<SUBMISSION>
<ACCESSION-NUMBER>0001035398-01-500003
<TYPE>10QSB
<PUBLIC-DOCUMENT-COUNT>2
<PERIOD>20010331
<FILING-DATE>20010515
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>USURF AMERICA INC
<CIK>0001035398
<ASSIGNED-SIC>4841
<IRS-NUMBER>721346591
<STATE-OF-INCORPORATION>NV
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10QSB
<ACT>34
<FILE-NUMBER>001-15383
<FILM-NUMBER>1634551
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>8748 QUARTERS LAKE RD
<CITY>BATON ROUGE
<STATE>LA
<ZIP>70809
<PHONE>2259227744
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>8748 QUARTERS LAKE RD
<CITY>BATON ROGUE
<STATE>LA
<ZIP>70809
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>INTERNET MEDIA CORP
<DATE-CHANGED>19980729
</FORMER-COMPANY>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>MEDIA ENTERTAINMENT INC
<DATE-CHANGED>19980729
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>aqsb0301.htm
<TEXT>

<HTML>
<HEAD>
<META HTTP  EQUIV="Content-Type" CONTENT="text/html; charset=windows-1252">
<META NAME="Generator" CONTENT="Microsoft Word 97">
</HEAD>
<BODY>

<FONT FACE="Courier New" SIZE=2>
<P>&nbsp;</P>
<P>                       Form 10-QSB</P>

<P>&nbsp;</P>
<P>            SECURITIES AND EXCHANGE COMMISSION</P>
<P>                     Washington, D.C.</P>

<P>&nbsp;</P>
<P>  [ X ] Quarterly Report Pursuant to Section 13 or 15(d)</P>
<P>         of the Securities Exchange Act of 1934</P>

<P>&nbsp;</P>
<P>       For the quarterly period ended March 31, 2001</P>

<P>&nbsp;</P>
<P>                            OR</P>

<P>&nbsp;</P>
<P>  [ ] Transition Report Pursuant to Section 13 or 15(d)</P>
<P>         of the Securities Exchange Act of 1934</P>

<P>&nbsp;</P>
<P>       For the transition period from to .</P>

<P>&nbsp;</P>
<P>               Commission File No. 1-15383</P>

<P>&nbsp;</P>
<P>                     USURF America, Inc.</P>
<P>           (Exact Name of Small Business Issuer</P>
<P>               as Specified in its Charter)</P>

<P>&nbsp;</P>
<P>           NEVADA                                72-1346591 </P>
<P>(State or Other Jurisdiction of               (I.R.S. Employer </P>
<P>incorporation or organization)              Identification Number)</P>

<P>&nbsp;</P>
<P>    8748 Quarters Lake Road, Baton Rouge, Louisiana 70809</P>
<P>          (Address of Principal Executive Offices,</P>
<P>                     including Zip Code)</P>

<P>&nbsp;</P>
<P>                       (225) 922-7744</P>
<P>      (Issuer's telephone number, including area code)</P>

<P>&nbsp;</P>
<P>Indicate by check mark whether Registrant (1) has filed all</P>
<P>reports required to be filed by Section 13 or 15(d) of the</P>
<P>Securities Exchange Act of 1934 during the preceding 12</P>
<P>months (or for such shorter period that Registrant as</P>
<P>required to file such reports), and (2) has been subject to</P>
<P>such filing requirements for the past 90 days:</P>

<P>&nbsp;</P>
<P>Yes [ X ] No [ ]</P>

<P>&nbsp;</P>
<P>Indicate the number of shares outstanding of each of the</P>
<P>issuer's classes of common stock as of the latest</P>
<P>practicable date:</P>

<P>&nbsp;</P>
<P>    Class                    Outstanding as of 5-11-01</P>

<P>&nbsp;</P>
<P>Common Stock,</P>
<P> $.0001 par value                 19,824,770</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&lt;PAGE&gt;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>                      PART I - FINANCIAL INFORMATION</P>

<P>&nbsp;</P>
<P>Item 1. Financial Statements.</P>

<P>&nbsp;</P>
<P>               INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</P>

<P>&nbsp;</P>
<P>                            USURF America, Inc.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>Consolidated Balance Sheets as of March 31,</P>
<P> 2001 (unaudited), and December 31, 2000</P>

<P>&nbsp;</P>
<P>Consolidated Statements of Operations for</P>
<P> the Three Months Ended March 31, 2001 and</P>
<P> 2000(unaudited)</P>

<P>&nbsp;</P>
<P>Consolidated Statements of Cash Flows for</P>
<P> the Three Months Ended March 31, 2001 and</P>
<P> 2000(unaudited)</P>

<P>&nbsp;</P>
<P>Notes to Consolidated Financial Statements</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&lt;PAGE&gt;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>           USURF AMERICA, INC. AND SUBSIDIARIES</P>

<P>&nbsp;</P>
<P>                CONSOLIDATED BALANCE SHEETS</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>                            12/31/00          3/31/01</P>
<P>                            (audited)       (unaudited)</P>

<P>&nbsp;</P>
<P>ASSETS</P>

<P>&nbsp;</P>
<P>CURRENT ASSETS</P>
<P>   Cash and cash</P>
<P>    equivalents            $     1,088       $  125,494</P>
<P>   Accounts receivable</P>
<P>    - net                            0              384</P>
<P>   Inventory                   246,721          246,721</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>      Total current</P>
<P>       assets                  247,809          372,599</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>PROPERTY AND EQUIPMENT,</P>
<P>   Cost                        138,954          138,954</P>
<P>   Less: accumulated</P>
<P>    depreciation               (69,476)         (81,056)</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>                                69,478           57,898</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>INVESTMENTS                     68,029           68,029</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>OTHER ASSETS                    25,000           25,000</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>                                25,000           25,000</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>      Total assets         $   410,316      $   523,526</P>

<P>&nbsp;</P>
<P>LIABILITIES AND STOCKHOLDERS' EQUITY</P>

<P>&nbsp;</P>
<P>CURRENT LIABILITIES</P>
<P>   Disbursements in excess of</P>
<P>    cash balances               42,469           42,469</P>
<P>   Accounts payable          1,472,030        1,473,817</P>
<P>   Accrued payroll             158,262          200,155</P>
<P>   Other current liabilities    41,824           51,824</P>
<P>   Property dividends</P>
<P>    payable                     43,750           43,750</P>
<P>   Notes payable to</P>
<P>    stockholder                  6,638           32,728</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>      Total current</P>
<P>       liabilities           1,764,973        1,844,743</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>LONG-TERM LIABILITIES</P>
<P>   Deferred income tax               0                0</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>         Total</P>
<P>          liabilities        1,764,973        1,844,743</P>

<P>&nbsp;</P>
<P>STOCKHOLDERS' EQUITY</P>
<P>   Common stock, $.0001</P>
<P>    par value; Authorized:</P>
<P>    100,000,000; Issued</P>
<P>    and Outstanding:</P>
<P>    16,688,808 shares at</P>
<P>    December 31, 2000,</P>
<P>    and 18,052,770 shares</P>
<P>    at March 31, 2001            1,669            1,805</P>
<P>   Additional paid-in</P>
<P>    capital                 34,183,962       35,131,339</P>
<P>   Accumulated deficit     (34,502,160)     (35,403,419)</P>
<P>   Subscriptions</P>
<P>    receivable                 933,514          313,000</P>
<P>   Deferred consulting      (1,971,642)      (1,363,942)</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>                            (1,354,657)      (1,321,217)</P>
<P>                            ----------       ----------</P>

<P>&nbsp;</P>
<P>TOTAL LIABILITIES AND</P>
<P>STOCKHOLDERS' EQUITY       $   410,316      $   523,526</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&lt;PAGE&gt;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>            USURF AMERICA, INC. AND SUBSIDIARIES</P>

