UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
x		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended December 31, 2008
or
o		Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______________ to __________________

Commission File No. 000-24595

METROCONNECT, INC.

(Exact name of registrant as specified in its charter)


Nevada (State or other jurisdiction of incorporation or organization)		88-0343832 (I.R.S. Employer Identification No.)
300 S. Harbor Blvd., Suite 500, Anaheim, California (Address of principal executive offices)		92805 (Zip Code)
(714) 765-0010 (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (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 twelve months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes o No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company x

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

The number of shares of the issuer's Common Stock, $0.001 par value, outstanding on February 20, 2008 was 7,696,181

NEXTHASE WIRELESS, INC.

(Former name, former address and former fiscal year if changed since last report)

METROCONNECT, INC.

TABLE OF CONTENTS

		Page no.
PART I - FINANCIAL INFORMATION		1

Item 1. Condensed Consolidated Financial Statements (Unaudited)		1

Unaudited Condensed Consolidated Balance Sheets, December 31, 2008 and March 31, 2008		1

Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2008 and 2007		2

Unaudited Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2008 and 2007		3

Notes to Unaudited Condensed Consolidated Financial Statements		4

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		7

Item 3. Quantitative and Qualitative Disclosures About Market Risk		12

Item 4. Controls and Procedures		12

PART II - OTHER INFORMATION		13

Item 1. Legal Proceedings		13

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		13

Item 3. Defaults Upon Senior Securities		13

Item 4. Submission of Matters to a Vote of Security Holders		13

Item 5. Other Information		13

Item 6. Exhibits		13

SIGNATURES		14

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

METROCONNECT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	December 31,			March 31,
	2008			2008
ASSETS
Current assets:
Cash	$	397		$	592
Accounts receivable, net of allowance for doubtful accounts
of $0 and $4,000 respectively		13,130			38,601
Prepaid expenses		181,453			39,703
Total current assets		194,980			78,896

Property and equipment, net of $42,501 and $361,502 of		241,268			330,166
accumulated depreciation, respectively
Intangible assets:
Customer lists - net of $457,741 and $408,000 of		159,499			692,000
accumulated amortization, respectively
Trademarks		100,000			100,000
Supply contracts - net of $33,000 and $24,000 of
accumulated amortization, respectively		27,000			36,000
Goodwill		-			340,000
Total intangible assets		286,499			1,168,000
Deposits		8,037			8,636
Total assets	$	730,784		$	1,585,698

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Bank overdraft	$	5,536		$	-
Accounts payable		1,649,866			1,241,019
Accrued expenses		467,983			225,175
Deferred revenue		44,846			101,500
Cash advance payable		-			375,000
Due to officer and shareholders		147,160			326,852
Notes payable - current portion		876,597			3,762,323
Total current liabilities		3,191,988			6,031,869

Long- term notes payable, net of current portion		-			23,766
Total liabilities		3,191,988			6,055,635

Stockholders' deficit:
Class A Convertible Preferred stock, $0.001 par value;
20,000,000 shares authorized; 476,804 outstanding;
liquidation preference		4,768,036			-
Common stock, $0.001 par value; 10,000,000 shares authorized;
6,871,181 and 4,123,000 shares issued and outstanding, respectively		6,871			4,123
Additional paid-in capital		15,273,443			13,872,121
Accumulated deficit		(22,509,554	)		(18,346,181	)
Total stockholders' deficit		(2,461,204	)		(4,469,937	)
Total liabilities and stockholders' deficit	$	730,784		$	1,585,698

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

METROCONNECT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	For the Three Months						For the Nine Months
	Ended December 31,						Ended December 31,
	2008			2007			2008			2007

Revenue	$	139,065		$	452,652		$	723,527		$	1,445,095

Cost of revenue		117,301			276,564			502,477			759,406

Gross profit		21,764			176,088			221,050			685,689

Operating expenses:
General and administrative expenses		396,484			9,984,203			3,167,559			11,725,327
Loss on impairment of intangibles		340,000			-			830,000			-
Other Expenses		93,537			-			120,148			-

Total operating expenses		830,021			9,984,203			4,117,707			11,725,327

Operating profit (loss)		(808,257	)		(9,808,115	)		(3,896,657	)		(11,039,638	)

