
consolidated financial statements as of and for the three and six months ended
June 30, 2006 reflect the impact of SFAS 123(R). In accordance with the modified
prospective transition method, the Company's consolidated financial statements
for prior periods have not been restated to reflect, and do not include, the
impact of SFAS 123(R).

SFAS No. 123(R) requires companies to estimate the fair value of share-based
payment awards on the date of grant using an option-pricing model. The value of
the portion of the award that is ultimately expected to vest is recognized as
expense over the requisite service periods in the Company's consolidated
statement of operations. Prior to the adoption of SFAS No. 123(R), the Company
accounted for stock-based awards to employees and directors using the intrinsic
value method in accordance with APB Opinion No. 25 as allowed under SFAS No.
123, "Accounting for Stock-Based Compensation." Under the intrinsic value
method, no stock-based compensation expense had been recognized in the Company's
consolidated statements of operations, other than as related to option grants to
employees and consultants below the fair market value of the underlying stock at
the date of grant.

Stock-based compensation expense recognized during the period is based on the
value of the portion of share-based payment awards that is ultimately expected
to vest during the period. SFAS 123(R) requires forfeitures to be estimated at
the time of grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. The forfeiture rate that the Company
presently uses is 0.

SFAS No. 123(R) requires the cash flows resulting from the tax benefits
resulting from tax deductions in excess of the compensation cost recognized for
those options to be classified as financing cash flows. Due to the Company's
loss position, there were no such tax benefits during the three and six months
ended June 30, 2006. Prior to the adoption of SFAS No. 123(R), those benefits
would have been reported as operating cash flows had the Company received any
tax benefits related to stock option exercises.

The fair value of each stock-based award is estimated on the grant date using
the Black Scholes option-pricing model. Expected volatilities are based on the
historical volatility of the Company's stock price. The expected term of options
granted subsequent to the adoption of SFAS 123(R) is derived using the
simplified method as defined in the SEC's Staff Accounting Bulletin 107,
"Implementation of FASB 123(R)."

Equity Instruments Issued To Other Than Employees for Services.

The Company follows SFAS No. 123(R) (as interpreted by EITF No. 96-18,
"Accounting for Equity Instruments That Are Issued To Other Than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services") to account for
transactions involving services provided by third parties where the Company
issues equity instruments as part of the total consideration.

Pursuant to paragraph 7 of SFAS No. 123(R), the Company accounts for such
transactions using the fair value of the consideration received (i.e. the value
of the goods or services) or the fair value of the equity instruments issued,
whichever is more reliably measurable. The Company applies EITF No. 96-18, in
transactions, when the value of the goods and/or services are not readily
determinable and (1) the fair value of the equity instruments is more reliably
measurable and (2) the counterparty receives equity instruments in full or
partial settlement of the transactions, using the following methodology:

(a) For transactions where goods have already been delivered or services
rendered, the equity instruments are issued on or about the date the
performance is complete (and valued on the date of issuance).

(b) For transactions where the instruments are issued on a fully vested,
non-forfeitable basis, the equity instruments are valued on or about the
date of the contract.

(c) For any transactions not meeting the criteria in (a) or (b) above, the
Company re-measures the consideration at each reporting date based on its
then current stock value.

The Company incurred stock-based compensation in transactions with third parties
during the three and six months ended June 30, 2006. Such transactions related
to deferred consulting arrangements valued at $140,727 and $632,441,
respectively, and were accounted for under the methodology in (c) above. The
unamortized portion of the total fair value of such contracts was approximately
$92,000 as of June 30, 2006 and is presented as deferred consulting fees, contra
equity, in the accompanying condensed balance sheet. Amortization expense of
such deferred consulting fees totaled approximately $260,000 for the three
months ended June 30, 2006. In addition, mark to market adjustments of
approximately $56,000 were added during the quarter ended June 30, 2006.

Reclassifications.

Certain reclassifications have been made to the prior period financial
statements to conform to the current year presentation.

Segment Disclosures.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," changed the way public companies report information about segments
of their business in their annual financial statements and requires them to
report selected segment information in their quarterly reports issued to
shareholders. It also requires entity-wide disclosures about the products and
services an entity provides, the foreign countries in which it holds significant
assets and its major customers. At June 30, 2006, the Company operated in one
segment.

2. BALANCE SHEET CAPTIONS

Inventory.

Inventory consisted of the following at June 30, 2006:

Raw materials $ 85,243
Work in process 33,462
Finished goods 27,865
--------
Total $146,570
========

Property and Equipment

Property and equipment consisted of the following at June 30, 2006:

Building Improvements $ 4,747
Computers 275,872
Furniture and fixtures 21,264
Software 23,755
--------
Total property and equipment 325,638

Less: accumulated depreciation 284,275
--------
Total $ 41,363
========

Accounts Payable and Accrued Liabilities.

Accounts payable and accrued liabilities consisted of the following at June 30,
2006:

Accounts payable $411,743
Accrued salaries and payroll related costs 240,866
Deferred income 112,564
Other accrued liabilities 87,567
--------
Total $852,740
========

Other Liabilities.

Other liabilities consisted of the following at June 30, 2006:

Accrued liquidated damages - Longview $ 495,057
Series B preferred stock - conversion feature derivative
liability 1,517,143
$805,000 convertible notes - conversion feature derivative
liability 325,341
Longview convertible notes - conversion feature derivative
liabilities 732,651
Longview convertible notes - warrants derivative liabilities 521,834
Montgomery convertible debentures - conversion feature derivative
liabilities 810,000
Montgomery convertible debentures - warrants derivative liabilities 840,000
Montgomery notes - redemption premium accreted 5,584
$250,000 convertible notes - warrants derivative liability 4,800
Series B preferred stock - accrued dividends 14,938
----------
Total $5,267,348
==========

See Notes 3 and 4 for a description of the Company's derivative liabilities.

3. NOTES PAYABLE AND CONVERTIBLE NOTES

Note payable and convertible notes payable consist of the following at June 30,
2006:

Note payable, interest bearing at 10% per annum with principal
and interest payment of $2,500 monthly, maturing in July 2006 $ 22,424
----------
Total note payable 22,424
----------
$805,000 convertible notes, bearing interest at 9% per annum,
principal converted of $472,000, matured in April 2006, extended
to March 2008 333,000
$2,000,000 convertible notes, bearing interest at 5%, net of
discount of $524,891 and $717,459 of principal converted,
maturing in September 2007 757,650
$1,000,000 convertible notes, bearing interest at prime plus 4%,
net of discount of $359,145 and $13,040 of principal converted
maturing in March 2007 627,815
$300,000 convertible note, bearing interest at prime plus 4%, net
of discount of $158,333, maturing in July 2007 141,667
$69,000 convertible note, bearing interest at 12%, net of discount
of $60,849, maturing in April 2007 8,151
$600,000 convertible note, bearing interest at 12%, net of discount
of $585,989, maturing in June 2008 14,011
----------
Total convertible notes payable 1,882,294
----------
Total $1,904,718
==========

Note Payable.

On March 21, 2003, the Company signed a $50,000 promissory note that as of June
30, 2006 had a balance of $22,424 and is scheduled to be repaid in monthly
installments of $2,500 per month. No payments were made during the three months
ended June 30, 2006. The note matures in July 2006 and is currently in default.
The default interest rate is 10% and at June 30, 2006 approximately $1,862 of
accrued interest was payable.

$250,000 Convertible Notes.

In March 2004, the Company borrowed $250,000 under convertible notes payable
("$250,000 Convertible Notes"), of which $100,000 came from management or
individuals related to certain management personnel. All borrowings were due in
March 2006, with monthly interest payments on the outstanding balance; interest
accrues at 9% per annum. The $250,000 Convertible Notes may be converted into
common stock of the Company based on a formula subject to a floor of $0.001 per
share. During the three months ended June 30, 2006, the remaining $75,000
principal balance of these notes was converted to common stock. Accordingly, as
of June 30, 2006, there is no outstanding balance on the $250,000 Convertible
Notes.

In connection with the $250,000 Convertible Notes, the Company issued warrants
to purchase 1,904 (post reverse split) shares of the Company's restricted common
stock based on a formula subject to a floor of $0.001 per share. The warrants
vested upon grant and expire in June 2008.

During the quarter ended June 30, 2006, the Company issued two convertible note
instruments with variable conversion features and not subject to a floor.
Consequently, due to these terms, the number of shares required for settlement
is indeterminate. Accordingly, at June 30, 2006, after considering all other
commitments that may require the issuance of common stock during the maximum
period the warrants could remain outstanding, the Company may not have
sufficient authorized and unissued shares available to settle such warrants.
Accordingly, the warrants were reclassified to derivative liabilities (included
in other liabilities- See Note 2) with the change in fair value between the
reclassification date and June 30, 2006 charged to results of operations and
recorded as a change in estimated fair value of derivative liabilities in the
accompanying statements of operations for the three and six months ended June
30, 2006. The amount reclassified from additional paid-in capital related to the
warrants was $52,632. The change in estimated fair value between the
reclassification date and June 30, 2006 was $47,831 and the balance of
derivative liability was $4,800.

$805,000 Convertible Notes.

In March 2004, the Company borrowed $715,000 under convertible notes payable
("$715,000 Convertible Notes"). All borrowings are due in March 2006, with
monthly interest payments on the outstanding balance; interest accrues at 9% per
annum. The $715,000 Convertible Notes may be converted into common stock of the
Company based on a formula subject to a floor of $0.001 per share. In July 2004,
the Company borrowed an additional $90,000 under terms identical to those of the
$715,000 Convertible Notes.

The conversion feature embedded in the notes and the warrants can be settled in
unregistered shares pursuant to EITF No. 00-19. Therefore, the notes and warrant
instruments met the scope exception of paragraph 11(a) of SFAS No. 133 at
inception through March 31, 2006.

During the quarter ended June 30, 2006, the Company issued two convertible note
instruments with variable conversion features and not subject to a floor.
Consequently, due to these terms, the number of shares required for settlement
is indeterminate. Accordingly, at June 30, 2006, after considering all other
commitments that may require the issuance of stock during the maximum period the
convertible notes could remain outstanding, the Company may not have sufficient
authorized and unissued shares available to settle the convertible notes.
Accordingly, the conversion feature associated with the $715,000 Convertible
Notes was reclassified to derivative liabilities (included in other
liabilities-See Note 2) with the change in the estimated fair value between the
reclassification date and June 30, 2006 charged to results of operations.
Because there was no beneficial conversion feature ("BCF") associated with the
$715,000 Convertible Notes at inception, no amount was reclassified from
additional paid-in capital at the reclassification date. The change in estimated
fair value between the reclassification date and June 30, 2006 was $325,341 and
is included in change in fair value of derivative liabilities in the
accompanying statements of operations for the three and six months ended June
30, 2006.

The Company issued warrants with the $715,000 Convertible Notes. The warrants
expired February 28, 2006 and thus none are outstanding as of June 30, 2006.

In connection with the issuance of the $715,000 Convertible Notes, the Company
paid issuance costs of $74,500, which has been recorded as a debt discount and
is being amortized to interest expense over the life of notes. Prior to the
quarter ended June 30, 2006 the debt discount was fully amortized.

During the three months ended June 30, 2006, $103,100 of principal balance of
the $715,000 Convertible Notes was converted into common stock.

In April 2006, the notes expired and were in default. During the three months
ended June 30, 2006, the parties agreed to extend the due date to March 31,
2008.

$2,000,000 Longview Convertible Notes.