<P>&nbsp;</P>
<P>            CONSOLIDATED STATEMENTS OF OPERATIONS</P>

<P>&nbsp;</P>
<P>                              Three Months Ended</P>
<P>                                   March 31,</P>
<P>                          2001                  2000</P>
<P>                       (unaudited)           (unaudited)</P>

<P>&nbsp;</P>
<P>REVENUES</P>
<P> Internet access</P>
<P>  revenues             $       384           $   597,392</P>
<P> Internet access</P>
<P>  costs and cost</P>
<P>  of goods sold                  0              (269,136)</P>
<P>                        ----------            ----------</P>

<P>&nbsp;</P>
<P>   Gross profit                384               328,256</P>
<P>                        ----------            ----------</P>

<P>&nbsp;</P>
<P>OPERATING EXPENSES</P>
<P> Depreciation</P>
<P>  and amortization          11,580             2,238,544</P>
<P>  Professional fees        707,288               390,038</P>
<P>  Rent                       5,361                61,570</P>
<P>  Salary and</P>
<P>   commissions             160,746               399,358</P>
<P>  Advertising                    0                15,179</P>
<P>  Other                     16,668               249,530</P>
<P>                        ----------            ----------</P>
<P>    Total</P>
<P>     Operating</P>
<P>     Expenses              901,643             3,354,219</P>
<P>                        ----------            ----------</P>

<P>&nbsp;</P>
<P>LOSS FROM OPERATIONS      (901,259)           (3,025,963)</P>

<P>&nbsp;</P>
<P>OTHER INCOME(EXPENSE)</P>
<P> Other income                    0                 6,618</P>
<P> Interest expense                0                (9,770)</P>
<P>                        ----------            ----------</P>

<P>&nbsp;</P>
<P>LOSS BEFORE INCOME TAX    (901,259)           (3,029,115)</P>

<P>&nbsp;</P>
<P>INCOME TAX BENEFIT               0               471,519</P>
<P>                        ----------            ----------</P>

<P>&nbsp;</P>
<P>   NET LOSS               (901,259)           (2,557,596)</P>

<P>&nbsp;</P>
<P>   Net loss per</P>
<P>    common share             (.05)               (0.20)</P>

<P>&nbsp;</P>
<P>   Weighted average</P>
<P>    number of</P>
<P>    shares</P>
<P>    outstanding         18,208,215            12,937,499</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&lt;PAGE&gt;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>            USURF AMERICA, INC. AND SUBSIDIARIES</P>

<P>&nbsp;</P>
<P>            CONSOLIDATED STATEMENTS OF CASH FLOWS</P>

<P>&nbsp;</P>
<P>                      Three Months Ended  Three Months Ended </P>
<P>                           3/31/01             3/31/00</P>
<P>                         (unaudited)         (unaudited)  </P>

<P>&nbsp;</P>
<P>CASH FLOWS FROM</P>
<P>OPERATING ACTIVITIES</P>
<P> Net loss               $(  901,259)        $(2,557,596)</P>

<P>&nbsp;</P>
<P> Adjustment to</P>
<P>  reconcile net loss</P>
<P>  to net cash used</P>
<P>  in operating</P>
<P>  activities    </P>
<P>   Depreciation and</P>
<P>    amortization             11,580           2,238,544</P>
<P>   Consulting fees</P>
<P>    recognized              670,400              311,750</P>
<P>   Compensation expense       3,300               24,000</P>
<P>   Deferred income</P>
<P>    taxes                         0             (471,519)</P>
<P>   Accounts receivable         (384)                 633</P>
<P>   Inventory                      0                6,301</P>
<P>   Other current</P>
<P>    liabilities              10,000              (16,823)</P>
<P>   Other assets and</P>
<P>    liabilities                   0                9,276</P>
<P>   Deferred revenue               0               68,051</P>
<P>   Accounts payable           1,786               49,464</P>
<P>   Prepaid expenses and</P>
<P>    other current assets          0               (3,381)</P>
<P>   Accrued payroll           41,893               35,521</P>
<P>                         ----------           ----------</P>

<P>&nbsp;</P>
<P>     Net cash used</P>
<P>      in operating</P>
<P>      activities           (162,684)            (305,779)</P>
<P>                         ----------           ----------</P>
<P>CASH FLOWS FROM</P>
<P>INVESTING ACTIVITIES</P>
<P> Cash acquired in</P>
<P>  acquisitions                    0                7,704</P>
<P> Capital expenditures             0             (102,612)</P>
<P>                         ----------           ----------</P>

<P>&nbsp;</P>
<P>    Net cash used</P>
<P>     in investing</P>
<P>     activities                   0              (94,908)</P>
<P>                         ----------           ----------</P>

<P>&nbsp;</P>
<P>CASH FLOWS FROM</P>
<P>FINANCING ACTIVITIES</P>
<P> Payments on notes</P>
<P>  payable and capital</P>
<P>  lease obligations               0               (5,910)</P>
<P> Proceeds from sub-</P>
<P>  scriptions receivable     261,000              115,000</P>
<P> Proceeds from note</P>
<P>  payable to stockholder     26,090              286,400</P>
<P> Issuance of common</P>
<P>  stock for cash                  0                    0</P>
<P> Payment on note</P>
<P>  payable to stockholder          0              (11,093)</P>
<P>                         ----------           ----------</P>

<P>&nbsp;</P>
<P>    Net cash provided</P>
<P>     by financing</P>
<P>     activities             287,090              384,397</P>
<P>                         ----------           ----------</P>

<P>&nbsp;</P>
<P>    Net increase</P>
<P>     (decrease)</P>
<P>     in cash and</P>
<P>     cash equivalents       124,406              (16,290)</P>

<P>&nbsp;</P>
<P>Cash and cash equi-</P>
<P> valents, beginning</P>
<P> of period                    1,088               75,313</P>

<P>&nbsp;</P>
<P>Cash and cash equi-</P>
<P> valents, end of period     125,494               59,023</P>

<P>&nbsp;</P>
<P>SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING</P>
<P>AND OTHER CASH FLOW INFORMATION</P>

<P>&nbsp;</P>
<P>Three Months March 31, 2001:</P>

<P>&nbsp;</P>
<P>  -  In January 2001, the Company entered into a one-year</P>
<P>     consulting agreement, by issuing 200,000 shares of</P>
<P>     stock valued at $62,000.</P>

<P>&nbsp;</P>
<P>  -  In January 2001, the Company issued 800,000 shares of</P>
<P>     stock valued at $248,000, in payment of a commitment</P>
<P>     fee under a common stock purchase agreement.</P>

<P>&nbsp;</P>
<P>  -  In January 2001, 774,162 shares were issued to the</P>
<P>     Company's president, pursuant to a debt conversion</P>
<P>     agreement, which shares were not issued in 2000, due</P>
<P>     to an administrative error.</P>

<P>&nbsp;</P>
<P>Three Months March 31, 2000:</P>

<P>&nbsp;</P>
<P>  -  In January 2000, the Company entered into a one-year</P>
<P>     legal and business consulting services agreement, by</P>
<P>     issuing 100,000 shares of stock valued at $300,000.</P>

<P>&nbsp;</P>
<P>  -  In January 2000, the Company entered into a one-year</P>
<P>     business and communications consulting services</P>
<P>     agreement, by issuing 60,000 shares of stock valued at</P>
<P>     $180,000.</P>

<P>&nbsp;</P>
<P>  -  In February 2000, the Company acquired all of the stock</P>
<P>     of The Spinning Wheel, Inc., by issuing 81,063 shares</P>
<P>     of stock valued at $324,252.  This acquisition was</P>
<P>     accounted for as a purchase business combination.</P>

<P>&nbsp;</P>
<P>  -  In February 2000, the Company acquired all of the</P>
<P>     ownership interests of Internet Innovations, L.L.C.,</P>
<P>     by issuing 50,000 shares of stock valued at $437,500.</P>
<P>     This acquisition was accounted for as a purchase</P>
<P>     business combination.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&lt;PAGE&gt;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>                   USURF AMERICA, INC.</P>