Other income (expense)
Legal settlements		-			36,734			-			181,085
Interest expense		(106,596	)		(71,819	)		(266,716	)		(196,477	)

Total other income (expense)		(106,596	)		(35,085	)		(266,716	)		(15,392	)

Net loss	$	(914,853	)	$	(9,843,200	)	$	(4,163,373	)	$	(11,055,030	)

Basic and diluted net loss per share	$	(0.14	)	$	(3.35	)	$	(0.71	)	$	(5.39	)

Weighted average shares outstanding		6,616,588			2,934,960			5,865,114			2,050,065

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

METROCONNECT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months
	Ended December 31,
	2008			2007
Cash flows from operating activities:
Net loss	$	(2,263,078	)		(11,055,030	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Gain on forgiveness of notes payable and accrued expenses		-			-
Impairment of intangible assets		830,000			(181,085	)
Issuance of preferred stock for services		390,308			-
Issuance of common stock for services		1,279,819			5,287,001
Issuance of warrants and options for consulting services		-			3,352,255
Depreciation		96,238			-
Amortization		51,501			26,136
Changes in assets and liabilities:
Accounts receivable		25,471			214,006
Prepaid expenses		(141,750	)		(5,800	)
Accounts payable		4,073,847			-
Accrued expenses		578,094			308,258
Due to officers-shareholders		-			89,208
Deferred revenue		(56,654	)		(121,870	)

Net cash used in operating activities		4,863,796			(2,086,921	)
Cash flows from investing activities:
Purchase of property and equipment		7,340			(36,744	)
Purchase of Interactive Network Services, Inc.		-			(342,612	)

Net cash used in investing activities		7,340			(379,356	)
Cash flows from financing activities:
Proceeds from bank overdraft		5,536			-
Proceeds from notes payable		430,508			910,000
Proceeds from cash advances payable		-			275,000
Principal payments on notes payable and capital leases		-			(7,201	)

Net cash provided by financing activities		436,044			1,177,799

Net increase (decrease) in cash		(195	)		(1,288,478	)
Cash at beginning of period		592			71,683
Cash end of period	$	397		$	(1,216,795	)

Supplemental disclosure of cash flow information:
Non-cash investing and financing transactions:
Accrued liabilities issued for prepaid consulting fees	$	-		$	1,359,500
Preferred stock issued in satisfaction of accrued compensation		179,692			-
Preferred stock issued upon conversion of notes payable,
cash advances, accounts payable and accrued interest		4,198,036			-
Common stock issued upon conversion of notes payable		50,000			162,305
Common stock issued for consulting services		-			291,000
Common stock issued upon conversion of accounts payable	$	74,250		$	391,554

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

METROCONNECT, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2008

(Unaudited)

NOTE 1-NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited condensed financial statements included in this Form 10-Q have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, these financial statements do not include all of the disclosures required by U.S. generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the fiscal year ended March 31, 2008 in the Company’s annual report on Form 10-K, as amended. The financial information furnished herein reflects all adjustments consisting of normal, recurring adjustments which, in the opinion of management, are necessary for a fair presentation of the Company's financial position, the results of operations and cash flows for the periods presented. Operating results for the period ended December 31, 2008 are not necessarily indicative of the results that may be expected for the year ending March 31, 2009.

New name

On December 9, 2008, by written consent of the directors, the Company changed its name to MetroConnect, Inc.

Reclassification

Certain reclassifications have been made to conform prior periods' data to the current presentation. These reclassifications had no effect on reported loss.

Basis of Presentation

The condensed consolidated financial statements include the accounts and transactions of METROCONNECT, INC. and its subsidiaries. The results of operations for Interactive Network Systems, have been included since the date of acquisition on July 23, 2007. All significant inter-company accounts and transactions have been eliminated in consolidation.

Business Condition

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate the continuation of the Company as a going concern. As of December 31, 2008, the Company has an accumulated deficit of $22,509,554. During the nine months ended December 31, 2008, the Company suffered a loss of $4,163,373 and used $2,969,037 of cash in its operating activities. The Company has a working capital deficit of $2,997,008 and a stockholders’ deficit of $2,461,204 at December 31, 2008. These factors raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time. Without realization of additional capital, is unlikely that the Company will be able to continue as a going concern. These unaudited, condensed, consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the resolution of this uncertainty.