On September 22, 2004, the Company entered into a subscription agreement with
Longview Fund, LP, Longview Equity Fund, LP, and Longview International Equity
Fund, LP whereby these investors purchased $2,000,000 of principal amount of
promissory notes ("$2,000,000 Convertible Notes"), bearing interest at 5% per
annum, of the Company that are convertible into shares of the Company's common
stock. The conversion formula is subject to a floor of $0.001 per share. The
conversion price is equal to the lesser of (i) 75% of the average of the five
lowest closing bid prices of the Company's common stock as reported by the OTC
Bulletin Board for the ninety trading days preceding the conversion date, of
(ii) $17.50 (post reverse split). The notes mature in September 2007. Under the
terms of the notes, they cannot be converted if such conversion would result in
beneficial ownership by the subscriber and its affiliates of more than 4.99% of
the outstanding shares of the Company's common stock on the conversion date. In
addition, the convertible note holders received Class A and Class B share
warrants to purchase shares of common stock, as described below. The $2,000,000
Convertible Notes and related warrant agreements require registration of the
shares underlying the conversion feature and warrants. See "Registration
Rights," "Classification of Conversion Feature and Warrants" and "Liquidated
Damages," below.

$1,000,000 of promissory notes was purchased on the initial closing date and the
second $1,000,000 of the purchase price was received on November 9, 2004.

The convertible note holders received Class A and Class B share warrants to
purchase shares of common stock based on the following formulas:

30 Class A warrants were issued for each 100 shares issuable assuming
conversion at inception. The per warrant share exercise price to acquire a
share upon exercise of a Class A Warrant is $0.15, as adjusted June 13,
2006. The original exercise price was $7.14 (post reverse split). Each
Class A warrant is exercisable until five years after the issue date .

125 Class B warrants were issued for each $1.00 of purchase price invested
on each closing date. The per warrant share exercise price to acquire a
share upon exercise of a Class B Warrant is $0.15, as adjusted June 13,
2006. The original exercise price was $7.00 (post reverse split). Each
warrant is exercisable until three years after the issue date of the Class
B warrant.

At the inception of the $2,000,000 Convertible Notes, the convertible feature
and the warrants could be settled in unregistered shares and was outside the
scope of EITF No. 00-19. Consequently, pursuant to EITF No. 98-5 and EITF No.
00-27, the Company estimated the fair value of such BCF to be approximately
$2,000,000 and recorded such amount as a debt discount. Such discount is being
amortized to interest expense over the two-year term of the notes. Amortization
expense of the discount on the $2,000,000 Convertible Notes during the three and
six months ended June 30, 2006 approximated $126,000 and $321,000, respectively.

During the three and six months ended June 30, 2006, approximately $92,000 plus
accrued interest of $12,000 of the $2,000,000 Convertible Notes were converted
into 460,000 shares of common stock. To date, the Company has issued 1,022,336
shares (post-reverse split) upon conversion of $717,459 aggregate principal and
related accrued interest.

On October 22, 2005, upon the de-election as a BDC, the shares underlying the
conversion feature and the warrants were required to be registered. As a result,
the Company reclassified the fair value of the conversion feature and the
warrants to derivative liability from additional paid in capital. The balance of
the derivative liability related to the $2,000,000 Convertible Notes at December
31, 2005 was $26,193. During the three and six months ended June 30, 2006, the
change in the fair value of the liability associated with the conversion feature
and the warrants was $227,447 and $615,974, respectively and such amounts were
charged to results of operations. The change in estimated fair value during the
three and six months ended June 30, 2006 includes a reduction of expense of
$115,289 and expense of $273,238, respectively as a charge directly associated
with the re-pricing of the Class A and B warrants.

$1,000,000 Longview Convertible Notes.

On March 22, 2005, the Company entered into a subscription agreement with
Longview Fund, LP, Longview Equity Fund, LP, and Longview International Equity
Fund, LP whereby these investors purchased $1,000,000 in convertible notes
("$1,000,000 Convertible Notes"), bearing interest at prime plus 4% per annum of
the Company convertible into shares of the Company's common stock. The
conversion formula is subject to a floor of $0.001 per share. The conversion
price is equal to the lesser of (i) 75% of the average of the five lowest
closing bid prices of the Company's common stock as reported by the OTC Bulletin
Board for the ninety trading days preceding the conversion date, of (ii) $17.50
(post reverse split). The notes mature in March 2007. Under the terms of the
notes, they cannot be converted if such conversion would result in beneficial
ownership by the subscriber and its affiliates of more than 4.99% of the
outstanding shares of the Company's common stock on the conversion date. In
addition, the convertible note holders received Class A share warrants to
purchase shares of common stock, as described below. The $1,000,000 Convertible
Notes and related warrant agreements require registration of the shares
underlying the conversion feature and warrants. See "Registration Rights,"
"Classification of Conversion Feature and Warrants" and "Liquidated Damages,"
below.

The convertible note holders received Class A share warrants to purchase shares
of common stock based on the following formulas:

30 Class A warrants were issued for each 100 shares issuable assuming
conversion at inception. The per warrant share exercise price to acquire a
share upon exercise of a Class A Warrant is $0.15, as adjusted June 13,
2006. The original exercise price was $3.50 (post reverse split). Each
Class A warrant is exercisable until five years after the issue date.

At the inception of the $1,000,000 Convertible Notes, the convertible feature
and the warrants could be settled in unregistered shares and was outside the
scope of EITF No. 00-19. Consequently, pursuant to EITF No. 98-5 and EITF No.
00-27, the Company estimated the fair value of such BCF to be approximately
$1,000,000 and recorded such amount as a debt discount. Such discount is being
amortized to interest expense over the two-year term of the notes. Amortization
expense on these notes during the three and six months ended June 30, 2006
approximated $123,000 and $263,000, respectively. To date, the Company has
issued 29,872 shares (post-reverse split) upon conversion of $13,040 aggregate
principal and related accrued interest.

On October 22, 2005, upon the de-election as a BDC, the shares underlying the
conversion feature and the warrants were required to be registered. As a result,
the Company reclassified the fair value of the conversion feature and the
warrants to derivative liability from additional paid in capital. The balance of
derivative liability related to the $1,000,000 Convertible Notes at December 31,
2005 is $13,096. During the three and six months ended June 30, 2006, the change
in the fair value of the liability associated with the conversion feature and
the warrants was $164,519 and $207,604, respectively and was charged to results
of operations. The change in estimated fair value during the three and six
months ended June 30, 2006 includes a reduction of expense of $4,085 and expense
of $39,000, respectively as a charge directly associated with the re-pricing of
the Class A warrants.

$300,000 Longview Convertible Notes.

On July 22, 2005, the Company entered into a subscription agreement with
Longview Fund, LP, Longview Equity Fund, LP, and Longview International Equity
Fund, LP whereby these investors purchased $300,000 of principal amount of
promissory notes ("$300,000 Convertible Notes"), bearing interest at prime plus
4% per annum, of the Company convertible into shares of the Company's common
stock. The conversion formula is subject to a floor of $0.001 per share. The
conversion price is equal to the lesser of (i) 75% of the average of the five
lowest closing bid prices of the Company's common stock as reported by the OTC
Bulletin Board for the ninety trading days preceding the conversion date, or
(ii) $17.50 (post reverse split). The notes mature in July 2007.Under the terms
of the notes, they cannot be converted if such conversion would result in
beneficial ownership by the subscriber and its affiliates of more than 4.99% of
the outstanding shares of the Company's common stock on the conversion date. In
addition, the convertible note holders received Class A share warrants to
purchase shares of common stock, as described below. The $300,000 Convertible
Notes and related warrant agreements require registration of the shares
underlying the conversion feature and warrants. See "Registration Rights,"
"Classification of Conversion Feature and Warrants" and "Liquidated Damages,"
below.

The convertible note holders received Class A share warrants to purchase shares
of common stock based on the following formulas:

30 Class A warrants were issued for each 100 shares issuable assuming
conversion at inception. The per warrant share exercise price to acquire a
share upon exercise of a Class A Warrant is $0.15, as adjusted June 13,
2006. The original exercise price was 120% of the closing bid price of the
common stock on the trading day immediately preceding the Initial Closing
Date. Each Class A warrant is exercisable until five years after the issue
date.

At the inception of the $300,000 Convertible Notes, the convertible feature and
the warrants could be settled in unregistered shares and was outside the scope
of EITF No. 00-19. Consequently, pursuant to EITF No. 98-5 and EITF No. 00-27,
the Company estimated the fair value of such BCF to be approximately $300,000
and recorded such amount as a debt discount. Such discount is being amortized to
interest expense over the two-year term of the notes. Amortization expense on
this note during the three and six months ended June 30, 2006 approximated
$38,000 and $76,000, respectively.

To date, none of the $300,000 Convertible Notes have been converted into common
stock.

On October 22, 2005, upon the de-election as a BDC, the shares underlying the
conversion feature and the warrants were required to be registered. As a result,
the Company reclassified the fair value of the conversion feature and the
warrants to derivative liability from additional paid in capital. The balance of
derivative liability related to the $300,000 Convertible Notes at December 31,
2005 is $3,929. During the three and six months ended June 30, 2006, the change
in the estimated fair value of the liability associated with the conversion
feature and the warrants was $27,402 and $102,010, respectively, and was charged
to results of operations. The change in estimated fair value during the three
and six months ended June 30, 2006 includes a reduction of expense of $23,179
and expense of $51,429 as a charge directly associated with the re-pricing of
the Class A warrants.

Registration Rights - Longview.

The Longview notes (see above) along with related warrant agreements contain
provisions whereby the holders of notes and warrants were entitled to
registration rights in the event the Company's Regulation E exemption from
registration ceases to be effective. This exemption from registration (evidence
by a Form 1-E filed when the Company operated as a BDC), ceased to be effective
on October 22, 2005. Specifically, subsequent to October 22, 2005, the Company
was required to register with the SEC the shares issuable pursuant to the
Longview notes' conversion feature and warrants. From the date that Regulation E
exemption ceased to be effective, , the Company must file a registration
statement with the SEC within 60 days and, it must have such registration
statement be effective within 90 days.

The Company is required to pay liquidated damages at the rate of 2% per month
(based on the notes' outstanding principal balance) until a registration
statement is effective. The Company filed Form SB-2 with the SEC on August 8,
2006.

Classification of Longview Conversion Feature and Warrants.

Pursuant to EITF No. 00-19, the Company evaluated the Longview conversion
feature and warrants at October 22, 2005. Management determined that due to the
nature of the liquidated damages the Company must pay (with no maximum
prescribed in the agreements), the Company must pursue registration as its most
"economic alternative" and settle the Longview conversion feature and warrants
with registered shares; and as a result, it must treat the conversion feature
and warrants as derivative liabilities. In addition, under View C of EITF No.
05-04, the Company accounts for the liquidated damages separately from these two
other derivative liabilities. Management estimated the value of the warrants
using a Black-Scholes valuation model. The fair value of the Longview warrant
derivative liability at June 30, 2006 totaled $521,835 and is included in other
liabilities in the accompanying condensed balance sheet. Management estimated
the value of the conversion feature, after consultation with a valuation expert,
taking into consideration limitations on ownership (Longview cannot own in
excess of 4.99% of the Company's outstanding shares at any time "cap") and,
estimated conversions during the term of the notes, subject to the cap, using
discount rates of 67%. The fair value of the derivative liability with respect
to the conversion feature at June 30, 2006 totaled $605,139 and is included in
other liabilities in the accompanying condensed balance sheet.

Liquidated Damages - Longview.

The Company is required to pay liquidated damages at the rate of 2% per month
(based on the Longview notes' principal balance) until such time a Form SB-2
registration statement is effective. The Company has accrued $495,057 in
liquidated damages, which is included in other liabilities in the accompanying
condensed balance sheet at June 30, 2006. The Company estimates the registration
statement to become effective in November 2006 and damages were accrued through
that date.

$69,000 Longview Convertible Notes.

On April 5, 2006, the Company entered into a subscription agreement with
Longview Fund, LP under which this investor will purchase up to $69,000 in
convertible notes bearing interest at 12% per annum, convertible into shares of
the Company's common stock (the total amount of the notes was changed upon
signing from $60,000 to $69,000) ("$69,000 Convertible Notes"). The terms of
these notes are two years. The conversion price is equal to the lower of (i)
$0.50, or (ii) 50% of the lowest five day weighted average volume price of the
common stock using the volume weighted average price as reported by Bloomberg
L.P. for our principal market for the 20 trading days preceding a conversion
date. The conversion feature is not subject to a floor.

