The phases of the reading program do overlap. Once your child can read many words you can introduce couplets or short phrases. They will learn many words this way, even if they do not know them prior to seeing them. You can always keep introducing new words while adding sentences and books. I had sentence strips and would right things such as:
Gabriella likes to have tea parties.
My name is Gabriella.
I am a girl.
We would point to each word as I read it to her. I also pointed to the text in books and that was enough. You can also play games with the flash cards where you make sentences out of several cards. My kids enjoyed this because they would make sentences that made no sense and I would laugh and tell them that was hilarious. Get some sight words flashcards, MonkiSee has some big ones, teach the sight words and then start making sentences. It is a lot of fun. You can see more here.
http://www.monkisee.com/sight-words-flash-cards.html Scroll down and you will see what I mean. I taught my daughter over a 100 sight words in a few weeks. I would flash her between 10 and 20 words as fast as I could. We did this twice a day and in less than 5 days she would know all the words. We moved on to sentences and books and now she reads just about anything.