The Company has developed a plan to integrate additional internet service providers in a scalable roll-up strategy. Through its business plan to position MetroConnect as a nationwide provider of WiMax-ready networks and advanced wired and wireless broadband connectivity solutions. There is no assurance that management will achieve its plan. There is further no assurance that the proceeds from operating cash flows or future financings will be sufficient to obtain profitable operations. The Company will need to raise additional debt and/or equity capital in order to finance its business plan and its need for working capital. Such financing, if available, may increase the risk of the Company not being able to service its debt obligations.

Long-Lived Assets

The Company reviews its fixed assets and certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The test for impairment is required to be performed by management at least annually. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted operating cash flow expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

As of December 31, 2008, the Company’s management has impaired $490,000 of Customer Lists and $340,000 goodwill from its long-lived assets.

Revenue Recognition and Deferred Revenue

Revenues are recognized in the period that services are provided. For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition” when (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or for which services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required.

The Company generates and recognizes revenue as follows:

Revenue from operating as a wireless Internet service provider of tiered wireless Internet services to business and residential subscribers: Internet services are billed at the beginning of each month's activity at a fixed rate for each customer. Customers sign an annual agreement or utilize the service on a month-to-month basis. Revenue is recognized over the period of service. Unrecognized revenue is recorded as deferred revenue.

Revenue from the sale and configuration of wireless equipment: MetroConnect acts as a reseller of certain components and equipment related to its products and services. Equipment revenue is recognized at the time of shipment to the customer. Configuration is billed at an hourly rate and recognized after completion. Costs associated with the equipment are recognized at the time of shipment. Revenue from the sale and configuration of wireless equipment is sometimes billed in advance of shipment. In such cases, the amount billed is recorded as deferred revenue until shipment and configuration are completed.

Revenue from consulting services: These services include wireless network consulting, interference surveys, network management and telephone consulting. Revenue is recognized after the service has been provided. Revenue from consulting services is sometimes billed in advance of project completion. In such cases, the amount billed is recorded as deferred revenue until the services are provided.

Net Loss per Common Share

Basic and diluted net loss per common share are calculated by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. As of December 31, 2007,there were outstanding common stock equivalents to purchase 20,700 shares of common stock that were not included in the computation of diluted net loss per common share as their effect would have been anti-dilutive, thereby decreasing the net loss per common share.

Preferred stock which is convertible into $10 of common stock has not been included in the dilutive loss per share as it would also be anti-dilutive.

NOTE 2 - ACQUISITIONS

On July 23, 2007, the Company, acquired all of the assets (excluding cash) and assumed certain liabilities of Interactive Network Systems (INS), pursuant to an asset purchase agreement. The assets and liabilities acquired comprised the INS Internet service and connectivity business.

The following unaudited condensed combined pro forma results of operations reflect the operations of the MetroConnect and INS businesses as if their operations had been combined on April 1, 2007. The unaudited pro forma condensed consolidated results of operations do not purport to represent what the companies’ actual combined results of operations would have been if such transaction had occurred at that date, and are not necessarily indicative of the Company's future results.

	Nine Months Ended
	December 31, 2007

Total revenues	$	1,538,880

Net loss	$	(11,070,154	)

Loss per share	$	(5.39	)

Pro forma loss per share	$	(5.40	)

NOTE 3 - RELATED PARTY TRANSACTIONS

On September 30, 2008, the former President, the former CFO and the current President and CEO entered into a Securities Exchange Agreement with the Company wherein they were issued 25,000, 25,000 and 7,000 shares, respectively, of Series A Preferred Stock valued at $570,000 or $10.00 per share. These shares were accepted as payment in full of $172,692 of unpaid compensation rendered to the Company and for all loans extended to the Company.

From time to time the officer-shareholders have loaned cash to the Company. As of December 31, 2008, $147,160 was due to officers-shareholders. The Company’s obligation to reimburse the President for expenses as previously approved by the Company was not affected by the agreement.