The note holder received Class A share warrants to purchase shares of common
stock based on the following formula:

1 Class A warrant was issued for each 1 share of common stock issuable
assuming conversion at inception. The per warrant share exercise price to
acquire a share upon exercise of a Class A Warrant is $0.15, as adjusted
June 13, 2006. The original exercise price was $0.50 (post reverse split).
Each warrant is exercisable until five years after the issue date of the
Class A Warrants.

On this basis, the Company issued warrants to purchase 216,668 shares of common
stock on April 5, 2006.

The Company has received a total of $69,000 under two promissory notes under a
first and second closing under the terms of the subscription agreement.

The conversion feature of the notes and warrants do not satisfy all of the
conditions of EITF No. 00-19 and therefore do not meet the scope exception of
paragraph 11(a) of SFAS No. 133. As a result, the conversion feature must be
bifurcated from the host note and together with the warrants must be reflected
as derivative liabilities. The estimated fair value of the warrants was $132,167
at inception and $69,000 was allocated as discount against the note and $63,167
of excess discount was charged to results of operations. During the period from
issuance to June 30, 2006, the Company charged an additional $49,833 in results
of operations. At June 30,2006, $82,334 of derivative liability is included in
other liabilities in the accompanying condensed balance sheet. The estimated
fair value of the conversion feature was $120,681 at inception and none was
allocated as discount against the note and $120,681 and such amount was charged
to results of operations and recorded to change in estimated fair value of
derivative liabilities in the accompanying statements of operations for the
three and six months ended June 30, 2006. During the period from issuance to
June 30, 2006, the Company charged an additional $6,831 to results of operations
for the change in estimated fair values of such liabilities between those dates.
At June 30,2006, $127,512 is included in other liabilities in the accompanying
condensed balance sheet.

During the period from issuance to June 30, 2006, there were no conversions of
the $69,000 Convertible Notes into common stock.

Montgomery Convertible Debentures.

On June 13, 2006, the Company entered into and closed on a Securities Purchase
Agreement with Montgomery Equity Partners, LP ("Montgomery"). Under this
agreement, Montgomery agreed to purchase from us 12% convertible debentures in
the aggregate principal amount of $1,200,000; that will mature on June 13, 2008
("Montgomery Convertible Debentures"). The debentures will be convertible from
time to time into our common stock by Montgomery, at its sole option, into a
price per shares of either: (i) $0.3155, or (ii) 80% of the lowest closing bid
price of our common stock, for the five trading days immediately preceding the
conversion date. The conversion feature is not subject to a floor.

Beginning January 15, 2007, the Company is required to redeem the debentures at
a rate of no less than $60,000 per month of any then outstanding principal
balance plus a redemption premium equal to 20% of the principal amount being
redeemed. The Company is accreting the redemption premium as interest expense as
over the period from inception through each required monthly redemption date.
During the period from inception through June 30, 2006, the Company recorded
$5,584 of redemption premium accretion

The Company granted Montgomery a subordinate priority security interest in
certain of our assets pursuant to a Security Agreement, dated June 13, 2006.

The Company received $600,000 upon closing, will receive another $300,000 one
business day after the date a registration statement is filed, and will receive
the final $300,000 one business day after the date a registration statement is
declared effective by the Securities and Exchange Commission.

Montgomery will not be able to convert the debentures and/or exercise the
warrants into an amount that would result in the investor beneficially owning in
excess of 4.99% of the outstanding shares of the Company's common stock.
Further, Montgomery agreed to limit its weekly debenture conversions to no more
than $50,000 per week, unless this provision is waived by us. That limitation
becomes void when our traded weighted dollar volume exceeds $400,000 for the
previous week or the closing bid price of our common stock exceeds $0.4259.

In this transaction, Montgomery received three five-year warrants, all dated
June 13, 2006, to purchase as follows:

o Class A warrant for 800,000 shares of common stock at an exercise price of
$0.15;

o Class B warrant for 800,000 shares at an exercise price of $0.35 per
share; and

o Class C warrant for 800,000 shares at an exercise price the lesser of
$0.35 or 80% of the lowest closing bid price of our common stock per share
as reported by Bloomberg L.P. for the 5 trading days prior to exercise of
the warrant.

These warrants are exercisable on a cash basis provided the Company is not in
default and the shares underlying the warrants are subject to an effective
registration statement. The Company paid to Montgomery 60,852 shares of common
stock as a loan commitment fee. In addition, the Company will pay the following
under the Securities Purchase Agreement to Yorkville Advisors LLC (an affiliate
of Montgomery):

o commissions of 10% of the principal amount of the debenture, which is to
be paid proportionally upon each disbursement;

o a structuring fee of $10,000 directly from the initial proceeds; and

o a non-refundable due diligence fee of $5,000.

These costs have been accounted for as deferred financing costs. In connection
with this transaction, the Company granted to Montgomery certain demand rights
under a registration rights agreement, dated June 13, 2006, to the shares to be
issued upon conversion of the Montgomery debentures and the warrants.

The parties also entered into a Pledge and Escrow Agreement, dated June 13,
2006, under which the Company agreed to irrevocably pledge to Montgomery
15,212,982 shares of the our common stock as security. This stock is to be held
by an escrow agent (counsel for Montgomery) until the full payment of all
amounts due under the Montgomery convertible debentures

The convertible feature of the Montgomery Convertible Debentures provides for a
rate of conversion that is below the market value of the Company's common stock.
The conversion feature of the notes and warrants do not meet all of the criteria
of EITF No. 00-19 as the number of shares is not fixed and therefore the scope
exception of paragraph 11(a) of SFAS No. 133 is not met. As a result, the
conversion feature must be bifurcated from the host note and together with the
warrants reflected as derivative liabilities. The estimated fair value of the
conversion feature was $744,000 at inception and $600,000 was allocated as
discount against the notes with the remaining $144,000 charged to results of
operations. During the period from issuance to June 30, 2006, the Company
charged an additional $66,000 to results of operations for the change in fair
value of derivative liabilities between such dates. At June 30, 2006, $810,000
related to the Montgomery conversion feature derivative liability is included in
other liabilities in the accompanying condensed balance sheet. The discount of
$600,000 is being amortized to interest expense over the two-year term of the
notes. Amortization expense on this note during the period from issue until June
30, 2006 approximated $14,000.

The estimated fair value of the warrants was $840,000 at inception and such
amount was charged results of operations. During the period from June 12, 2006
to June 30, 2006, the Company recorded no change in estimated fair value of
derivative liabilities. At June 30, 2006, $840,000 of Montgomery warrant
derivative liability is included as part of other liabilities in the
accompanying condensed balance sheet.

During the period from issue through June 30, 2006, there were no conversions of
the Montgomery Convertible Debentures into common stock.

4. STOCKHOLDERS' EQUITY (DEFICIT)

Preferred Stock.

Series A.

The Company has 3,000,000 shares of Series A preferred stock authorized. On
October 6, 2004 the Company's Compensation Committee granted and the Company
issued Series "A" convertible preferred shares ("Series A") to Mr. Dix and Mr.
Boudewyn totaling 3,000,000. Each share of Series A is convertible at the rate
of 800 shares of common stock for each full share of Series A).

Each share of outstanding Series A entitles the holder thereof to vote on each
matter submitted to a vote of the stockholders of the Company and to have the
number of votes equal to the number (including any fraction) of shares of common
stock into which such share of Series A is then convertible pursuant to the
provisions hereof at the record date for the determination of shareholders
entitled to vote on such matters or, if no such record date is established, at
the date such vote is taken or any written consent of stockholders becomes
effective. The Series A are convertible after three years from issuance.

A third party conducted an evaluation prior to the issuance and concluded that
the value of the Series A was $200,000, which is being amortized over the three
year vesting period. The remaining balance of $83,333 is carried as unearned
compensation, contra equity, in the accompanying condensed balance sheet at June
30, 2006.

Series B.

The Company is authorized to issue up to 5,000,000 shares of Series B
convertible preferred stock ("Series B"). This stock is convertible into common
stock upon various events including, change of control of the Company.

Each share of the Series B is convertible at a per share conversion price equal
to the lesser of: (i) if converted without benefit of a registration statement,
the conversion price will be equal to 75% of the lowest close bid of the common
stock as reported by the Over-the-Counter Bulletin Board for the twenty trading
days preceding the conversion date for each full share of Series B held; (ii) if
converted with the benefit of a registration statement, the conversion price
will be equal to 85% of the lowest close bid of the common stock as reported by
the Over-the-Counter Bulletin Board for the twenty trading days preceding the
conversion date for each full share of Series B held; or (iii) $1.00 (subject to
adjustment as appropriate in the event of recapitalizations, reclassifications
stock splits, stock dividends, divisions of shares and similar events).

Except as otherwise required by law, each share of outstanding Series B entitles
the holder thereof to vote on each matter submitted to a vote of the
stockholders of the Company and to have the number of votes equal to the number
(including any fraction) of shares of common stock into which such share of
Series B is then convertible pursuant to the provisions hereof at the record
date for the determination of stockholders entitled to vote on such matters or,
if no such record date is established, at the date such vote is taken or any
written consent of stockholders becomes effective. Except as otherwise required
by law or by the Certificate of Designation for the Series B, the holders of
shares of common stock and Series B are to vote together and not as separate
classes.

Should the Company file with the SEC a Form SB-2 registration statement in order
to register the shares of common stock to be issued upon conversion of the
Series B and the shares which could be issued upon payment of the dividends for
resale and distribution under the Securities Act of 1933, the registrable
securities are to be reserved and set aside exclusively for the benefit of each
holder. Additionally, the registration statement will immediately be amended or
additional registration statements will be immediately filed by the Company as
necessary to register additional shares of common stock to allow the public
resale of all common stock included in and issuable by virtue of the registrable
securities.

During the three months ended June 30, 2006, the Company received an aggregate
$40,000 in cash as an investment in Series B. At June 30, 2006, such amount is
included in Series B preferred stock in the accompanying condensed balance
sheet. Also, during the three months ended June 30, 2006, the Company issued
250,000 shares of Series B for proceeds collected during the three months ended
March 31, 2006. During the three months ended June 30, 2006, the Company paid no
issuance costs related to Series B issuances.

Additionally, the Series B designation document includes the following
provisions:

o 10% cumulative preferred dividends shall accrue and accumulate on a
quarterly basis at $0.10 per share.

o Provided that, and only to the extent that, the Company has a sufficient
number of shares of authorized but unissued and unreserved common stock
available to issue upon conversion, each share of Series B shall be
convertible at the option of the holder.

o In the event the Company is prohibited from issuing shares of common stock
upon conversion of the Series B, then at the holder's election, the
Company must pay to the holder, an amount in cash determined by
multiplying the unconverted face amount, together with accrued but unpaid
dividends theron, of the amount of shares of convertible preferred stock
designated by the Holder for mandatory redemption by 110%.

The Series B embedded conversion feature contains a variable conversion rate
with no cap. Additionally, all of the three criteria pursuant to SFAS No. 133
paragraph 12 are met, therefore the embedded derivative instrument (the
conversion option) is required to be bifurcated from the host contract and
accounted for as a derivative instrument pursuant to SFAS No. 133, with changes
in fair value between reporting periods included in results of operations.
Accordingly, the Company recorded the commitment date fair value as derivative
liabilities ($332,500 for shares issued the three months ended March 31, 2006
and $998,889 for shares issued during the three months ended June 30, 2006),
with a corresponding decrease to additional paid-in capital (since the Company
has no retained earnings) for the offsetting deemed dividend. The Company then
revalued the conversion feature at June 30, 2006 totaling $1,517,143, which is
included in other liabilities in the accompanying condensed balance sheet. The
change in estimated fair value during the three months ended June 30, 2006
totaled $11,746 and was recorded as part of change in fair value of derivative
liabilities in the accompanying condensed statements of operations.