<P>&nbsp;</P>
<P>          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P>
<P>              Three Months Ended March 31, 2001</P>
<P>                        (Unaudited)</P>

<P>&nbsp;</P>
<P>Note 1. Nature of Business, Organization and</P>
<P>          Basis of Presentation</P>

<P>&nbsp;</P>
<P>Basis of Presentation</P>

<P>&nbsp;</P>
<P>USURF America, Inc. (USURF), formerly Internet Media</P>
<P>Corporation, was incorporated as Media Entertainment, Inc.</P>
<P>in the State of Nevada on November 1, 1996. USURF currently</P>
<P>provides wireless Internet access services to a small number</P>
<P>of customers in Santa Fe, New Mexico. USURF's</P>
<P>original purpose was to operate as a holding company in the</P>
<P>wireless cable television and community (low power)</P>
<P>television industries, as well as other segments of the</P>
<P>communications industry. Until January 1999, the Company was</P>
<P>in the development stage. In 1998 the Company changed its</P>
<P>focus to concentrate its efforts in the wireless internet</P>
<P>communications industry. The Company later ceased efforts</P>
<P>to develop the wireless cable and low power television</P>
<P>business areas and assigned all of its assets from the low</P>
<P>power television activities to New Wave Media Corp. in</P>
<P>exchange for a 15% ownership interest in New Wave Media</P>
<P>Corp. </P>

<P>&nbsp;</P>
<P>Effective December 31, 1996, USURF acquired all of the</P>
<P>outstanding common stock of Winter Entertainment, Inc., a</P>
<P>Delaware corporation incorporated on December 28, 1995</P>
<P>(WEI), and Missouri Cable TV Corp., a Louisiana corporation</P>
<P>incorporated on October 9, 1996 (MCTV). WEI operates a</P>
<P>community television station in Baton Rouge, Louisiana; MCTV</P>
<P>owns wireless cable television channels in Poplar Bluff,</P>
<P>Missouri, which system has been constructed and is ready for</P>
<P>operation, and Lebanon, Missouri. Effective October 8,</P>
<P>1998, the Company formed Santa Fe Wireless Internet, Inc.</P>
<P>(Santa Fe), a New Mexico corporation, to hold the assets</P>
<P>acquired from Desert Rain Internet Services. Santa Fe was</P>
<P>organized to provide wireless internet access. The</P>
<P>acquisition of WEI and MCTV by USURF was accounted for as a</P>
<P>reorganization of companies under common control. The</P>
<P>assets and liabilities acquired were recorded at historical</P>
<P>cost in a manner similar to a pooling of interests. The</P>
<P>acquisition of Santa Fe was accounted for as a purchase</P>
<P>whereby cost is allocated to the assets acquired.</P>

<P>&nbsp;</P>
<P>On January 29, 1999, the Company acquired all the stock of</P>
<P>CyberHighway, Inc., a Boise, Idaho-based ISP, by issuing</P>
<P>2,000,000 shares of stock valued at approximately</P>
<P>$15,940,000. In addition, 325,000 shares of common stock</P>
<P>were issued in payment of a finder's fee arising out of this</P>
<P>acquisition. This acquisition was accounted for as a</P>
<P>purchase business combination.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>In June 1999, USURF acquired all the stock of Santa Fe Trail</P>
<P>Internet Plus, Inc., a Santa Fe, New Mexico-based ISP, by</P>
<P>issuing 100,000 shares of stock valued at approximately</P>
<P>$400,000. This acquisition was accounted for as a purchase</P>
<P>business combination.</P>

<P>&nbsp;</P>
<P>In July 1999, USURF acquired all of the stock of Premier</P>
<P>Internet Services, Inc., an Idaho-based ISP, by issuing</P>
<P>127,000 shares of stock valued at approximately $508,000.</P>
<P>This acquisition was accounted for as a purchase business</P>
<P>combination.</P>

<P>&nbsp;</P>
<P>In November 1999, the Company acquired the customer base of</P>
<P>Cyber Mountain, Inc. a Denver, Colorado-based ISP, for</P>
<P>25,000 shares of stock valued at approximately $75,000. In</P>
<P>December 1999, USURF acquired a portion of the ISP-related</P>
<P>equipment and customer base of Cyber Highway of North</P>
<P>Georgia, Inc., a Demorest, Georgia-based ISP for 54,000</P>
<P>shares of stock valued at approximately $212,000.</P>

<P>&nbsp;</P>
<P>In February 2000, the Company acquired Spinning Wheel, Inc.,</P>
<P>an Idaho Springs, Idaho-based ISP, for 81,063 shares of</P>
<P>stock valued at approximately $325,000. This acquisition</P>
<P>has been accounted for as a purchase business combination. </P>

<P>&nbsp;</P>
<P>In February 2000, the Company acquired Internet Innovations,</P>
<P>LLC, a Baton Rouge, Louisiana based web design company, for</P>
<P>50,000 shares of common stock valued at approximately</P>
<P>$437,000. This acquisition has been accounted for as a</P>
<P>purchase business combination.</P>

<P>&nbsp;</P>
<P>Principles of Consolidation</P>

<P>&nbsp;</P>
<P>The accompanying consolidated financial statements include</P>
<P>all the accounts of USURF and all wholly owned subsidiaries.</P>
<P>Inter-company transactions and balances have been eliminated</P>
<P>in the consolidation. </P>
<P>  </P>
<P>Loss Per Common Share</P>

<P>&nbsp;</P>
<P>Basic loss per common share has been computed by dividing</P>
<P>the net loss by the weighted average number of shares of</P>
<P>common stock outstanding throughout the period.</P>

<P>&nbsp;</P>
<P>Note 2. Interim Consolidated Financial Statements</P>

<P>&nbsp;</P>
<P>In the opinion of management, the accompanying consolidated</P>
<P>financial statements for the three months ended March 31,</P>
<P>2001 and 2000, reflect all adjustments (consisting only of</P>
<P>normal recurring adjustments) necessary to present fairly</P>
<P>the financial condition, results of operations and cash</P>
<P>flows of USURF, including subsidiaries, and include the</P>
<P>accounts of USURF and all of its subsidiaries. All material</P>
<P>inter-company transactions and balances are eliminated.</P>

<P>&nbsp;</P>
<P>The financial statements included herein have been prepared</P>
<P>by USURF, without audit, pursuant to the rules and</P>
<P>regulations of the SEC. Certain information and footnote</P>
<P>disclosures normally included in financial statements</P>
<P>prepared in accordance with generally accepted accounting</P>
<P>principles have been condensed or omitted pursuant to such</P>
<P>rules and regulations. It is suggested that these unaudited</P>
<P>financial statements be read in conjunction with the</P>
<P>financial statements and notes thereto included in</P>
<P>USURF's Annual Report on Form 10-KSB/A for the year</P>
<P>ended December 31, 2000, as filed with the SEC. Certain</P>
<P>reclassifications and adjustments may have been made to the</P>
<P>financial statements for the comparative period of the prior</P>
<P>fiscal year to conform with the 2001 presentation. The</P>
<P>results of operations for the interim periods are not</P>
<P>necessarily indicative of the results to be obtained for the</P>
<P>entire year.</P>

<P>&nbsp;</P>
<P>Note 3. Notes Payable to Shareholder</P>

<P>&nbsp;</P>
<P>                                     March 31, 2001</P>
<P>                                       (unaudited)</P>
<P>Notes payable to majority</P>
<P>stockholder, interest</P>
<P>accrues at 8%, due on</P>
<P>demand and unsecured                     $32,728</P>