NOTE 4 – NOTES PAYABLE

	December 31,			March 31,
Notes payable consisted of the following balances as of:	2008			2008

Secured convertible note payable, interest at 6%,	$	-		$	2,300,000
Convertible notes, interest at 7%		848,867			1,440,000
Convertible notes, interest at 10%		-			13,300
Automobile loan, interest at 5.9%, due $924 monthly		29,730			32,789
Total Notes Payable		876,597			3,786,089
Less: Current portion		(876,597	)		(3,762,323	)
Total Long Term Notes Payable	$	-		$	23,766

Cash-advance payable on demand, interest at 9%	$	-		$	375,000

NOTE 5 – EQUITY

On September 30, 2008, the Company entered into a Securities Exchange Agreement, mentioned in Note 3, that also called for note holders to surrender, cancel and release promissory notes issued by the Company along with all claims of principal and interest or other charges there-under in exchange for Preferred Stock. In addition to the 57,000 shares of Preferred Stock mentioned in Note 3, the Company issued 99,000 shares of Preferred stock in satisfaction of $990,000 of 6% notes payable; 230,000 shares of Preferred Stock in satisfaction of $2,300,000 of 6% secured notes payable; 37,500 shares of Preferred Stock in satisfaction of $375,000 of a 9% cash-advance payable; 27,200 shares of Preferred Stock to vendors in satisfaction of $272,000 of accounts payable and 26,104 shares of Preferred Stock in satisfaction of $261,036 of accrued interest. The Preferred Stock is convertible to $10 of common stock and has liquidation preference also at $10 per share.

On September 30, 2008, the Company entered into a Securities Exchange Agreement whereby it designated 600,000 preferred shares as Series A Preferred Stock with a $.001 par value per share and then issued 476,804 shares, as described in Notes 3 and 4 above. In addition, the Securities Exchange Agreement sets forth registration rights for the shares when converted.

In the nine months ended December 31, 2008 the Company issued; 2,748,000 shares of common stock at values ranging from $0.095 to $2.05 to various consultants for business advisory services, recorded as stock based compensation, at a value of $1,328,670; 380,000 shares of common stock as payment to a number of employees, in lieu of cash, at a value of $54,150 and 25,000 shares of common stock to a vendor in satisfaction of a debt valued at $21,250.

During October and December 2008, the company issued 230,000 shares of common stock at values ranging from $0.095 to $0.18 per share to various consultants for business advisory services recorded as stock based compensation at a value of $30,350.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Indemnities and Guarantees

The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party, in relation to certain actions or transactions. The Company indemnifies its directors, officers, employees and agents, as permitted under the laws of the State of Nevada. The duration of the guarantees and indemnities varies, and is generally tied to the life of the agreement. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying condensed consolidated balance sheet.

Litigation

The Company is, from time to time, involved in various legal and other proceedings which arise in the ordinary course of operating its business. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not materially affect the financial position or results of operations of the Company.

During the year ended March 31, 2007 the Company entered into a settlement agreement in which the Company was to pay $45,000. During the 2008 fiscal year, the Company recorded an additional expense of $22,222 related to the settlement agreement which was recorded to reduce gain on settlement of liabilities.

In July 2008, a vendor filed a complaint for breach of lease agreement in the amount of $55,412. The Company believes that the lawsuit is without merit and anticipates resolving the matter without incurring expenses in excess of the amounts accrued.

Tessco Technologies, Inc. v. METROCONNECT, INC.: The Company is being sued by a vendor in a collection action. The amount at issue is approximately $65,000. Also, there is a suit by Certilman Balin relating to a collections action relating to unpaid legal fees. The amount at issue is approximately $125,000. There is a current dispute against the Company for the use of premises occupied by Speed Factory. The amount at issue is approximately $225,000. Speed Factory has ceased most of its operations.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Forward Looking Statements

Certain information contained in this report may include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, and is subject to the safe harbor created by that act. The safe harbor created by the Securities Litigation Reform Act will not apply to certain "forward looking statements" because we issued "penny stock" (as defined in Section 3(a) (51) of the Securities Exchange Act of 1934 and Rule 3a51-1 under the Exchange Act) during the three year period preceding the date(s) on which those forward looking statements were first made, except to the extent otherwise specifically provided by rule, regulation or order of the Securities and Exchange Commission(“SEC”). We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements which may be deemed to have been made in this Report or which are otherwise made by or on behalf of us. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "will", "expect", "believe", "explore", "consider", "anticipate", "intend", "could", "estimate", "plan", "propose", "seem", "hope", "continue" or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. Factors that may affect our results include, but are not limited to, the risks and uncertainties associated with:

Our ability to generate sufficient cash to pay our lenders and other creditors

Our ability to obtain regulatory permits and approvals to operate in the high-speed wireless network industry

The introduction of new broadband connectivity technologies by our competitors that may have advantages over our planned products and may make our planned products less attractive to our potential customers

Our ability to identify and complete acquisitions and successfully integrate the businesses we acquire, if any

Our ability to employ and retain qualified management and employees

Our dependence on the efforts and abilities of our current employees and executive officers

Changes in government regulations that are applicable to our anticipated business

Changes in the demand for our services

He degree and nature of our competition

Our lack of diversification of our business plan

The general volatility of the capital markets and the establishment of a market for our shares

Disruption in the economic and financial conditions primarily from the impact of past terrorist attacks in the United States, threats of future attacks, police and military activities overseas and other disruptive worldwide political events

We are also subject to other risks detailed from time to time in other SEC filings and elsewhere in this report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.

Management believes that cash on hand and cash generated from operations may be insufficient to fund its current or planned operating needs, and the Company currently has insufficient revenue to fund its operations. The Company plans on funding working capital requirements, necessary equipment purchases, marketing costs, and all other operations for the next quarter and foreseeable future by raising capital with the sale of equity and/or debt securities.

As widely reported, financial markets in the United States, Europe and Asia have been experiencing extreme disruption in recent months. Unfavorable changes in economic conditions, including declining consumer confidence, inflation, recession or other changes, may lead our customers to delay or reduce purchases of our products and our results of operations and financial condition could be adversely affected thereby. Challenging economic conditions also may impair the ability of our customers or distributors to pay for products they have purchased, and as a result, our reserves for doubtful accounts and write-offs of accounts receivable could increase. Our cash flows may be adversely affected by delayed payments or underpayments by our customers. We are unable to predict the duration and severity of the current disruption in financial markets and adverse economic conditions in the U.S. and other countries.

Financial Statement Overview

Nature of Operations

METROCONNECT, INC. (“MetroConnect” or the “Company”) was incorporated on August 28, 1995 in Nevada under the name of Professional Mining Consultants, Inc.

On August 3, 2004, MetroConnect consummated a share exchange in which it issued 12,943,000 shares of common stock, or approximately 76% of its outstanding common stock, to the shareholders of MetroConnect Technologies, Inc. ("NTI") in exchange for all of the shares of NTI. As a result, NTI became a wholly owned subsidiary of MetroConnect. NTI was formed on September 14, 2000. For accounting purposes, this transaction is considered a "reverse merger,” and the historical financial statements of MetroConnect reflect the operations of NTI. Effective on the merger date, all financial activity became generated by MetroConnect and NTI became an inactive subsidiary. On January 21, 2005 the Company changed its name to NextPhase Wireless, Inc.

Effective April 5, 2006, through its wholly-owned subsidiary SpeedFactory, Inc. (“SpeedFactory”), MetroConnect acquired the Internet service and connectivity business assets previously operated by Synkronus, Inc. (“Synkronus”) under the name "SpeedFactory." Effective July 23, 2007 SpeedFactory acquired the Internet service and connectivity business assets previously operated by Interactive Network Systems, Inc. (“INS”).

Prior to the acquisition of SpeedFactory, MetroConnect had a limited operating history with revenue-generating products and services only recently entering the market.

With the acquisition of SpeedFactory, MetroConnect enhanced its position as a nationwide provider of scalable, reliable and cost effective connectivity solutions, expanding its portfolio of products and services to include DSL, T1s, co-location and web hosting. MetroConnect continues to extend its wireless “footprint” in Southern California, through a combination of organic growth and acquisition, MetroConnect has continued to add small to medium business subscribers, small office/home office (SOHO) subscribers, and residential subscribers in underserved markets to its network.