Common Stock

During the three months ended June 30, 2006, in accordance with the terms of the
applicable convertible notes payable agreements, the Company issued 1,132,032
shares of common stock in connection with the conversion of notes payable plus
accrued interest totaling approximately $301,000.

During the three months ended June 30, 2006, the Company issued 336,652 shares
of common stock and no warrants to non-employees for services. There was no
stock based employee compensation during the three months ended June 30, 2006.
The Company incurred approximately $260,000 of non-employee stock-based
compensation during the quarter ended June 30, 2006, of which approximately
$84,000 was related to common stock and $176,000 was related to warrants (see
Note 1).

Warrants.

During the three months ended June 30, 2006 Longview Equity Fund, LP, Longview
Equity Fund, LP and Longview International Equity Fund, LP exercised 11,666,
4,166 and 833 warrants, respectively to purchase a total of 11,666, 4,166 and
833 shares of the Company's common stock at an exercise price of $0.15 pursuant
to the $2 million Longview note agreement.

5. COMMITMENTS AND CONTINGENCIES

Lease Commitments.

In October, 2003, the Company's operates its business from its corporate
headquarters in Marina del Rey, California under an operating lease agreement
for its office and research and development space of approximately 10,560 square
feet, for a five-year term, ending in October 2008.

Rent expense approximated $35,000 and $35,000 for the three months ended June
30, 2006 and 2005, respectively.

Litigation.

Other than as set forth below, the Company is not a party to any material
pending legal proceedings, claims or assessments and, to the best of its
knowledge, no such action by or against the Company has been threatened.

(a) On June 15, 2005 the Company was served with a complaint from a third party
in a matter entitled Leslie J. Bishop and Deborah J. Bishop v. Brian K. Corty
and Candy M. Corty, Wireless Think Tank, Inc., and 5G Wireless Communications,
Inc., New York Supreme Court (Chenango County). This action seeks actual damages
in excess of $80,000 and punitive damages of $300,000 against a former employee
of us for breach of a residential lease and damage to a residential property in
2001. The claim against us alleges that the former employee was a principal in
Wireless ThinkTank (a wholly owned subsidiary of the Company) and conducted
business from such residence.

Management believes the Company has meritorious claims and defenses to the
plaintiffs' claims and ultimately will prevail on the merits. However, this
matter remains in the early stages of litigation and there can be no assurance
as to the outcome of the lawsuit. Litigation is subject to inherent
uncertainties, and unfavorable rulings could occur. Were unfavorable rulings to
occur, there exists the possibility of a material adverse impact of money
damages on the Company's financial condition, results of operations, or
liquidity of the period in which the ruling occurs, or future periods.

(b) On May 8, 2006 the Company was served with a complaint in a matter entitled
Brian Vallone and Anne Vallone v. 5G Wireless Communications, Inc., California
Superior Court (Orange County). This action, which does not allege a damage
amount, includes causes of action for breach of contract, negligent
misrepresentation, and fraud, and is concerning equipment that was sold to a
wireless internet provider in California for approximately $9,000 who claims
that they were unable to generate fees for use and for advertising revenues.

6. RELATED PARTY TRANSACTIONS

During the three months ended June 30, 2006 and 2005, the Company used the
credit lines of Service Group, which is a company controlled by Jerry Dix, chief
executive officer of the Company, to help the Company purchase equipment, travel
and related consumables throughout the year as a means of managing cash flows.
The was no amount owed to Service Group at June 30, 2006.

Mr. Dix advanced $2,500 to the company during the three months ended June 30,
2006. There is no interest applicable to this advance. As of June 30, 2006
$2,500 is outstanding and remains payable to Jerry Dix which is included in
Related Party notes and advances in the accompanying condensed balance sheet.

Thomas Janes, a family relative of Don Boudewyn, executive vice president, lent
$20,000 to the Company pursuant to a loan agreement dated June 1, 2006. The loan
provides for simple interest at ten percent (10%) per annum. In addition, there
was an administration fee of $4,000 paid in 21,333 restricted shares of the
Company's common stock issued at a 25% discount to the lowest closing bid price
in the 20 trading days prior to the date of the agreement. During the three
months ended June 30, 2006, the Company charged $5,333 for fair value of the
administration fee and related discount to results of operations and recorded
the common stock at this value.

Russell Janes, a family relative of Mr. Boudewyn lent $20,000 to the Company
pursuant to a loan agreement dated June 1, 2006. The loan provides for simple
interest at ten percent (10%) per annum. In addition, there was an
administration fee of $4,000 paid in 21,333 restricted shares of the Company's
common stock issued at a 25% discount to the lowest closing bad price in the 20
trading days prior to the date of the agreement. During the three months ended
June 30, 2006, the Company charged $5,333 for fair value of the administration
fee and related discount to results of operations and recorded the common stock
at this value.

7. SUBSEQUENT EVENTS

(a) On July 11, 2006, 5G Wireless issued a total of 239,499 (post reverse split)
shares of common stock to an individual who provided the guarantee on lease for
the company. The shares had an aggregate value of $44,906 (average of $0.18
(post reverse split) per share). See Exhibit 10.1.

(b) On July 11, 2006, 5G Wireless issued a total of 77,866 (post reverse split)
shares of common stock to three individuals for interest on loans provided to
the company. The shares had an aggregate value of $14,600 (average of $0.18
(post reverse split) per share). See Exhibits 10.2, 10.4, and 10.5.

(c) On August 8, 2006, the Company filed a Form SB-2 with the SEC for the
purpose of registering shares underlying the Longview transactions, the Series B
preferred stock, and the shares underlying the Montgomery transaction.

(d) On August 11, 2006, the Company received the second installment of the
Montgomery Convertible Debentures in the amount of $300,000 less fee to
Yorkville Advisors of $30,000 and $6,000 equaling 2 months' prepaid interest to
Montgomery Equity Partners, LP.

(e) The Company has tentatively reached a settlement in the matter entitled
Leslie J. Bishop and Deborah J. Bishop v. Brian K. Corty and Candy M. Corty,
Wireless Think Tank, Inc., and 5G Wireless Communications, Inc., New York
Supreme Court (Chenango County). The Company has not admitted any guilt;
however, management believes it to be in the best interest of the Company to
settle and has tentatively agreed to settle the matter. Management does not
believe the amount of the settlement will have material impact on future results
of operations.

(f) On July 13, 2006, Longview Fund, LP, Longview Equity Fund, LP and Longview
International Equity Fund, LP exercised warrants to purchase 34,433, 30,825 and
10,275 respectively, of the Company's common stock. The exercise price was $0.15
per share and proceeds to the Company were $11,330.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion and analysis of financial condition and results
of operations is based upon, and should be read in conjunction with, the audited
financial statements and related notes included elsewhere in this Form 10-QSB,
which have been prepared in accordance with accounting principles generally
accepted in the United States.

Overview.

The Company is a developer and manufacturer of wireless broadband
communications equipment operating on the 802.11a/b/g frequency. The Company's
principal markets are universities and hospitality properties.

The Company has focused on the marketing and sales of its innovative
wireless solutions to large campus and enterprise wide-area-networks ("WAN"). In
addition to manufacturing the existing product line, the Company has focused on
developing new solutions that create larger and more efficient wireless
networks.

The Company markets and sells both outdoor and indoor Wi-Fi wireless radio
systems that, because of their distance and user capacity, can be used in both
wireless LAN and WAN applications. The outdoor products can be configured in
point-to-point or point-to-multipoint networks that can reach distances of eight
miles or more in fixed wireless configurations or up to one mile in roaming
scenarios using laptops with off-the-shelf Wi-Fi cards. The Company believes its
antenna design and wireless packet switching allows its systems to more readily
penetrate buildings and trees than competitors, and to accommodate up to 1,000
user associations. The indoor product shares many of the same characteristics
and strengths as the outdoor product, including user capacity and penetration of
objects, but is designed to utilize less power, at a lower cost and for indoor
distances up to 1,000 feet depending upon the structure.

Both the Company's outdoor and indoor products provide strong security at
both the hardware and software levels, can transmit voice, data, and video at
multi-megabit speeds, and can work together seamlessly in wireless networks with
each other or with other common wireless network equipment. Because of these
advantages, the Company believes its products enable customers to combine
wireless networks with fewer components that cost less, perform better and
potentially provide a faster return on invested capital. The Company has devoted
substantial resources to the build out of its networks and product research and
development with limited resources applied to its marketing programs.

The Company has historically experienced operating losses and negative
cash flow. The Company expects that these operating losses and negative cash
flows may continue through additional periods. In addition, the Company only has
a limited record of revenue-producing operations and there is only a limited
operating history upon which to base an assumption that it will be able to
achieve its business plans.

Results of Operations.

(a) Revenue.

Revenue from the sales of equipment and support services was $89,302 and
$298,402 for the three and six months ended June 30, 2006, respectively,
compared to $0 for the three and six months ended June 30, 2005. The revenue was
primarily attributable to sales of wireless equipment in the university campus
marketplace as opposed to the comparison period in which the Company as a BDC
and did not record any revenue. The Company expects to continue the current
strategy as more university campuses look to upgrade their network
infrastructure.

(b) Cost of Revenues.

Total cost of revenues was $34,319 and $146,793 for the three and six
months ended June 30, 2006, respectively, compared to $0 for the three and six
months ended June 30, 2005. The cost of revenues principally due to sales
partially offset by economies of scale due to greater buying power in the
Company's supply chain and its ability to maintain pricing in the marketplace.
The Company expects it will continue the current strategy in the future.

Total operating expenses were $1,080,622 for the three months ended June
30, 2006 compared to $479,363 for the three months ended June 30, 2005, an
increase of $601,259 or approximately 125%. Total operating expenses for the six
months ended June 30, 2006 were $2,014,424 compared to $1,015,716 for the six
months ended June 30, 2005, an increase of $998,708 or approximately 98%. The
increase is principally attributable to increased professional fees. As
management continues to focus on operations operating expenses are expected to
increase in 2006.

(d) Interest Expense.

Interest expense was $658,959 for the three months ended June 30, 2006
compared to $451,033 for the three months ended June 30, 2005, an increase of
$207,926 or approximately 46%. Interest expense was $1,237,033 for the six
months ended June 30, 2006 compared to $891,386 for the six months ended June
30, 2005, an increase of $345,647 or approximately 39%.

Ongoing amortization of beneficial conversion features and other debt
discounts on the notes will decline in the year 2006 and beyond as the notes
reach maturity. Interest expense for the year 2006 will be significantly higher
than in prior years as a result of the liquidated damages provisions associated
with the Longview notes that accrue at the rate of approximately $51,390 per
month until such time as an effective registration statement is on file with the
SEC.

Costs recorded as interest expense primarily consist of the amortization
of the beneficial conversion feature of the convertible notes issued by the
Company in the years 2003, 2004, 2005 and 2006. Due to the short-term nature of
the convertible notes entered into with the Longview Funds, a portion of the
expense associated with the beneficial conversion feature and other debt
discount attributed to their notes was recognized in the year 2005 and
substantially all of the remaining unamortized discounts on such notes are
expected to be fully expensed during 2006.

(e) Net Loss.

Net loss was $3,636,408 for the three months ended June 30, 2006 compared
to $930,396 for the three months ended June 30, 2005, an increase of $2,706,012
or approximately 291%. Net loss was $5,755,378 for the six months ended June 30,
2006 compared to $1,907,102 for the six months ended June 30, 2005, an increase
of $3,848,276 or approximately 202%. The increased net loss is attributable to
higher salaries and related cost along with increased interest expense. The net
loss for the year 2006 and beyond is anticipated to decline as sales increase
without a corresponding increase in operating expenses and a reduction in
interest expense.