<P>&nbsp;</P>
<P>Note 4. Stock Sales</P>

<P>&nbsp;</P>
<P>In February 2001, the Company sold, pursuant to a Securities</P>
<P>Purchase Agreement, 840,000 shares of common stock and</P>
<P>840,000 warrants with an exercise price of $.15, exercisable</P>
<P>for a period of three years from issuance. These securities</P>
<P>were sold for $126,000 in cash, with no portion of the</P>
<P>purchase price having been allocated to these warrants. In</P>
<P>connection with this transaction, the Company issued, as a</P>
<P>finder's fee, 84,000 shares of common stock and 336,000</P>
<P>warrants with an exercise price of $.15 per share,</P>
<P>exercisable for a period of three years from issuance.</P>

<P>&nbsp;</P>
<P>In March 2001, the Company sold, pursuant a Securities</P>
<P>Purchase Agreement, 500,000 shares of common stock and</P>
<P>500,000 warrants with an exercise price of $.25, exercisable</P>
<P>for a period of three years from issuance. These securities</P>
<P>were sold for $125,000 in cash, with no portion of the</P>
<P>purchase price having been allocated to the warrants. In</P>
<P>connection with this transaction, the Company issued, as a</P>
<P>finder's fee, 50,000 shares of common stock and 200,000</P>
<P>warrants with an exercise price of $.25 per share,</P>
<P>exercisable for a period of three years from issuance.</P>

<P>&nbsp;</P>
<P>Note 5. Other Material Stock Issuances</P>

<P>&nbsp;</P>
<P>In January 2000, the Company issued 800,000 shares of its</P>
<P>common stock as a commitment fee under a common stock</P>
<P>purchase agreement to an unrelated company. See Note 7.</P>

<P>&nbsp;</P>
<P>Note 6. Contingencies</P>

<P>&nbsp;</P>
<P>  A. Bankruptcy</P>

<P>&nbsp;</P>
<P>      On September 29, 2000, three creditors of</P>
<P>      CyberHighway filed an involuntary petition in the</P>
<P>      Idaho Federal Bankruptcy Court, styled In</P>
<P>      Re: CyberHighway, Inc., Case No. 00-02454. In</P>
<P>      December 2000, CyberHighway and the petitioning</P>
<P>      creditors filed a joint motion to dismiss this</P>
<P>      proceeding. The joint motion to dismiss requires the</P>
<P>      approval of CyberHighway's creditors. However, some</P>
<P>      of CyberHighway's creditors objected to the dismissal</P>
<P>      of the proceeding. The basis of the creditors'</P>
<P>      objection is their belief that CyberHighway's as-yet</P>
<P>      unasserted damage claims against the original</P>
<P>      petitioning creditors and their law firm and a claim</P>
<P>      against Dialup USA, Inc. represent CyberHighway's most</P>
<P>      valuable assets. These as-yet unasserted claims</P>
<P>      include claims for bad faith filing of the original</P>
<P>      bankruptcy petition as to the original petitioning</P>
<P>      creditors and their law firm, as well as claim for</P>
<P>      tortious interference with beneficial business</P>
<P>      relationships as to Dialup USA, Inc. The objecting</P>
<P>      creditors desire that all claims be adjudicated in the</P>
<P>      bankruptcy court. The Company believes it is likely</P>
<P>      that, at some time in the future, a final order of</P>
<P>      bankruptcy will be entered with respect to</P>
<P>      CyberHighway.</P>

<P>&nbsp;</P>
<P>      Subsequent to the involuntary bankruptcy,</P>
<P>      CyberHighway lost nearly all of its customers. Due</P>
<P>      to this loss of customer base, the Company's</P>
<P>      intangible assets relating to those customers were</P>
<P>      determined to be worthless. The write-off of the</P>
<P>      intangible assets reflected on the Company's December</P>
<P>      31, 2000 balance sheet was $4,814,272 (net of deferred</P>
<P>      taxes). Due to this change in operating environment,</P>
<P>      the Company's revenues have decreased substantially as</P>
<P>      well as a decrease in expenses associated with the</P>
<P>      elimination of personnel previously required to</P>
<P>      operate the Company's network operations center, and</P>
<P>      accordingly goodwill has been impaired. The</P>
<P>      write-down of goodwill reflected on the Company's</P>
<P>      December 31, 2000, balance sheet was $4,425,037.</P>

<P>&nbsp;</P>
<P>  B. Potential Rescission Claims</P>

<P>&nbsp;</P>
<P>      Since January 2000, a total of 5,032,085 shares of</P>
<P>      the common stock of the Company may have been issued</P>
<P>      in violation of Section 5 of the Securities Act of</P>
<P>      1933, as amended. The aggregate value assigned to</P>
<P>      these shares upon their issuance totaled $5,521,502. </P>
<P>      It is possible that each of the issues of these</P>
<P>      shares has a potential claim for rescission of</P>
<P>      their respective issuance transactions.</P>

<P>&nbsp;</P>
<P>The Company believes that it is unlikely that any of these</P>
<P>potential rescission claims will be asserted against the</P>
<P>Company.</P>

<P>&nbsp;</P>
<P>Note 7. Financing Transaction</P>

<P>&nbsp;</P>
<P>On October 9, 2000, the Company signed a common stock</P>
<P>purchase agreement with an unrelated company to sell up to</P>
<P>$10,000,000 of its common stock. This agreement was</P>
<P>replaced by a similar agreement on April 25, 2001, as</P>
<P>amended May 9, 2001. The purchase price of the shares under</P>
<P>this agreement will vary, based on future market prices of</P>
<P>the Company's common stock. The agreement calls for the</P>
<P>Company to meet certain requirements and maintain certain</P>
<P>criteria with respect to its common stock in order to avoid</P>
<P>an event of default. Upon the occurrence of the event of</P>
<P>default, the buyer would no longer obligated to purchase any</P>
<P>additional shares of stock. The agreement will expire on</P>
<P>May 31, 2001, if all of the circumstances necessary to</P>
<P>effect the transaction have not occurred by that date,</P>
<P>including completion of a registration statement with</P>
<P>respect thereto. This registration statement is to be filed</P>
<P>in the near future.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&lt;PAGE&gt;</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>Item 2. Management's Discussion and Analysis of Financial</P>
<P>          Condition and Results of Operations.</P>

<P>&nbsp;</P>
<P>Background</P>

<P>&nbsp;</P>
<P>Our management has determined to commit all of our</P>
<P>available resources to the exploitation of our Quick-Cell</P>
<P>wireless Internet access products. We currently lack the</P>
<P>capital necessary to do so.</P>

<P>&nbsp;</P>
<P>We were organized to operate in the wireless cable and</P>
<P>community (low power) television industries. Due to</P>
<P>existing market conditions, we have abandoned our wireless</P>
<P>cable business. Because our Quick-Cell wireless Internet</P>
<P>access system can be adapted for use on the wireless cable</P>
<P>frequencies, we believe our frequencies possess future</P>
<P>value. However, these frequencies will not be of value to</P>
<P>us, unless and until the FCC approves two-way communications</P>
<P>on them. Due to this circumstance, our wireless-cable-related</P>
<P>assets were determined to be impaired and their $188,091 book</P>
<P>value written off in December 2000.</P>

<P>&nbsp;</P>
<P>Effective July 1, 1999, we assigned all of our</P>
<P>television-related assets to New Wave Media Corp., in</P>
<P>exchange for a 15% ownership interest in New Wave common</P>
<P>stock. This business segment was discontinued as of that</P>
<P>date and, since then, has not, and will not, generate any</P>
<P>revenues. Our board of directors has declared a dividend</P>
<P>with respect to all of the New Wave shares. These shares</P>
<P>will be distributed to our shareholders, upon New</P>
<P>Wave's completion of a Securities Act registration of</P>
<P>the distribution transaction. This registration proceeding</P>
<P>has not been commenced by New Wave, due to a lack of funds</P>
<P>necessary to pay related professional expenses. New Wave</P>
<P>has advised us that it is making its best efforts to obtain</P>
<P>capital for this purpose, but cannot provide an exact time</P>
<P>by which this will occur.</P>