Effective October 1, 2006, all revenue generating activity was combined with SpeedFactory and INS a division of SpeedFactory.

On December 9, 2008, by written consent of the directors, the Company changed its name to MetroConnect, Inc.

The Company conducts its operations from its office located in Anaheim, California, the SpeedFactory location in Marietta, Georgia and the INS operation in Blackwood, New Jersey.

The condensed consolidated financial statements presented include only the accounts of NTI, from its inception (September 14, 2000) through December 31, 2008, of MetroConnect from August 3, 2004 through December 31, 2008, of SpeedFactory from April 6, 2006 (date of acquisition) through December 31, 2008 and INS, a division of SpeedFactory, from July 23, 2007 (date of acquisition) through December 31, 2008.

Results of Operations:

For the three months and nine months ended December 31, 2008, revenue was $139,065 as compared with $723,527 and $452,652 as compared with $1,445,095 for the same period of the previous year. The reduction was due to the decreased emphasis on the sale of wired services and an increased effort for the sale of wireless services. Cost of revenue was $117,301 or 84.4% of revenue for the three months ended December 31, 2008, compared to $502,477 or 69.4% during the three months ended December 31, 2007. Reorganization of the Company’s network infrastructure is resulting in reduced costs, not all of the anticipated reductions have been realized yet. The apparent increase is the result of fixed costs remaining in place as revenue has temporarily declined. Management anticipates that, with additional capital expenditures, these fixed costs will be reduced to more acceptable levels.

Selling, general, and administrative expenses were $488,199 for the three months ended December 31, 2008 as compared with $9,984,203 for the three months ended December 31, 2007, a decrease of $9,496,004 for the most recent 3 months. The decrease was due primarily to managements’ cost cutting efforts while engaging in the paradigm shift from wired to wireless services. Management believes that based on its cost cutting program, savings will continue to be realized for this sector. Included in the 9 months ended December 31, 2008, are stock based compensation payments totaling $1,670,127 which if excluded would create an expense saving, for the nine months ended December 31, 2008, of $1,670,127.

Depreciation and amortization expense for the three months ended December 31, 2008 and 2007 was $114,652 and $289,599 respectively. Amortization of the intangible assets acquired in the SpeedFactory and INS acquisitions was $57,501 and $52,000 for the three months ended December 31, 2008 and 2007.

Interest expense of $106,596 and $266,716 for the three and nine months ended December 31, 2008 increased over the same periods of the previous year as a result of additional funds being borrowed through the issuance of convertible promissory notes. The conversion of $3,665,000 of those notes to Preferred A stock will significantly reduce that cost in future accounting periods.

Net loss for the three months ended December 31, 2008 was $914,853 or $0.13 per share as compared with a net loss of $9,843,200 or $2.64 per share for the three months ended December 31, 2007. Monthly operating cash losses are now approximately $87,500 per month. Management expects this to continue to decline as the Company continues to implement its new business plan.

Liquidity and Capital Resources

As of December 31, 2008, the Company had a cash balance of $392, used $2,997,008 of cash for operations and the Company's accumulated deficit was $22,509,554. The Company had negative working capital of $2,997,008. Total liabilities were $3,191,988, which included accounts payable of $1,649,866, accrued expenses of $467,983, deferred revenue of $44,846 and notes and advances payable of $1,023,757.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operation, liquidity, capital expenditures or capital resources that is material to investors.

Inflation

In the opinion of management, inflation has not had a material effect on the Company's financial condition or results of its operations

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., which requires us to make estimates and assumptions in certain circumstances that affect amounts reported. In preparing these financial statements, management has made its best estimates and judgments of certain amounts, giving due consideration to materiality. We believe that of our significant accounting policies (more fully described in notes to the consolidated financial statements), which are particularly important to the portrayal of our results of operations and financial position and may require the application of a higher level of judgment by our management, and as a result are subject to an inherent degree of uncertainty. While there are a number of accounting policies, methods and estimates affecting our unaudited condensed consolidated financial statements, areas that are particularly significant include:

Revenue Recognition and Deferred Revenue

Revenues are recognized in the period that services are provided. For revenue from product sales, the Company recognizes revenue in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”, which superseded SAB No. 101, Revenue Recognition in Financial Statements). SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or for which services have not been rendered or are subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or services have been rendered or no refund will be required.