Factors That May Affect the Company's Operating Results.

The operating results of the Company can vary significantly depending upon
a number of factors, many of which are outside its control. General factors that
may affect the Company's operating results include:

o gain or loss of clients or strategic relationships;

o announcement or introduction of new products by the Company or by its
competitors;

o the ability to build brand recognition;

o timing of sales to customers;

o price competition;

o the ability to attract and integrate new personnel in a timely and
effective manner;

o reduction in or delay of capital spending by clients due to the effects of
terrorism, war and political instability; and

o general economic conditions.

The Company believes that its planned growth and profitability will depend
in large part on the ability to promote its products, gain clients and expand
its relationship with current clients. Accordingly, the Company intends to
invest in marketing, strategic partnerships, and development of its customer
base. If the Company is not successful in promoting its products and expanding
its customer base, this may have a material adverse effect on its financial
condition and its ability to continue to operate its business.

The Company is also subject to the following specific factors that may
affect its operating results:

(a) The Company May Not Be Able to Accommodate Rapid Growth Which Could Decrease
Revenues and Result in a Loss of Customers.

The Company is currently selling and installing Wi-Fi equipment in
universities and municipalities. To manage anticipated growth, the Company must
continue to implement and improve its operational, financial and management
information systems. The Company must also hire, train and retain additional
qualified personnel, continue to expand and upgrade core technologies, and
effectively manage its relationships with end users, suppliers and other third
parties. The Company's expansion could place a significant strain on its current
services and support operations, sales and administrative personnel, capital and
other resources. The Company could also experience difficulties meeting demand
for its products. The Company cannot guaranty that its systems, procedures or
controls will be adequate to support operations, or that management will be
capable of fully exploiting the market. The Company's failure to effectively
manage growth could adversely affect its business and financial results.

(b) The Company's Customers Require a High Degree of Reliability in Equipment
and If the Company Cannot Meet Their Expectations, Demand for Its Products May
Decline.

Any failure to provide reliable equipment for the Company's customers,
whether or not caused by their own failure, could reduce demand for the
Company's products. Because the Company has only recently begun to place
customers on its Wi-Fi system, the Company does not have substantial experience
in gauging negative customer response.

The Company depends upon a number of suppliers for components of its
products. There is an inherent risk that certain components of the Company's
products will be unavailable for prompt delivery or, in some cases,
discontinued. The Company only has limited control over any third-party
manufacturer as to quality controls, timeliness of production, deliveries and
various other factors. Should the availability of certain components be
compromised, it could force the Company to develop alternative designs using
other components, which could add to the cost of goods sold and compromise
delivery commitments. If the Company is unable to obtain components in a timely
manner, at an acceptable cost, or at all, it may need to select new suppliers,
redesign or reconstruct processes used to build its devices. In such an
instance, the Company would not be able to manufacture any devices for a period
of time, which could materially adversely affect its business, results from
operations, and financial condition.

(d) The Company Faces Strong Competition in Its Market, Which Could Make It
Difficult for the Company to Generate Income

The market for wireless products is highly competitive. The Company's
future success will depend on its ability to adapt to rapidly changing
technologies, evolving industry standards, product offerings and evolving
demands of the marketplace. The Company competes for customers primarily with
facilities-based carriers, as well as with other non-facilities-based network
operators. Some of the Company's competitors have substantially greater
resources, larger customer bases, longer operating histories and greater name
recognition than the Company has.

o Some of our competitors provide functionalities that the Company does not.
Potential customers who desire these functions may choose to obtain their
equipment from the competitor that provides these additional functions.

o Potential customers may be motivated to purchase their wireless Internet
equipment from a competitor in order to maintain or enhance their
respective business relationships with that competitor.

In addition, the Company's competitors may also be better positioned to
address technological and market developments or may react more favorably to
technological changes. The Company competes on the basis of a number of factors,
including:

o range

o non-line of sight capabilities

o data rate

o security scheme

o simultaneous users

o implementation cost

Competitors may develop or offer products that provide significant
(technological, creative, performance, price) or other advantages over the
products offered by the Company. If the Company fails to gain market share or
loses existing market share, its financial condition, operating results and
business could be adversely affected and the value of the investment in the
Company could be reduced significantly. The Company may not have the financial
resources, technical expertise, marketing, and distribution or support
capabilities to compete successfully.

(e) Uncertain Demand for Equipment May Cause Revenues to Fall Short of
Expectations and Expenses to Be Higher Than Forecast If the Company Needs to
Incur More Marketing Costs.

The Company is unable to forecast revenues with certainty because of the
unknown demand from consumers for its equipment and the emerging nature of the
Wi-Fi industry. The Company is in the process of refining its marketing plan for
colleges, universities and municipalities in order to achieve the desired level
of revenue, which could result in increased marketing costs. In the event demand
for the Company's wireless equipment does not prove to be as great as
anticipated, revenues may be lower than expected and/or marketing expenses
higher than anticipated, either of which may increase the amount of time and
capital that the Company needs to achieve a profitable level of operations.

(f) The Company Could Fail to Develop New Products to Compete In an Industry of
Rapidly Changing Technology, Resulting In Decreased Revenue.

The Company operates in an industry with rapidly changing technology, and
its success will depend on the ability to deploy new products that keep pace
with technological advances. The market for broadband communications equipment
is characterized by rapidly changing technology and evolving industry standards
in both the Wi-Fi and Internet access industries. The Company's technology or
systems may become obsolete upon the introduction of alternative technologies.
If the Company does not develop and introduce new products in a timely manner,
it may lose opportunities to competing service providers, which would adversely
affect business and results of operations.

There is a risk to the Company that there may be delays in initial
implementation of new products. Further risks inherent in new product
introductions include the uncertainty of price-performance relative to products
of competitors, competitors' responses to its new product introductions, and the
desire by customers to evaluate new products for longer periods of time. Also,
the Company does not have any control over the pace of technology development.
There is a significant risk that rights to a technology could be acquired or be
developed that is currently or is subsequently made obsolete by other
technological developments. There can be no assurance that any new technology
will be successfully acquired, developed, or transferred.

(g) The Company's Ability to Grow Is Directly Tied to Its Ability to Attract and
Retain Customers, Which Could Result In Reduced Income.

The Company has no way of predicting whether its marketing efforts will be
successful in attracting new locations and acquiring substantial market share.
Past efforts have been directed toward a limited target market of colleges,
universities and municipalities. If the Company's marketing efforts fail, it may
fail to attract new customers and fail to retain existing ones, which would
adversely affect business and financial results.

(h) Government Regulation May Affect the Ability of the Company to Conduct
Business.

The Company's technology is deployed in license-free frequency bands and
is not subject to any wireless or transmission licensing in most jurisdictions,
including the United States. Continued license-free operation is dependent upon
the continuation of existing government policy. While the Company is not aware
of any policy changes planned or expected, there can be no assurances that
government policy will not change. License-free operation of the Company's
products in the 2.4 GHz and 5 GHz bands are subordinate to certain licensed and
unlicensed uses of the bands and its products must not cause harmful
interference to other equipment operating in the bands and must accept
interference from any of them. If the Company is unable to eliminate any such
harmful interference, or should its products be unable to accept interference
caused by others, the Company and its customers could be required to cease
operations in the bands in the locations affected by the harmful interference.

(i) Any Required Expenditures as a Result of Indemnification Will Result in a
Decrease in the Company's Net Income.

The Company's bylaws include provisions to the effect that the Company may
indemnify any director, officer, or employee. In addition, provisions of Nevada
law provide for such indemnification, as well as for a limitation of liability
of the Company's directors and officers for monetary damages arising from a
breach of their fiduciary duties. Any limitation on the liability of any
director or officer, or indemnification of any director, officer, or employee,
could result in substantial expenditures being made by the Company in covering
any liability of such persons or in indemnifying them.

Operating Activities.

Net cash used in operating activities was $1,061,240 for the six months
ended June 30, 2006 compared to $707,105 for the six months ended June 30, 2005,
an increase of $354,135 or approximately 50%. This increase is attributed
primarily to the increase in salaries and related expense.

Investing Activities.

Net cash provided by investing activities was $18,635 during the six
months ended June 30, 2006 as compared to net cash used in investing activities
of $814,750 during the six months ended June 30, 2005, a change of $833,385, or
approximately 102%. This change was the result of no equipment purchases in the
current period as opposed to equipment purchases related to research and
development activities and increased spending on software license to support
sales and finance activities.

Liquidity and Capital Resources.

(a) General Discussion.

The Company's current liabilities totaled $7,091,716 at June 30, 2006, and
current assets totaled $556,914, resulting in a working capital deficit of
$6,534,802 at June 30, 2006. At June 30, 2006, the Company's assets consisted
primarily of net accounts receivable of $81,820, inventory of $146,570, and cash
of $246,251. The Company incurred a net loss of $5,755,378 for the six months
ended June 30, 2006. The Company has an accumulated deficit of $28,540,045 as of
June 30, 2006.

The above factors raise doubt as to the Company's ability to continue as a
going concern. The Company's current cash flow from operations will not be
sufficient to maintain its capital requirements for the next twelve months.
Accordingly, the Company's implementation of its business plan will depend upon
its ability to raise additional funds through bank borrowings and equity or debt
financing. The Company estimates that it will need to raise up to $5,000,000
over the next twelve months for such purposes.

The accompanying financial statements have been prepared assuming that the
Company continues as a going concern that contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business assuming
the Company will continue as a going concern. However, the ability of the
Company to continue as a going concern on a longer-term basis will be dependent
upon its ability to generate sufficient cash flow from operations to meet its
obligations on a timely basis, to retain its current financing, to obtain
additional financing, and ultimately attain profitability.

The Company has been successful in obtaining the required cash resources
through private placements, convertible notes and notes payable to service the
Company's operations during the six months ended June 30, 2006. The Company's
net cash provided by financing activities for the six months ended June 30, 2006
was $1,203,499, which resulted from the net proceeds from the sale of the Series
B preferred stock during that period, $69,000 Longview convertible notes, and
the Montgomery convertible debentures.

Management plans to continue raising additional capital through a variety
of fund raising methods during 2006 and to pursue all available financing
alternatives in this regard. Management may also consider a variety of potential
partnership or strategic alliances to strengthen its financial position. Whereas
the Company has been successful in the past in raising capital, no assurance can
be given that these sources of financing will continue to be available to it
and/or that demand for its equity/debt instruments will be sufficient to meet
its capital needs, or that financing will be available on terms favorable to the
Company. The financial statements do not include any adjustments relating to the
recoverability and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.

If funding is insufficient at any time in the future, the Company may not
be able to take advantage of business opportunities or respond to competitive
pressures, or may be required to reduce the scope of its planned product
development and marketing efforts, any of which could have a negative impact on
its business and operating results. In addition, insufficient funding may have a
material adverse effect on the Company's financial condition, which could
require it to:

o curtail operations significantly;

o sell significant assets;

o seek arrangements with strategic partners or other parties that may
require the Company to relinquish significant rights to products,
technologies or markets; or

o explore other strategic alternatives including a merger or sale of the
Company.

To the extent that the Company raises additional capital through the sale
of equity or convertible debt securities, the issuance of such securities may
result in dilution to existing stockholders. If additional funds are raised
through the issuance of debt securities, these securities may have rights,
preferences and privileges senior to holders of common stock and the terms of
such debt could impose restrictions on the Company's operations. Regardless of
whether the Company's cash assets prove to be inadequate to meet the Company's
operational needs, the Company may seek to compensate providers of services by
issuing stock in lieu of cash, which may also result in dilution to existing
stockholders.

(b) Longview Funds.