<P>&nbsp;</P>
<P>Since 1998, we have acquired seven dial-up Internet service</P>
<P>providers, including CyberHighway, the business of</P>
<P>www.e-tail.com and a web design firm, none of which was an</P>
<P>affiliated company nor were any acquired from an affiliate.</P>
<P>All but one of these acquisitions were made for shares of</P>
<P>our stock. All of these acquisitions were accounted for as</P>
<P>a purchase, which means that we did not include past</P>
<P>operations of the acquired businesses in our historical</P>
<P>statements of operations. Also in connection with these</P>
<P>acquisitions, we recorded large amounts of amortizable</P>
<P>customer base and goodwill values, as a result of the</P>
<P>acquisitions' valuations exceeding the values of the</P>
<P>tangible net assets. At December 31, 2000, all of these</P>
<P>values were written off, due to the demise of</P>
<P>CyberHighway's business. Please see the discussion</P>
<P>under "CyberHighway Bankruptcy" below.</P>

<P>&nbsp;</P>
<P>All of the customers of the acquired Internet access</P>
<P>providers were assimilated into the dial-up operations of</P>
<P>our CyberHighway subsidiary, which has few remaining</P>
<P>customers; please see the discussion under</P>
<P>"CyberHighway Bankruptcy" below.</P>

<P>&nbsp;</P>
<P>Current Overview</P>

<P>&nbsp;</P>
<P>Our management has committed all available current and</P>
<P>future capital and other resources to the commercial</P>
<P>exploitation of our Quick-Cell wireless Internet access</P>
<P>products. It is these products upon which our future is</P>
<P>based.</P>

<P>&nbsp;</P>
<P>As CyberHighway's business has become defunct while</P>
<P>in bankruptcy, we have determined not to attempt to revive</P>
<P>our dial-up Internet access business and, for the</P>
<P>foreseeable future, we have abandoned development of our</P>
<P>e-commerce business.</P>

<P>&nbsp;</P>
<P>In April 2001, we entered into a common stock purchase</P>
<P>agreement with Fusion Capital Fund II, LLC, which was</P>
<P>amended in May 2001. This agreement replaced a similar</P>
<P>agreement entered into in October 2000. Pursuant to the</P>
<P>agreement, Fusion Capital may purchase up to $10 million of</P>
<P>our common stock. We intend to file, in the very near</P>
<P>future, a registration statement with respect to the shares</P>
<P>issued and to be issued pursuant to the Fusion Capital</P>
<P>agreement. Please see the discussion under the heading</P>
<P>"Management's Plans Relating to Future</P>
<P>Liquidity", for a more thorough explanation of the</P>
<P>impact this agreement could have on our business. Should we</P>
<P>obtain this funding, we would be able to begin to pursue our</P>
<P>wireless Internet business plan. We have commenced</P>
<P>marketing of our Quick-Cell service through a reseller. We</P>
<P>will need more capital thereafter, as we continue to expand</P>
<P>our wireless Internet business. We may never possess enough</P>
<P>capital to permit us to earn a profit.</P>

<P>&nbsp;</P>
<P>CyberHighway Bankruptcy</P>

<P>&nbsp;</P>
<P>On September 29, 2000, an involuntary bankruptcy petition</P>
<P>was filed against CyberHighway in the Idaho Federal</P>
<P>Bankruptcy Court, styled In Re: CyberHighway, Inc., Case No.</P>
<P>00-02454, by ProPeople Staffing, CTC Telecom, Inc. and</P>
<P>Hawkins-Smith. In December 2000, CyberHighway and the</P>
<P>petitioning creditors filed a joint motion to dismiss this</P>
<P>proceeding. The joint motion to dismiss requires the</P>
<P>approval of CyberHighway's creditors. However, some of</P>
<P>CyberHighway's creditors have objected to the</P>
<P>dismissal of the proceeding. The basis of the</P>
<P>creditors' objection is their belief that</P>
<P>CyberHighway's as-yet unasserted damage claims against</P>
<P>the original petitioning creditors and their law firm and a</P>
<P>claim against Dialup USA, Inc. represent</P>
<P>CyberHighway's most valuable assets. These as-yet</P>
<P>unasserted claims include claims for bad faith filing of the</P>
<P>original bankruptcy petition as to the original petitioning</P>
<P>creditors and their law firm, as well as a claim for</P>
<P>tortious interference with beneficial business relationships</P>
<P>as to Dialup USA, Inc. The objecting creditors desire that</P>
<P>these claims be adjudicated in the bankruptcy court. It is</P>
<P>likely that, at some time in the future, a final order of</P>
<P>bankruptcy will be entered with respect to CyberHighway. No</P>
<P>prediction of the timing of such an order can be made,</P>
<P>although we believe that such an order would come only after</P>
<P>the final adjudication of the claims described above.</P>

<P>&nbsp;</P>
<P>The January 1999 acquisition of CyberHighway fundamentally</P>
<P>altered our company. Our annual revenues went from nearly</P>
<P>zero to about $2.5 million. Throughout 2000, operating</P>
<P>losses at CyberHighway, primarily personnel costs and leased</P>
<P>telephone-line charges, steadily increased, while revenues</P>
<P>began to decrease slightly each quarter. This trend</P>
<P>continued until September 2000.</P>

<P>&nbsp;</P>
<P>As a means to achieve immediate cost savings at</P>
<P>CyberHighway, in September 2000, the following actions were</P>
<P>taken:</P>

<P>&nbsp;</P>
<P>     - CyberHighway sold its affiliate-ISP business for</P>
<P>       $40,500, in cash; and</P>

<P>&nbsp;</P>
<P>     - CyberHighway contracted with Dialup USA for all</P>
<P>       "backroom and customer support services, which</P>
<P>       took effect at the end of October 2000.</P>

<P>&nbsp;</P>
<P>These actions did reduce monthly operating costs by</P>
<P>approximately $50,000.</P>

<P>&nbsp;</P>
<P>However, the involuntary bankruptcy proceeding started the</P>
<P>demise of CyberHighway's business, in effect rendering</P>
<P>our September 2000 actions meaningless. Since that time,</P>
<P>CyberHighway's company-owned dial-up customer base has</P>
<P>gone from approximately 8,500 to none. The filing of the</P>
<P>involuntary bankruptcy and CyberHighway's switch-over</P>
<P>to the network of Dialup USA were the primary causes of</P>
<P>CyberHighway's customer base demise. We will not</P>
<P>apply any available future capital to the revitalization of</P>
<P>our dial-up Internet access business.</P>

<P>&nbsp;</P>
<P>This sudden and permanent demise of CyberHighway's</P>
<P>customer base has rendered our intangible assets relating to</P>
<P>those customers to become worthless. The write-off of these</P>
<P>intangible assets totalled $4,814,272, net of deferred</P>
<P>taxes, as reflected in our December 31, 2000, financial</P>
<P>statements. Due to this change in operating environment,</P>
<P>monthly revenues have decreased substantially, and,</P>
<P>accordingly, goodwill has been impaired. The write-down of</P>
<P>goodwill totalled $4,425,037, as reflected in our December</P>
<P>31, 2000, balance sheet.</P>

<P>&nbsp;</P>
<P>Shareholder Loans - Conversion to Equity</P>

<P>&nbsp;</P>
<P>In August 2000, our president, David M. Loflin, converted</P>
<P>all loan amounts owed to him, including accrued interest,</P>
<P>into a total of 774,162 shares of our common stock. The</P>
<P>total amount of indebtedness converted to common stock was</P>
<P>$967,703. Since August 2000, Mr. Loflin has made small</P>
<P>loans to us to ease periods of restricted cash flow. At</P>
<P>March 31, 2001, we owed Mr. Loflin $32,728.</P>