SAB 104 incorporates Emerging Issues Task Force Issue (“EITF”) No. 00-21, “Deliverable Revenue Arrangements.” EITF No. 00-21 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing EITF No. 00-21 on the Company's consolidated financial position and results of operations was not significant.

The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. The Company generates and recognizes revenue as follows:

Revenue from the sale and configuration of wireless equipment: MetroConnect acts as a reseller of certain components and equipment related to its products and services. Equipment revenue is recognized at the time of shipment FOB to the customer. Configuration is billed at an hourly rate and recognized after completion. Costs associated with the equipment are expensed at the time of shipment. In order to maximize the Company’s cash flows, revenue from the sale and configuration of wireless equipment is sometimes billed in advance of shipment. In such cases, these invoices are recorded as deferred revenue.

Revenue from professional and consulting services provided by its staff: These services include wireless network consulting, interference surveys, network management and telephone consulting. Revenue is recognized after the professional or consulting service has been provided. In order to maximize the Company’s cash flows, revenue from professional services is sometimes billed in advance of project completion. In such cases, these invoices are recorded as deferred revenue.

Long-Lived Assets

Goodwill and Other Intangible Assets

The Company has adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 requires that goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to an annual impairment test which has two steps to determine whether asset impairment exists. The first step of the impairment test identifies potential impairment by comparing the fair value with the carrying amount of the reporting unit, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step of the impairment test shall be performed to measure the amount of the impairment loss, if any. Intangibles with indefinite useful lives are measured for impairment by the amount that the carrying value exceeds the estimated fair value of the intangible. The fair value is calculated using the income approach. Intangible assets with definite useful lives will continue to be amortized over their estimated useful lives. Any impairment is recorded at the date of determination.

The Company’s policy provides for annual evaluation of goodwill on the first day of the fourth fiscal quarter and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of goodwill is tested at the operating segment level by comparing the segments' net carrying value, including goodwill, to the fair value of the segment. The fair values of our segments are estimated using a combination of the income or discounted cash flows approach and the market approach, which uses comparable market data. If the carrying amount of the segment exceeds its fair value, goodwill is potentially impaired and a second test would be performed to measure the amount of impairment loss, if any.

Business Combinations

In accordance with SFAS No. 141, “Business Combinations,” the Company allocates the purchase price of acquired entities to the tangible and intangible assets acquired and, liabilities assumed, based on their estimated fair values. Such a valuation requires management to make significant estimates and assumptions, especially with respect to intangible assets.

Management makes estimates of fair values based upon assumptions believed to be reasonable. These estimates are based on historical experience and information obtained from the management of the acquired companies. Critical estimates in valuing certain of the intangible assets include but are not limited to: future expected cash flows from revenues, customer relationships, key management and market position, assumptions about the period of time the acquired trade names will continue to be used in the Company's combined product portfolio, and discount rates used to establish fair value. These estimates are inherently uncertain and unpredictable. Assumptions may be incomplete or inaccurate, and unanticipated events and circumstances may occur which may affect the accuracy or validity of such assumptions, estimates or actual results.

Beneficial Conversion Feature

The convertible feature of one of the Company’s convertible notes provided for a rate of conversion that was below market value (see Note 4). Such feature is normally characterized as a “beneficial conversion feature” (“BCF”). Pursuant to Emerging Issues Task Force (“EITF”) Issue No. 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratio” and EITF No. 00-27, “Application of EITF Issue No. 98-5 to Certain Convertible Instruments”, the estimated relative fair value of the BCF was recorded as a discount from the face amount of the convertible note. The Company amortized the discount using the effective interest method through the conversion of such instrument.

Income Taxes

The Company utilizes the liability method of accounting for income taxes as set forth in SFAS No. 109, “Accounting for Income Taxes”. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The Company also determines its tax contingencies in accordance with SFAS No. 5, “Accounting for Contingencies.” The Company records estimated tax liabilities to the extent the contingencies are probable and can be reasonably estimated.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157 “Fair Value Measurements,” to eliminate the diversity in practice that exists due to the different definitions of fair value and the limited guidance for applying those definitions in accounting principles generally accepted in the United States of America that are dispersed among the many accounting pronouncements that require fair value measurements.

SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, although earlier application is encouraged. Additionally, prospective application of the provisions of SFAS No. 157 is required as of the beginning of the fiscal year in which it is initially applied, except when certain circumstances require retrospective application. The Company is currently evaluating the effect of adopting SFAS No. 157 on its consolidated financial statements.

SFAS No. 159 permits all entities to choose to measure eligible items at fair value at specified election dates. A business entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings (or another performance indicator if the business entity does not report earnings) at each subsequent reporting date. The fair value option: ( a ) may be applied instrument by instrument, with a few exceptions, such as investments otherwise accounted for by the equity method; ( b ) is irrevocable (unless a new election date occurs); and ( c ) is applied only to entire instruments and not to portions of instruments. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of the previous fiscal year provided that the entity makes that choice in the first 120 days of that fiscal year and also elects to apply the provisions of SFAS No. 157. The adoption of this pronouncement is not expected to have material effect on the Company’s consolidated financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

None.

ITEM 4 CONTROLS AND PROCEDURES.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, among other things, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, we conducted an evaluation, under the supervision and with the participation of our principal financial officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act). Based on his evaluation, our principal financial officer concluded that our current system of disclosure controls and procedures still contains a significant deficiency.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the fiscal quarter to which this report relates that has materially affects, or is reasonable likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1: LEGAL PROCEEDINGS.

None

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

On November 5, 2007 the Company executed employment agreements with Messrs. Ford, Hemingway and Noyes. In connection with the agreements, the Company granted 600,000, 600,000 and 250,000 shares to Messrs. Ford, Hemingway and Noyes respectively. These issuances were valued at $4,550,000 and charged to stock-based compensation in the three and nine months ended December 31, 2007. The shares are subject to lock-up provisions. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On November 5, 2007, we issued 25,000 shares to Michael Jones, Director, valued at $81,250 which was charged to stock-based compensation in the three months and nine months ended December 31, 2007. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On November 5, 2007 we issued 100,000 shares in total to five employees and one consultant. These shares were valued at $325,000 and charged to stock-based compensation in the three and nine months ended December 31, 2007. . The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On November 5, 2007 we issued 36,271 shares of our common stock valued at $78,908 to a note holder for payment of interest. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 18, 2007 we issued 11,753 shares of our common stock valued at $42,241 to a note holder for payment of interest. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On July 18, 2008 we issued 100,000 shares of our common stock valued at $15,000 to a consultant for services rendered. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On September 18, 2008 we issued 50,000 shares of our common stock valued at $9,000 to several consultants for services rendered. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On October 10, 2008 we issued 100,000 shares of our common stock valued at $18,000 to several consultants for services rendered. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 10, 2008 we issued 130,000 shares of our common stock valued at $12,350 to several consultants for services rendered. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

On December 12, 2008 we issued 70,000 shares of our common stock valued at $6,650 to several consultants for services rendered. The issuance was exempt from registration under Section 4(2) of the Securities Act of 1933.

None of the sales of securities described above have been registered with the Securities and Exchange Commission because they are believed to be exempt from registration under the Securities Act of 1933 pursuant to Regulation D, Rule 506, promulgated thereunder or generally section 4(2) of the Act. Each purchaser represented his, her or its intention to acquire the securities for investment only and not with a view toward distribution. Each investor was given adequate information about us to make an informed investment decision. We did not engage in any general solicitation or advertising. The stock certificates issued in each case contain an appropriate legend identifying each as restricted stock.

ITEM 3: DEFAULTS UPON SENIOR SECURITIES.

The Company does not hold any assets or liabilities requiring disclosure under this item.

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

None.

ITEM 5: OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Please see Exhibit Index located behind the signature page.

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	METROCONNECT, INC.

February 23, 2009	By:	/s/ Thomas Hemingway
		Thomas Hemingway
		President and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number		Description of Exhibit
10.9		Securities Exchange Agreement filed with the Securities and Exchange Commission in the exhibits attached to Form 8-K filed on October 2,2008 and incorporated by reference here in.
31		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

MetroConnect Inc. 10-Q