Pursuant to the terms of the convertible notes entered into between the
Company and Longview Fund, LP, Longview Equity Fund, LP, and Longview
International Equity Fund, LP, the shares that serve as collateral for the notes
must be registered the Longview Funds, the shares that serve as collateral for
the notes must be registered or an exemption from registration available. The
filing of the Form N-54C on October 21, 2005 terminated the Regulation E
exemption from registration that covered the shares serving as collateral for
the notes. Pursuant to the terms of the notes, the Company remains in technical
default on the notes since that time.

The Company is still in negotiations with the Longview Funds and has
obtained verbal commitments from the lenders that it will not be declared in
default. The Company is liable for liquidated damages of 2% for each thirty days
or part thereof of the purchase price of the notes remaining unconverted that
are subject to such non-registration event. As of June 30, 2006, the remaining
principal balance of unconverted notes payable to the Longview Funds aggregated
to approximately $2,638,500. The Company's filed a Form SB-2 on August 8, 2006
that seeks to register the shares underlying the Longview notes and warrants,
among other things. Until such time as the registration statement has been made
effective, the Company will incur $51,390 in liquidated damage penalties per
month. $495,057 was accrued as of June 30, 2006.

In March 2004, the Company borrowed $715,000 under convertible notes
payable ("$715,000 Convertible Notes"). All borrowings are due in March 2006,
with monthly interest payments on the outstanding balance; interest accrues at
9% per annum. The $715,000 Convertible Notes may be converted into common stock
of the Company based on a formula subject to a floor of $0.001 per share. In
July 2004, the Company borrowed an additional $90,000 under terms identical to
those of the $715,000 Convertible Notes. During the three months ended June 30,
2006, approximately $103,100 of principal balance of convertible notes payable
were converted into common stock.

As of March and April 2006, there are certain of these note holders whose
notes have expired and as such are due and payable. The parties have agreed to
extend these notes for an additional two years to March 31, 2008.

Inflation.

The impact of inflation on the Company's costs and the ability to pass on
cost increases to its customers over time is dependent upon market conditions.
The Company is not aware of any inflationary pressures that have had any
significant impact on its operations over the past quarter, and the Company does
not anticipate that inflationary factors will have a significant impact on
future operations.

Off Balance Sheet Arrangements.

The Company does not engage in any off balance sheet arrangements that are
reasonably likely to have a current or future effect on its financial condition,
revenues, results of operations, liquidity or capital expenditures.

Contractual Obligations.

The Company has contractual obligations to repay its notes payable and to
make payments under its operating lease agreement. See Notes 2 and 4,
respectively, to the accompanying condensed financial statements.

Payments due by Period
-----------------------
Contractual Obligations Total 2006 2007-2008 2009-2010 Thereafter
- ----------------------- ---------- ---------- ----------- --------- ----------

Convertible debt $3,571,500 $1,615,540 $1,955,960 $-- $--
Notes payable 22,424 22,424 -- -- --
Operating leases 349,640 72,776 276,864 -- --
---------- ---------- ---------- --- ---
Total contractual
cash obligations $3,943,564 $1,710,740 $2,232,824 $-- $--
========== ========== ========== === ===

Critical Accounting Policies.

The SEC has issued Financial Reporting release No. 60, "Cautionary Advice
Regarding Disclosure About Critical Accounting Policies" ("FRR 60"); suggesting
companies provide additional disclosure and commentary on their most critical
accounting policies. In FRR 60, the SEC defined the most critical accounting
policies as the ones that are most important to the portrayal of a company's
financial condition and operating results, and require management to make its
most difficult and subjective judgments, often as a result of the need to make
estimates of matters that are inherently uncertain. Based on this definition,
the Company's most critical accounting policies include: (a) the use of
estimates in the preparation of financial statements; (b) revenue recognition;
(c) stock-based compensation arrangements; (d) warranty reserves; (e) inventory
reserves; (f) allowance for doubtful accounts; (g) the deferred tax valuation
allowance; (h) derivative liabilities; and (i) classification of conversion
feature and warrants. The methods, estimates and judgments the Company uses in
applying these most critical accounting policies have a significant impact on
the results reported in its financial statements.

(a) Use of Estimates.

The preparation of these financial statements requires the Company to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, the Company evaluates these estimates,
including those related to revenue recognition and concentration of credit risk.
The Company bases its estimates on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Actual results may differ from these estimates under different assumptions or
conditions.

(b) Revenue Recognition.

Revenues result principally from the sale and installation of wireless
radio equipment to customers. Equipment sales are recognized when products are
shipped. The Company recognizes revenues in accordance with Staff Accounting
Bulleting No. 104, "Revenue Recognition," when all of the following conditions
exist: (a) persuasive evidence of an arrangement exists in the form of an
accepted purchase order; (b) delivery has occurred, based on shipping terms, or
services have been rendered; (c) the Company's price to the buyer is fixed or
determinable, as documented on the accepted purchase order; and (d)
collectibility is reasonably assured.

Orders delivered to the Company by phone, fax, mail or email are
considered valid purchase orders and once accepted by the Company are deemed to
be the final understanding between the Company and its customer as to the
specific nature and terms of the agreed-upon sale transaction. Products are
shipped and are considered delivered when (a) for FOB factory orders they leave
the Company's shipping dock or (b) for FOB customer dock orders upon
confirmation of delivery. The creditworthiness of customers is generally
assessed prior to the Company accepting a customer's first order.

The Company offers installation services to customers and charges
separately when such services are purchased. Installation by the Company is not
required for the functionality of the equipment. Consequently, installation
services are considered a separate unit of accounting under Financial Accounting
Standards Board's Emerging Issues Task Force No. 00-21,"Revenue Arrangements
with Multiple Deliverables."

The Company issues shares of common stock to various individuals and
entities for certain management, legal, consulting and marketing services. These
issuances are valued at the fair market value of the service provided and the
number of shares issued is determined, based upon the closing price of the
Company's common stock on the date of each respective transaction after the
period of service. These transactions are reflected as the appropriate component
of the Company's condensed financial statements in conformity with generally
accepted accounting principles in the accompanying statement of operations.

On January 1, 2006, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 123(R), "Share-Based Payment," which establishes
standards for the accounting of transactions in which an entity exchanges its
equity instruments for goods or services, primarily focusing on accounting for
transactions where an entity obtains employee services in share-based payment
transactions. SFAS No. 123(R) requires a public entity to measure the cost of
employee services received in exchange for an award of equity instruments,
including stock options, based on the grant-date fair value of the award and to
recognize it as compensation expense over the period the employee is required to
provide service in exchange for the award, usually the vesting period.

(d) Warranty.

The Company provides a warranty on all electronics sold for a period of
one year after the date of shipment. Warranty issues are usually resolved with
repair or replacement of the product. Trends of sales returns, exchanges and
warranty repairs are tracked by as a management as a basis for the reserve that
management records in the Company's consolidated financial statements. Estimated
future warranty obligations related to certain products and services are
provided by charges to operations in the period in which the related revenue is
recognized. At June 30, 2006, warranty reserve approximated $29,000, which is
recorded under other current liabilities on the balance sheet.

(e) Inventory.

Inventories are stated at the lower of cost (first-in, first-out) or
market. Cost is determined on a standard cost basis that approximates the
first-in, first-out method. Market is determined by comparison with recent sales
or net realizable value.

Such net realizable value is based on management's forecasts for sales of
the Company's products or services in the ensuing years. The industry in which
the Company operates is characterized by technological advancement, change and
certain regulations. Should the demand for the Company's products prove to be
significantly less than anticipated, the ultimate realizable value of the
Company's inventories could be substantially less than amounts shown in the
accompanying balance sheet.

(f) Allowance for Doubtful Accounts.

In determining the allowance for doubtful accounts, management evaluated
the future collectibility of customer receivable balances, on a customer by
customer basis, including an individual assessment of the customer's credit
quality, financial standing, and the customer's ability to meet current or
future commitments and the industry and general economic outlook. Based on the
severity of the likely loss, the Company provides a reserve against outstanding
balances over 60 days. In the event collection efforts are unsuccessful for a
customer, the receivable is written off and charged to expense. At June 30,
2006, the Company carried an allowance for doubtful accounts of $33,857.

(g) Deferred Tax Valuation Allowance.

Deferred taxes are provided on the liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating loss
and tax credit carry forwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. A deferred
tax asset is reduced by a valuation allowance if, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized in the future. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.

A valuation allowance is provided for deferred tax assets if it is more
likely than not these items will either expire before the Company is able to
realize their benefit, or that future deductibility is uncertain. In accordance
with Statement of Financing Accounting Standards No 109, the Company records net
deferred tax assets to the extent the Company believes these assets will more
likely than not be realized. In making such determination, the Company considers
all available positive and negative evidence, including scheduled reversals of
deferred tax liabilities, projected future taxable income, tax planning
strategies and recent financial performance.

(h) Derivative Liabilities.

The Company evaluates free-standing instruments (or embedded derivatives)
indexed to its common stock to properly classify such instruments within equity
or as liabilities in its financial statements, pursuant to the requirements of
the EITF No. 00-19, "Accounting for Derivative Financial Instruments Indexed to,
and Potentially Settled in, a Company's Own Stock," EITF No. 01-06, "The Meaning
of Indexed to a Company's Own Stock," EITF No. 05-04, "The Effect of a
Liquidated Damages Clause on a Freestanding Financial Instrument Subject to EITF
No. 00-19," and Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as amended. The
Company's policy is to settle instruments indexed to its common shares on a
first-in-first-out basis.

(i) Classification of Conversion Feature and Warrants.

Pursuant to EITF No. 00-19, the Company evaluated the Longview conversion
feature and warrants at October 22, 2005. Management determined that due to the
nature of the liquidated damages the Company must pay (with no maximum
prescribed in the agreements), the Company must pursue registration as its most
"economic alternative" and settle the Longview conversion feature and warrants
with registered shares; and as a result, it must treat the conversion feature
and warrants as derivative liabilities. In addition, under View C of EITF No.
05-04, the Company accounts for the liquidated damages separately from these two
other derivative liabilities. Management estimated the value of the warrants
using a Black-Scholes model. Because the warrants have an exercise price greater
than the trading price of the Company's stock on October 22, 2005, the warrants
value was calculated to be insignificant. Management estimated the value of the
conversion feature, after consultation with a valuation expert, taking into
consideration limitations on ownership (Longview cannot own in excess of 4.99%
of the Company's outstanding shares at any time "cap") and, estimated
conversions during the term of the notes, subject to the cap, using discount
rates of 75%. Management has established a liability and has estimated the
decrease in the fair value of the conversion feature between December 31, 2005
and June 30, 2006 to be $561,921, which is reflected net of derivative expense
in the accompanying condensed statements of operations. The fair value of such
derivative liability at June 30, 2006 totaling $605,139 is included in other
liabilities in the accompanying condensed balance sheet.

Forward Looking Statements.

Information in this Form 10-QSB contains "forward looking statements"
within the meaning of Rule 175 of the Securities Act of 1933, as amended, and
Rule 3b-6 of the Securities Act of 1934, as amended. When used in this Form
10-QSB, the words "expects," "anticipates," "believes," "plans," "will" and
similar expressions are intended to identify forward-looking statements. These
are statements that relate to future periods and include, but are not limited
to, statements regarding the adequacy of cash, expectations regarding net losses
and cash flow, statements regarding growth, the need for future financing,
dependence on personnel, and operating expenses.

Forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected. These
risks and uncertainties include, but are not limited to, those discussed above
as well as the risks set forth above under "Factors That May Affect the
Company's Operating Results." These forward-looking statements speak only as of
the date hereof. The Company expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in its expectations with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.

ITEM 3. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

The Company maintains disclosure controls and procedures (as defined in
Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act that are designed to
ensure that information required to be disclosed in its periodic reports filed
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to its management, including its
principal executive officer and principal financial officer, to allow timely
decisions regarding required disclosure.