<P>&nbsp;</P>
<P>Results of Operations</P>

<P>&nbsp;</P>
<P>General. By the end of February 2001, CyberHighway had</P>
<P>lost all of its dial-up Internet access customers and we do</P>
<P>not foresee the revitalization of CyberHighway's</P>
<P>business. You should not purchase our common stock</P>
<P>expecting that CyberHighway's business will assist in</P>
<P>making us profitable.</P>

<P>&nbsp;</P>
<P>Our revenues for the first quarter of 2000 were derived</P>
<P>from CyberHighway's business. During the first</P>
<P>quarter of 2001, we derived no revenue from</P>
<P>CyberHighway's business.</P>

<P>&nbsp;</P>
<P>For the first three months of 2001, our small amount of</P>
<P>revenues were dervied from our Quick-Cell wireless Internet</P>
<P>access system in Santa Fe, New Mexico. With the demise of</P>
<P>CyberHighway, any future revenues will be derived from sales</P>
<P>of our Quick-Cell wireless Internet access service. We</P>
<P>currently lack the capital necessary to pursue our</P>
<P>Quick-Cell business plan, and we may never possess enough</P>
<P>capital with which to exploit fully our Quick-Cell products.</P>
<P>In this circumstance, it is likely that we would never earn</P>
<P>a profit.</P>

<P>&nbsp;</P>
<P>Before the demise of CyberHighway, our revenues were</P>
<P>derived primarily from monthly customer payments for dial-up</P>
<P>access and from per-customer royalty payments from our</P>
<P>CyberHighway affiliate-ISPs.</P>

<P>&nbsp;</P>
<P>Beginning in March 2000, we began initial Quick-Cell</P>
<P>wireless Internet access operations in Santa Fe, New Mexico.</P>
<P>Currently, we have approximately 120 Quick-Cell customers.</P>
<P>Throughout 2000, these customers were in their one-year</P>
<P>"free-use" period. Beginning in March 2001, we</P>
<P>began to bill the customers who had completed their one-year</P>
<P>of free use. The lack of growth of our wireless Internet</P>
<P>access business during 2000 is due to the fact that our</P>
<P>available monies were applied to CyberHighway expenses and</P>
<P>corporate overhead. We had no available capital to apply to</P>
<P>the expansion of the Santa Fe market.</P>

<P>&nbsp;</P>
<P>In the middle of 2000, we began marketing our Quick-Cell</P>
<P>systems to local exchange telephone companies, independent</P>
<P>telephone companies, digital subscriber line resellers and</P>
<P>Internet service providers. We sold three Quick-Cell</P>
<P>systems in a short time, and received approximately 200</P>
<P>additional indications of interest via e-mail and telephone</P>
<P>from other telecommunications companies and others, 25% of</P>
<P>which our management considered to be of a serious nature.</P>
<P>Due to a lack of capital, however, this marketing effort was</P>
<P>suspended before we investigated the nature of the other</P>
<P>inquiring companies. No paying customers use these systems,</P>
<P>due to circumstances involving these companies that are</P>
<P>beyond our control. During 2001, we do not expect to derive</P>
<P>significant revenues from customer modem sales to these</P>
<P>Quick-Cell purchasers.</P>

<P>&nbsp;</P>
<P>In cities in which we construct company-owned Quick-Cell</P>
<P>systems, we intend to employ telephone marketing as the</P>
<P>initial means for acquiring customers and, later, mass</P>
<P>media. We will employ a sales force that will focus</P>
<P>primarily on potential business customers. This focus on</P>
<P>business customers is based on our management's</P>
<P>informal study of Internet usage by businesses versus home</P>
<P>users that revealed businesses' higher demand for</P>
<P>high-speed Internet access. Our management's decision</P>
<P>may prove to have been incorrect, which would significantly</P>
<P>impair our ability to earn a profit. Our management</P>
<P>believes, based on its collective business experience, that</P>
<P>effective marketing techniques can overcome</P>
<P>Quick-Cell's lack of name recognition, although this</P>
<P>belief may also prove to be incorrect. Our Quick-Cell</P>
<P>business will not be able to succeed without additional</P>
<P>capital.</P>

<P>&nbsp;</P>
<P>In cities where a Quick-Cell reseller operates, we will not</P>
<P>have final approval of the reseller's marketing</P>
<P>strategies. Our resellers will be permitted to market our</P>
<P>Quick-Cell service in any commercially reasonable manner. We</P>
<P>cannot, therefore, assure you that any of our resellers will</P>
<P>ever achieve high enough sales levels that would permit us</P>
<P>to earn a profit.</P>

<P>&nbsp;</P>
<P>Under our Quick-Cell reseller agreement with Wireless</P>
<P>WebConnect!, Inc., we expect to derive revenues as follows:</P>

<P>&nbsp;</P>
<P>     - WebConnect's purchase of each Quick-Cell cell site;</P>

<P>&nbsp;</P>
<P>     - WebConnect's purchase of all customer modems;</P>

<P>&nbsp;</P>
<P>     - Charges for installation services on behalf of</P>
<P>       every customer acquired by WebConnect; and</P>

<P>&nbsp;</P>
<P>     - Monthly per-Quick-Cell-customer royalties'</P>
<P>       while we anticipate that this monthly per-customer royalty</P>
<P>       will average approximately $12.00, we cannot assure you that</P>
<P>       the monthly per-customer will be that high; in any event,</P>
<P>       given the number of customers that can use a single</P>
<P>       Quick-Cell cell site, approximately 2,000, the lowest</P>
<P>       monthly per-customer royalty to be paid by WebConnect will</P>
<P>       be about $9.00.</P>

<P>&nbsp;</P>
<P>We expect our revenues for all of 2001 to be significantly</P>
<P>below those of 2000, since we no longer will derive revenues</P>
<P>from the operations of CyberHighway. In 2001, we will</P>
<P>produce significant revenues only if:</P>

<P>&nbsp;</P>
<P>     - our Quick-Cell reseller is as successful selling</P>
<P>       our wireless Internet access products as it has been</P>
<P>       in the past in reselling a competing wireless</P>
<P>       Internet access service; or</P>

<P>&nbsp;</P>
<P>     - we are able to obtain at least $2,500,000 under the</P>
<P>       Fusion Capital agreement.</P>

<P>&nbsp;</P>
<P>Our reseller may not be successful enough for us to make a</P>
<P>profit, nor can we assure you that funding under the Fusion</P>
<P>Capital agreement will permit us to make a profit.</P>

<P>&nbsp;</P>
<P>Three Months Ended March 31, 2001, versus Three Months</P>
<P>Ended March 31, 2000. During the 2000 period, all of our</P>
<P>revenues were generated by CyberHighway's dial-up</P>
<P>Internet access operations. We derived our revenues from</P>
<P>monthly customer payments for dial-up Internet access, which</P>
<P>averaged approximately $18.00 per customer. We also derived</P>
<P>revenue from per-customer royalty payments from our</P>
<P>CyberHighway affiliate-ISPs, which averaged approximately</P>
<P>$1.75 per customer. This affiliate-ISP business was sold in</P>
<P>September 2000.</P>

<P>&nbsp;</P>
<P>During the 2001 period, we had only small revenues from our</P>
<P>wireless Internet access business. We derived no revenues</P>
<P>from CyberHighway's operations. Whether or not we</P>
<P>obtain capital, our existing operations in Santa Fe will</P>
<P>increase slightly from month to month, as our customers end</P>
<P>their free-use periods and begin to pay for our wireless</P>
<P>Internet access services.</P>

<P>&nbsp;</P>
<P>Our revenues for all of 2001 can be expected to be</P>
<P>significantly below our revenue levels of 2000. However,</P>
<P>due to uncertainties relating to the timing of receipt of</P>
<P>expected funds under the Fusion Capital agreement, we can</P>
<P>make no prediction of our actual revenues.</P>

<P>&nbsp;</P>
<P>Our operating results for the first quarters of 2001 and</P>
<P>2000 are summarized in the following table:</P>