As of the end of the period covered by this report, the Company's
management carried out an evaluation, under the supervision and with the
participation of its principal executive officer and principal financial
officer, of its disclosure controls and procedures (as defined in Rule 13a-15(e)
and Rule 15d-15(e) of the Exchange Act). Based upon the evaluation, the
Company's principal executive officer and principal financial officer concluded
that the Company's disclosure controls and procedures were effective to ensure
that information required to be disclosed by it in the reports that the Company
files or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms. In
addition, he concluded that the Company's disclosure controls and procedures
were effective to ensure that information required to be disclosed in the
reports that the Company files or submits under the Exchange Act is accumulated
and communicated to the Company's management, including its principal executive
officer and principal financial officer, to allow timely decisions regarding
required disclosure.

Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, will be or have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, and/or by management override of the control. The design of any
system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions;
over time, controls may become inadequate because of changes in conditions,
and/or the degree of compliance with the policies and procedures may
deteriorate. Because of the inherent limitations in a cost-effective internal
control system, misstatements due to error or fraud may occur and not be
detected.

Changes in Controls and Procedures.

During the three months ended June 30, 2006, there were no other changes
in the Company's disclosure controls and procedures, or its internal controls
over financial reporting (as defined in Rule 13a-15(f) of the Exchange act), or
in other factors that could affect these controls during the last fiscal quarter
that has materially affected, or is reasonably likely to materially affect,
these controls. The Company believes that disclosure controls and procedures,
and its internal controls over financial reporting were not and will not be
adversely impacted by the resignation of the Company's chief financial officer
on April 7, 2006.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is not party to any material pending legal proceedings, claims
or assessments and, to the best of its knowledge, no such action by or against
the Company has been threatened, except as follows:

(a) On June 15, 2005 the Company was served with a complaint from a third
party in a matter entitled Leslie J. Bishop and Deborah J. Bishop v. Brian K.
Corty and Candy M. Corty, Wireless Think Tank, Inc., and 5G Wireless
Communications, Inc., New York Supreme Court (Chenango County). This action
seeks actual damages in excess of $80,000 and punitive damages of $300,000
against a former employee of us for breach of a residential lease and damage to
a residential property in 2001. The claim against us alleges that the former
employee was a principal in Wireless ThinkTank (a wholly owned subsidiary of the
Company) and conducted business from such residence.

(b) On May 8, 2006 the Company was served with a complaint in a matter
entitled Brian Vallone and Anne Vallone v. 5G Wireless Communications, Inc.,
California Superior Court (Orange County). This action, which does not allege a
damage amount, includes causes of action for breach of contract, negligent
misrepresentation, and fraud, and is concerning equipment that was sold to a
wireless internet provider in California for approximately $9,000 who claims
that they were unable to generate fees for use and for advertising revenues.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

There were no unregistered sales of the Company's equity securities during
the three months ended on June 30, 2006 that were not previously disclosed in a
Form 8-K. There were no purchases of common stock of the Company by the Company
or its affiliates during the three months ended June 30, 2006.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Please see Management's Discussion and Analysis of Financial Condition and
Results of Operations, Liquidity and Capital Resources, for a discussion of the
technical default status of the Longview Funds notes.

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

None.

ITEM 5. OTHER INFORMATION.

Subsequent Events.

(a) On July 11, 2006, 5G Wireless issued a total of 239,499 (post reverse
split) shares of common stock to an individual who provided the guarantee on
lease for the company. The shares had an aggregate value of $44,906 (average of
$0.18 (post reverse split) per share). See Exhibit 10.1.

(b) On July 11, 2006, 5G Wireless issued a total of 77,866 (post reverse
split) shares of common stock to three individuals for interest on loans
provided to the company. The shares had an aggregate value of $14,600 (average
of $0.18 (post reverse split) per share). See Exhibits 10.2, 10.4, and 10.5.

(e) The Company has tentatively reached a settlement in the matter
entitled Leslie J. Bishop and Deborah J. Bishop v. Brian K. Corty and Candy M.
Corty, Wireless Think Tank, Inc., and 5G Wireless Communications, Inc., New York
Supreme Court (Chenango County). The Company has not admitted any guilt;
however, management believes it to be in the best interest of the Company to
settle and has tentatively agreed to settle the matter. Management does not
believe the amount of the settlement will have material impact on future results
of operations.

(f) On July 13, 2006, Longview Fund, LP, Longview Equity Fund, LP and
Longview International Equity Fund, LP exercised warrants to purchase 34,433,
30,825 and 10,275 respectively, of the Company's common stock. The exercise
price was $0.15 per share and proceeds to the Company were $11,330.

ITEM 6. EXHIBITS.

Exhibits included or incorporated by reference herein are set forth in the
Exhibit Index.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

5G Wireless Communications, Inc.

Dated: August 21, 2006 By: /s/ Jerry Dix
-------------------------------------
Jerry Dix
Chief Executive Officer

Dated: August 21, 2006 By: /s/ Don Boudewyn
-------------------------------------
Don Boudewyn,
Executive Vice President, Secretary,
Treasurer (principal financial
officer)

EXHIBIT INDEX

Number Description
- ------ -----------
1 Agency Agreement between the Company and May Davis Group, Inc., dated
April 1, 2003 (incorporated by reference to Exhibit 1 of the Form
10-QSB/A filed on November 17, 2003).

2.1 Agreement and Plan of Reorganization and Merger between Tesmark, Inc.,
an Idaho corporation, and the Company (formerly known as Tesmark,
Inc.), a Nevada corporation, dated November 10, 1998 (incorporated by
reference to Exhibit 2 of the Form 10-SB filed on December 15, 1999).

2.2 Acquisition Agreement between the Company, and Richard Lejeunesse,
Curtis Mearns, and Don Boudewyn, a partnership (known as 5G Partners),
dated December 15, 2000, as amended (incorporated by reference to
Exhibit 10 of the Form 8-K filed on February 14, 2001).

2.3 Share Purchase Agreement between the Company, and Sea Union Industries
Pte. Ltd., Richard Lajeunesse, Rita Chou, Peter Chen, Yeo Lai Ann, Tan
Lam Im, Choa So Chin, Tan Ching Khoon, Tan Sek Toh, and the Company
Communication Pte. Inc. (formerly known as Peteson Investment Pte
Ltd.), dated May 5, 2001 (incorporated by reference to Exhibit 2 of the
Form 8-K filed on June 5, 2001).

2.4 Purchase Agreement between the Company and Skyhub Asia Holdings
Limited, eVision USA.com, and eBanker USA.com, dated May 19, 2001
(incorporated by reference to Exhibit 2.4 of the Form 10-KSB filed on
April 18, 2002).

2.5 Definitive Acquisition Agreement between the Company and Wireless Think
Tank, dated April 30, 2002 (incorporated by reference to Exhibit 2 of
the Form 8-K filed on August 13, 2002).

2.6 Agreement and Plan of Merger between the Company and 5G Wireless
Solutions, Inc., dated January 18, 2006 (incorporated by reference to
Exhibit 2.6 of the Form 10-K filed on April 7, 2006).

3.1 Articles of Incorporation, dated September 24, 1998 (incorporated by
reference to Exhibit 3 of the Form 10-SB filed on December 15, 1999).

3.2 Certificate of Amendment to Articles of Incorporation, dated May 5,
2000 (incorporated by reference to Exhibit 3.3 of the Form SB-2 filed
on January 10, 2002).

3.3 Certificate of Amendment to Articles of Incorporation, dated January
19, 2001 (incorporated by reference to Exhibit 3.1 of the Form 8-K
filed on February 14, 2001).

3.4 Certificate of Amendment to Articles of Incorporation, dated January
21, 2003 (incorporated by reference to Exhibit 3.4 of the Form 10-KSB
filed on May 8, 2003).

3.5 Certificate of Amendment to Articles of Incorporation, dated September
16, 2004 (incorporated by reference to Exhibit 3.1 of the Form 8-K
filed on September 22, 2004).

3.6 Certificate of Correction, dated September 20, 2004 (incorporated by
reference to Exhibit 3.2 of the Form 8-K filed on September 22, 2004).

3.7 Bylaws, dated September 25, 2002 (incorporated by reference to Exhibit
3.5 of the Form 10-KSB filed on May 8, 2003).

4.1 2001 Stock Incentive Plan, dated November 1, 2001 (incorporated by
reference to Exhibit 10 of the Form S-8 filed on December 10, 2001).

4.2 Non-Employee Directors and Consultants Retainer Stock Plan, dated
January 30, 2002 (incorporated by reference to Exhibit 4.1 of the Form
S-8 filed on January 31, 2002).

4.3 Amended and Restated Stock Incentive Plan, dated January 30, 2002
(incorporated by reference to Exhibit 4.2 of the Form S-8 filed on
January 31, 2002).

4.4 Form of Subscription Agreement Between the Company and investors, dated
February 12, 2002 (including the following exhibits: Exhibit A: Form of
Notice of Conversion; Exhibit B: Form of Registration Rights Agreement;
Exhibit C: Form of Debenture; and Exhibit D: Form of Opinion of
Company's Counsel) (the following to this agreement have been omitted:
Exhibit E: Board Resolution; Schedule 3(A): Subsidiaries; Schedule
3(C): Capitalization; Schedule 3(E): Conflicts; Schedule 3(G): Material
Changes; Schedule 3(H): Litigation; Schedule 3(L): Intellectual
Property; Schedule 3(N): Liens; and Schedule 3(T): Certain
Transactions) (incorporated by reference to Exhibit 4.4 of the Form
10-QSB filed on May 20, 2002).

4.5 Escrow Agreement between the Company, First Union Bank, and May Davis
Group, Inc., dated February 12, 2002 (incorporated by reference to
Exhibit 4.5 of the Form 10-QSB filed on May 20, 2002).

4.6 Form of Escrow Agreement between the Company, Joseph B. LaRocco, Esq.,
and investors, dated February 12, 2002 (incorporated by reference to
Exhibit 4.6 of the Form 10-QSB filed on May 20, 2002).

4.7 Security Agreement (Stock Pledge) between the Company and investors,
dated February 12, 2002 (incorporated by reference to Exhibit 4.7 of
the Form 10-QSB filed on May 20, 2002).

4.8 Amended and Restated Non-Employee Directors and Consultants Retainer
Stock Plan, dated June 1, 2003 (incorporated by reference to Exhibit 4
of the Form S-8 POS filed on June 26, 2003).

4.9 Form of Subscription Agreement Between the Company and investors
(including the following exhibits: Exhibit A: Form of Debenture ;
Exhibit B: Form of Notice of Conversion; Exhibit C: Form of Opinion;
and Exhibit D: Subscription Procedures) (the following schedules have
been omitted: Schedule 3(a): Subsidiaries; Schedule 3(c):
Capitalization; Schedule 3(e): Conflicts; Schedule 3(g): Material
Changes; Schedule 3(h): Litigation; Schedule 3(l): Intellectual
Property; Schedule 3(n): Liens; and Schedule 3(t): Certain
Transactions) (incorporated by reference to Exhibit 4.9 of the Form
10-QSB/A filed on November 17, 2003).

4.10 Form of Subordinated, Convertible Note and Warrants Agreement between
the Company and investors (including the following exhibits: Exhibit A:
Form of Convertible Subordinated Promissory Note; and Exhibit B: Form
of Warrant Agreement) (incorporated by reference to Exhibit 4.10 of the
Form 10-QSB filed on November 24, 2003)

4.11 Form of Promissory Note issued by the Company to investors, dated March
4, 2004 (incorporated by reference to Exhibit 4.1 of the Form 10-QSB/A
filed on May 28, 2004).

4.12 Form of Note Purchase Agreement between the Company and investors,
dated March 4, 2004 (incorporated by reference to Exhibit 4.2 of the
Form 10-QSB/A filed on May 28, 2004).

4.13 Form of Warrant issued by the Company to investors, dated March 4, 2004
(incorporated by reference to Exhibit 4.3 of the Form 10-QSB/A filed on
May 28, 2004).