<P>&nbsp;</P>
<P>                               First              First</P>
<P>                           Quarter 2001      Quarter 2000</P>

<P>&nbsp;</P>
<P>     Revenues               $      384        $   597,392</P>
<P>     Internet access costs</P>
<P>      and cost of</P>
<P>      goods sold                     0            269,136</P>
<P>     Gross Profit                  384            328,256</P>
<P>     Operating Expenses        901,643          3,354,219</P>
<P>     Loss from Operations      901,259          3,025,963</P>
<P>     Net Loss                  901,259          2,557,596</P>

<P>&nbsp;</P>
<P>Our net loss of $901,259 for the first quarter of 2001 was</P>
<P>significantly less than our net loss for the 2000 period of</P>
<P>$2,557,596. This reduced net loss is attributable primarily</P>
<P>to:</P>

<P>&nbsp;</P>
<P>     - Depreciation and amortization decreasing from</P>
<P>$2,238,544 for the 2000 period to $11,580 for the 2001</P>
<P>period. This reduction is due to the demise of</P>
<P>CyberHighway's business and the write-off of all of</P>
<P>our intangible assets associated with that business, which</P>
<P>occurred during December 2000. We no longer amortize those</P>
<P>intangible assets.</P>

<P>&nbsp;</P>
<P>     - Professional fees increased from $390,038 in the 2000</P>
<P>period to $707,288 in the 2001 period. This increase is due</P>
<P>to the issuance of 800,000 shares as a commitment fee under</P>
<P>a common stock purchase agreement, which shares were valued</P>
<P>at $248,000, as well as the monthly amortization of various</P>
<P>consulting agreements under which we issued stock for</P>
<P>services during 2000 and 2001.</P>

<P>&nbsp;</P>
<P>     - Salary and commissions fell from $399,358 in 2000 to</P>
<P>$160,746 in 2001. Our lower salary and commissions during</P>
<P>2001 is attributable to CyberHighway's demise, its</P>
<P>personnel having been reduced from about 30 during the first</P>
<P>quarter of 2000 to none, now.</P>

<P>&nbsp;</P>
<P>     - Rent expense decreased from $61,570 during the first</P>
<P>quarter of 2000 to $5,361 during the 2001 period. This</P>
<P>large decrease is the result of our abandoning all leased</P>
<P>premises of CyberHighway, following the filing of the</P>
<P>involuntary bankruptcy proceeding. Our monthly lease</P>
<P>expense for the remainder of 2001 will be higher, due to our</P>
<P>recent leasing of a small assembly facility in Baton Rouge,</P>
<P>Louisiana.</P>

<P>&nbsp;</P>
<P>     - Other expenses fell from $249,530 in 2000 to $16,668</P>
<P>in 2001. The reduction in this line item is attributable to</P>
<P>the demise of CyberHighway's business, as well as our</P>
<P>severe lack of capital during the last half of 2000 and most</P>
<P>of the first quarter of 2001.</P>

<P>&nbsp;</P>
<P>Our statements of operations reflect an income tax benefit</P>
<P>of $471,519 for the 2000 period and no such benefit for the</P>
<P>2001 period. This income tax benefit was attributable to</P>
<P>the difference in the bases of our acquired customer bases</P>
<P>for book versus tax purposes. Since our intangible assets</P>
<P>were completely written-off as of December 31, 2000, we no</P>
<P>longer derive any similar income tax benefit.</P>

<P>&nbsp;</P>
<P>We expect that our results of operations for the second</P>
<P>quarter of 2001 will be similar to those of the first</P>
<P>quarter of 2001.</P>

<P>&nbsp;</P>
<P>During the first quarter of 2001, we issued 320,000 shares</P>
<P>of common stock under two consulting agreements; these</P>
<P>shares were valued for financial accounting purposes at</P>
<P>$99,200, in the aggregate. This amount will be expensed in</P>
<P>equal monthly amounts during 2001. Subsequent to March 31,</P>
<P>2001, we issued 300,000 shares under a consulting agreement;</P>
<P>these shares have been valued for financial accounting</P>
<P>purposes at $150,000, in the aggregate, and will be expensed</P>
<P>in equal monthly amounts during the remainder of 2001 and</P>
<P>the first quarter of 2002.</P>

<P>&nbsp;</P>
<P>During the first quarter of 2000, we issued 160,000 shares</P>
<P>of common stock under two separate consulting agreements;</P>
<P>these shares were valued for financial accounting purposes</P>
<P>at $480,000, in the aggregate. This amount was expensed in</P>
<P>equal monthly amounts during 2000.</P>

<P>&nbsp;</P>
<P>Liquidity and Capital Resources</P>

<P>&nbsp;</P>
<P>General. Since our inception, we have had a significant</P>
<P>working capital deficit. Following the CyberHighway</P>
<P>acquisition and until the recent demise of</P>
<P>CyberHighway's business, we generated significant</P>
<P>monthly revenues, yet continued to have a working capital</P>
<P>deficit. Currently, we are substantially illiquid, although</P>
<P>we do possess approximately $100,000 in cash, the result of</P>
<P>recent securities sales to private investors. Without</P>
<P>additional capital, it is possible that we would be forced</P>
<P>to cease operations.</P>

<P>&nbsp;</P>
<P>Our Capital Needs. To sustain our current level of</P>
<P>operations for the next twelve months, we will require</P>
<P>additional capital of approximately $300,000. To accomplish</P>
<P>our goals of expanding our Quick-Cell business, we will</P>
<P>require at least $2.5 million. If we are unable to obtain</P>
<P>this needed capital, we could be forced to cease our</P>
<P>operations.</P>

<P>&nbsp;</P>
<P>Currently we do not possess enough capital to accomplish</P>
<P>our goals for our Quick-Cell wireless Internet access</P>
<P>business, including the construction of Quick-Cell systems.</P>
<P>When we refer to the construction of a Quick-Cell system in</P>
<P>any city, that process requires the following expenditures:</P>

<P>&nbsp;</P>
<P>     - A single Quick-Cell cell site, including a</P>
<P>Quick-Cell server modem, parts and configuration -</P>
<P>projected average cost: $25,000;</P>

<P>&nbsp;</P>
<P>     - Tower lease site - projected average cost: $500 per month;</P>

<P>&nbsp;</P>
<P>     - Direct T1 telephone line connection to the Internet -</P>
<P>projected average cost: $1,200 per month; and</P>

<P>&nbsp;</P>
<P>     - Initial inventory of customer modems - approximate</P>
<P>cost: $70,000.</P>

<P>&nbsp;</P>
<P>Each Quick-Cell cell site added to an existing system will</P>
<P>cost approximately $25,000 for the server modem, parts and</P>
<P>configuration, plus tower lease costs and, if customer usage</P>
<P>requires, the cost of a direct T1 telephone line connection</P>
<P>to the Internet.</P>

<P>&nbsp;</P>
<P>Should we be able to obtain the minimum of $400,000 per</P>
<P>month pursuant to the Fusion Capital agreement, we would</P>
<P>have enough money to pay for the construction of the initial</P>
<P>Quick-Cell cell site in at least three markets per month.</P>
<P>We cannot assure you that we will be able to construct</P>
<P>Quick-Cell cell sites at that rate.</P>

<P>&nbsp;</P>
<P>In light of the relatively small amount of capital required</P>
<P>to construct each Quick-Cell cell site, we believe that the</P>
<P>expected funding under the Fusion Capital agreement would</P>
<P>provide us with enough capital to construct the initial</P>
<P>Quick-Cell cell site and commence marketing activities in</P>
<P>approximately 60 markets. With the Quick-Cell construction</P>
<P>permitted by this amount of capital, we will be able to</P>
<P>determine whether our Quick-Cell wireless Internet access</P>
<P>business is a viable business, as presently offered.</P>
<P>However, the funds expected under the Fusion Capital</P>
<P>agreement will not be adequate for us to pursue our complete</P>
<P>Quick-Cell business plan, and we cannot assure you that we</P>
<P>will be able to obtain capital when needed. Our inability</P>
<P>to obtain further capital when needed would lessen our</P>
<P>chance of earning a profit, as we would become illiquid.</P>