4.14 2004 Non-Employee Directors and Consultants Retainer Stock Plan, dated
June 8, 2004 (incorporated by reference to Exhibit 4 of the Form S-8
filed on June 21, 2004).

4.15 Subscription Agreement between the Company, on the one hand, and
Longview Fund, LP, Longview Equity Fund, LP, and Longview International
Equity Fund, LP, on the other hand, dated September 22, 2004, and Form
of Convertible Note (including the following items: Exhibit A1: Form of
Class A Warrant; Exhibit A2: Form of Class B Warrant; Exhibit B: Funds
Escrow Agreement; Exhibit E: Shares Escrow Agreement; Exhibit F: Form
of Limited Standstill Agreement; Exhibit G: Security Agreement; and
Exhibit H: Collateral Agent Agreement) (not including the following
items: Attachment 1: Disclosure Schedule; Exhibit C: Form of Legal
Opinion; Exhibit D: Form of Public Announcement on Form 8-K; Schedule
5(d): Additional Issuances; Schedule 5(q): Undisclosed Liabilities;
Schedule 5(s): Capitalization; Schedule 9(e) Use of Proceeds; Schedule
9(q): Limited Standstill Providers; and Schedule 11.1: Other Securities
to be Registered) (incorporated by reference to Exhibit 4 of the Form
8-K filed on September 30, 2004).

4.16 Form of Common Stock Purchase Warrant issued by the Company in favor of
Pole Star Communications, Inc., dated November 1, 2004 (incorporated by
reference to Exhibit 4 of the Form 8-K filed on November 12, 2004).

4.17 Certificate of Designation of Series A Convertible Preferred Stock,
dated October 5, 2004 (incorporated by reference to Exhibit 4.17 of the
Form 10-KSB filed on March 31, 2005).

4.18 Subscription Agreement between the Company, on the one hand, and
Longview Fund, LP, Longview Equity Fund, LP, and Longview International
Equity Fund, LP, on the other hand, dated March 22, 2005 (including the
following items: Exhibit A: Form of Class A Warrant; Exhibit B: Funds
Escrow Agreement; Exhibit C: Security Agreement; Exhibit D: Collateral
Agent Agreement; and Exhibit G: Form of Limited Standstill Agreement)
(not including the following items: Attachment 1: Disclosure Schedule;
Exhibit E: Legal Opinion; Exhibit F: Form of Public Announcement or
Form 8-K; Schedule 5(d): Additional Issuances/Capitalization; Schedule
5(q): Undisclosed Liabilities; Schedule 5(x): Subsidiaries; Schedule
9(e) Use of Proceeds; and Schedule 9(p): Limited Standstill Providers)
(incorporated by reference to Exhibit 4.1 of the Form 8-K filed on
March 31, 2005).

4.19 Form of Secured Convertible Note between the Company, on the one hand,
and Holders on the other hand, dated March 22, 2005 (incorporated by
reference to Exhibit 4.3 of the Form 8-K filed on March 31, 2005).

4.20 Subscription Agreement between the Company, on the one hand, and
Longview Fund, LP, Longview Equity Fund, LP, and Longview International
Equity Fund, LP, on the other hand, dated July 20, 2005 (including the
following items: Exhibit A1: Form of Note; Exhibit A2: Form of Class A
Warrant; Exhibit B: Funds Escrow Agreement; Exhibit D: Transfer Agent
Instructions; Exhibit F: Form of Limited Standstill Agreement) (not
including the following items: Exhibit C: Form of Legal Opinion;
Exhibit E Form of Public Announcement; Schedule 4(a): Subsidiaries;
Schedule 4(d): Additional Issuances/Capitalization; Schedule 4(q):
Undisclosed Liabilities; Schedule 4(u): Disagreements of Accountants
and Lawyers; Schedule 8(e) Use of Proceeds; and Schedule 8(q):
Providers of Limited Standstill Agreements) (incorporated by reference
to Exhibit 4 of the Form 8-K filed on July 25, 2005).

4.21 Modification and Amendment Agreement, dated July 26, 2005 (incorporated
by reference to Exhibit 4.2 of the Form 8-K/A filed on August 3, 2005).

4.22 2006 Stock and Option Plan, dated January 18, 2006 (incorporated by
reference to Exhibit 4 of the Form S-8 POS filed on January 25, 2006).

4.23 Form of Stock Purchase Agreement between the Company and certain
investors, dated February 17, 2006 (including the following items:
Exhibit A: Certificate of Designation, and Exhibit C: Form of
Registration Rights Agreement. Not including the following items:
Exhibit B: Investor Questionnaire; Exhibit D: Form of Opinion of
Counsel; Schedule 3(c): outstanding shares; Schedule: 3(g): list of
untimely filed reports; and Schedule I: list of investors)
(incorporated by reference to Exhibit 4 of the Form 8-K filed on
February 21, 2006).

4.24 Certificate of Designation of Series B Convertible Preferred Stock,
dated January 25, 2006 (incorporated by reference to Exhibit 4 of the
Form 8-K filed on February 21, 2006).

4.25 Subscription Agreement between the Company and Longview Fund, LP, dated
April 5, 2006 (including the following items: Exhibit A1: Convertible
Note; Exhibit A2: Class A Warrant; Exhibit B: Funds Escrow Agreement
(not including the following items: Exhibit C: Form of Legal Opinion;
Exhibit D: Transfer Agent Instructions; Exhibit E: Form of Public
Announcement; Exhibit F: Form of Limited Standstill Agreement; Schedule
4(a): Subsidiaries; Schedule 4(d): Additional Issuances/Capitalization;
Schedule 4(q): Undisclosed Liabilities; Schedule 4(u): Disagreements
with Accountants and Lawyers; Schedule 8(e) Use of Proceeds; and
Schedule 8(q): Providers of Limited Standstill Agreements (incorporated
by reference to Exhibit 4.25 of the Form 10-QSB fled on May 22, 2006).

4.26 Stock Purchase Agreement between the Company and Castellum Investments,
S.A., dated May 30, 2006 (including the following items: Exhibit A:
Certificate of Designation, and Exhibit C: Form of Registration Rights
Agreement. Not including the following items: Exhibit B: Investor
Questionnaire; Exhibit D: Form of Opinion of Counsel; Schedule 3(c):
outstanding shares; Schedule: 3(g): list of untimely filed reports; and
Schedule I: list of Investor) (incorporated by reference to Exhibit 4.9
of the Form 8-K filed on July 14, 2006)

4.27 Securities Purchase Agreement between the Company and Montgomery Equity
Partners, LP, dated as of June 13, 2006 (not including a Disclosure
Schedule) (incorporated by reference to Exhibit 4.1 of the Form 8-K
filed on July 14, 2006).

4.28 Secured Convertible Debenture between the Company and Montgomery Equity
Partners, LP, dated as of June 13, 2006 (incorporated by reference to
Exhibit 4.2 of the Form 8-K filed on July 14, 2006).

4.29 Security Agreement, dated as of June 13, 2006, between the Company and
Montgomery Equity Partners, LP (incorporated by reference to Exhibit
4.3 of the Form 8-K filed on July 14, 2006).

4.30 Class A Warrant, dated as of June 13, 2006, between the Company and
Montgomery Equity Partners, LP (incorporated by reference to Exhibit
4.4 of the Form 8-K filed on July 14, 2006).

4.31 Class B Warrant, dated as of June 13, 2006, between the Company and
Montgomery Equity Partners, LP (incorporated by reference to Exhibit
4.5 of the Form 8-K filed on July 14, 2006).

4.32 Class C Warrant, dated as of June 13, 2006, between the Company and
Montgomery Equity Partners, LP (incorporated by reference to Exhibit
4.6 of the Form 8-K filed on July 14, 2006).

4.33 Investor Registration Rights Agreement, dated as of June 13, 2006,
between the Company and Montgomery Equity Partners, LP (not including
Form of Notice of Effectiveness of Registration Statement)
(incorporated by reference to Exhibit 4.7 of the Form 8-K filed on July
14, 2006).

4.34 Pledge and Escrow Agreement, dated as of June 13, 2006, between the
Company and Montgomery Equity Partners, LP (incorporated by reference
to Exhibit 4.8 of the Form 8-K filed on July 14, 2006).

10.1 Employment Agreement between the Company and Jerry Dix, dated February
1, 2002 (incorporated by reference to Exhibit 10.12 of the Form 10-KSB
filed on April 18, 2002).

10.2 Employment Agreement between the Company and Don Boudewyn, dated
February 1, 2002 (incorporated by reference to Exhibit 10.13 of the
Form 10-KSB filed on April 18, 2002).

10.3 Employment Agreement Amendment between the Company and Don Boudewyn,
dated April 1, 2002 (incorporated by reference to Exhibit 10.17 of the
Form 10-KSB filed on April 18, 2002).

10.4 Executive Employment Agreement between the Company and Peter Trepp,
dated July 4, 2003 (including Exhibit A: Employee Proprietary
Information and Inventions Agreement) (the following exhibits have been
omitted: Exhibit A - Schedule A: Employee's Disclosure; and Exhibit A -
Schedule B: Termination Certificate Concerning 5G Wireless
Communications, Inc. Proprietary Information (incorporated by reference
to Exhibit 10 of the Form 10-QSB filed on November 24, 2003).

10.5 Independent Consulting Agreement between the Company and Ghillie Finaz,
AG, dated September 22, 2004 (incorporated by reference to Exhibit 10
of the Form 8-K filed on September 30, 2004).

10.6 Form of agreement between the Company and its independent directors
(incorporated by reference to Exhibit 10.2 of the Form 10-QSB filed on
November 17, 2004).

10.7 Contribution Agreement between the Company and the Company Solutions,
Inc. (the following to this agreement have been omitted: Schedule 1:
List of Assets; and Schedule 2: List of Liabilities), dated December
31, 2004 (incorporated by reference to Exhibit 10 of the Form 8-K filed
on January 7, 2005).

10.8 Guarantor Agreement between 5G Wireless and Al Lang, dated May 25, 2006
(incorporated by reference to Exhibit 10.1 of the Form 8-K filed on
July 14, 2006).

10.9 Loan Agreement between 5G Wireless and Production Partners, Ltd., dated
May 30, 2006 (incorporated by reference to Exhibit 10.2 of the Form 8-K
filed on July 14, 2006).

10.10 Consulting Agreement between 5G Wireless and Jason Meyers, dated May
30, 2006 (incorporated by reference to Exhibit 10.3 of the Form 8-K
filed on July 14, 2006).

10.11 Loan Agreement between 5G Wireless and Russell Janes, dated June 1,
2006 (incorporated by reference to Exhibit 10.4 of the Form 8-K filed
on July 14, 2006).

10.12 Loan Agreement between 5G Wireless and Thomas Janes, dated June 1, 2006
(incorporated by reference to Exhibit 10.5 of the Form 8-K filed on
July 14, 2006).

14 Code of Ethics, dated October 5, 2004 (incorporated by reference to
Exhibit 14 of the Form 10-KSB filed on March 31, 2005).

16.1 Letter on Change in Certifying Accountant (incorporated by reference to
Exhibit 16 of the Form 8-K/A filed on August 28, 2003).

16.2 Letter on Change in Certifying Accountant (incorporated by reference to
Exhibit 16 of the Form 8-K/A filed on September 30, 2004).

21 Subsidiaries of the Company (incorporated by reference to Exhibit 21 of
the Form 10-QSB filed on August 27, 2002).

23 Consent of Independent Registered Public Accounting Firm (incorporated
by reference to Exhibit 23 of the Form 10-K filed on April 7, 2006).

31.1 Rule 13a-14(a)/15d-14(a) Certification of Jerry Dix (filed herewith).

31.2 Rule 13a-14(a)/15d-14(a) Certification of Don Boudewyn (filed
herewith).

32 Section 1350 Certification of Jerry Dix and Don Boudewyn (filed
herewith).