<P>&nbsp;</P>
<P>Expected Proceeds from the Fusion Capital Agreement.</P>
<P>Beginning near the end of the second quarter of 2001, we</P>
<P>expect to begin to receive the first funds of up to $10</P>
<P>million under our agreement with Fusion Capital. Assuming</P>
<P>we receive the entire $10 million under that agreement, of</P>
<P>which there is no assurance, we anticipate that we will</P>
<P>apply these funds as follows:</P>

<P>&nbsp;</P>
<P>Purchase of Quick-Cell Equipment     $6,000,000</P>
<P>Construction of Quick-Cell Systems    1,300,000</P>
<P>Marketing                             1,000,000</P>
<P>General and Administrative Expenses     200,000</P>
<P>Finder's Fee                            800,000</P>
<P>Working Capital                         700,000</P>

<P>&nbsp;</P>
<P>                        Total       $10,000,000</P>

<P>&nbsp;</P>
<P>Should all of our outstanding warrants, including all of</P>
<P>the warrants to be issued in connection with the Fusion</P>
<P>Capital agreement, be exercised, we would receive cash</P>
<P>proceeds of approximately $2,540,000. Funds received from</P>
<P>the exercise of warrants would be used to purchase</P>
<P>Quick-Cell equipment, to construct Quick-Cell systems, to</P>
<P>market our Quick-Cell wireless Internet access service and</P>
<P>for working capital.</P>

<P>&nbsp;</P>
<P>You should note that we may never receive any of the funds</P>
<P>discussed above. Our failure to obtain capital from these</P>
<P>sources could cause us to cease our operations.</P>

<P>&nbsp;</P>
<P>March 31, 2001. Historically, we have had a significant</P>
<P>working capital deficit. At March 31, 2001, our working</P>
<P>capital deficit was $1,472,144, which is slightly lower than</P>
<P>our $1,517,164 deficit at December 31, 2000. Although we</P>
<P>had slightly higher accounts payable, accrued payroll and</P>
<P>notes payable to a shareholder at March 31, 2001, compared</P>
<P>to December 31, 2000, these increases were offset by our</P>
<P>receipt of cash pursuant to private sales of securities of</P>
<P>$251,000 during the first quarter of 2001. Most of our</P>
<P>accounts payable are accounts payable of CyberHighway.</P>
<P>Without additional capital, our working capital deficit can</P>
<P>be expected to become larger each quarter.</P>

<P>&nbsp;</P>
<P>The following table sets forth our current assets and</P>
<P>current liabilities at March 31, 2001, and December 31,</P>
<P>2000:</P>

<P>&nbsp;</P>
<P>                                   3/31/01        12/31/00</P>

<P>&nbsp;</P>
<P>Current Assets    Cash            $125,494        $   1,088</P>
<P>                  Accounts</P>
<P>                   Receivable          384                0</P>
<P>                  Inventory        246,721          246,721</P>

<P>&nbsp;</P>
<P>Current</P>
<P> Liabilities      Disbursements</P>
<P>                   in excess of</P>
<P>                   cash balances  $ 42,469        $  42,469</P>
<P>                  Accounts</P>
<P>                   payable       1,473,817        1,472,030</P>
<P>                  Accrued</P>
<P>                   payroll         200,155          158,262</P>
<P>                  Other current</P>
<P>                   liabilities      51,824           41,824</P>
<P>                  Property divi-</P>
<P>                   dends payable    43,750           43,750</P>
<P>                  Notes payable</P>
<P>                   to stockholder   32,728            6,638</P>

<P>&nbsp;</P>
<P>Our accrued payroll at March 31, 2001, as well as at</P>
<P>December 31, 2000, is attributable to accrued salary of our</P>
<P>president and two of our vice presidents.</P>

<P>&nbsp;</P>
<P>The increase in notes payable to stockholder, from $6,638</P>
<P>at December 31, 2000, to $32,728 at March 31, 2001,</P>
<P>represents loans made to us by our president, David M.</P>
<P>Loflin. All of this indebtedness is due on demand and bears</P>
<P>interest at 8% per annum. The funds loaned during 1Q 2000</P>
<P>were used primarily for operating expenses. Mr. Loflin has</P>
<P>advised us that he does not intend to demand payment of his</P>
<P>loans, until their repayment would not adversely affect our</P>
<P>financial position. Without outside funding, it is possible</P>
<P>that Mr. Loflin may loan us additional funds, though no</P>
<P>assurance or prediction can be made in this regard.</P>

<P>&nbsp;</P>
<P>In addition to Mr. Loflin's loans, during the first</P>
<P>quarter of 2001, we obtained a total of $261,000 in cash</P>
<P>from private sales of our securities.</P>

<P>&nbsp;</P>
<P>- In February 2001, we sold 840,000 units of securities,</P>
<P>each unit being comprised of one share of our stock and one</P>
<P>warrant with an exercise price of $.15 per share, to a</P>
<P>private investor for $126,000 in cash. The warrants are</P>
<P>exercisable for a period of three years. In connection with</P>
<P>this sale of securities, we issued to a finder 84,000 shares</P>
<P>of our common stock and a warrant to purchase 336,000 shares</P>
<P>of our common stock at an exercise price of $.15 per share.</P>
<P>These warrants are exercisable for a period of three years.</P>
<P>The 84,000 shares issued to the finder were valued at $.15</P>
<P>per share, a total value of $12,600. No value was placed on</P>
<P>the warrants issued.</P>

<P>&nbsp;</P>
<P>- In March 2001, we sold 500,000 units of securities, each</P>
<P>unit being comprised of one share of our stock and one</P>
<P>warrant with an exercise price of $.25 per share, to a</P>
<P>private investor for $125,000 in cash. The warrants are</P>
<P>exercisable for a period of three years. In connection with</P>
<P>this sale of securities, we issued to a finder 50,000 shares</P>
<P>of our common stock and a warrant to purchase 200,000 shares</P>
<P>of our common stock at an exercise price of $.25 per share.</P>
<P>These warrants are exercisable for a period of three years.</P>
<P>The 50,000 shares issued to the finder were valued at $.25</P>
<P>per share, a total value of $12,500. No value was placed on</P>
<P>the warrants issued.</P>

<P>&nbsp;</P>
<P>The funds received were used for working capital and for</P>
<P>the initial costs associated with the establishment of a new</P>
<P>company-owned Quick-Cell wireless Internet access system.</P>

<P>&nbsp;</P>
<P>Without obtaining at least $1,000,000 in new capital, we</P>
<P>will continue to have a significant working capital deficit</P>
<P>and will not be able to operate from a position of</P>
<P>liquidity. This will impair our ability to pursue our</P>
<P>Quick-Cell business plan and, thus, our ability ever to earn</P>
<P>a profit.</P>

<P>&nbsp;</P>
<P>If we are unable to obtain significant additional capital,</P>
<P>it is possible that we would be forced to cease operations.</P>

<P>&nbsp;</P>
<P>Cash Flows from Operating Activities. During the first</P>
<P>quarter of 2001, our operations used $162,684 in cash</P>
<P>compared to cash used of $305,779 during the first quarter</P>
<P>of 2000. In both periods, the use of cash in operations was</P>
<P>a direct result of the lack of revenues compared to our</P>
<P>operating expenses, particularly salary and commissions.</P>

<P>&nbsp;</P>
<P>Cash Flows from Investing Activities. During the first</P>
<P>quarter of 2001, our investing activities neither provided</P>
<P>nor used cash. In the first quarter of 2000, we used cash</P>
<P>of $94,908 in our investing activities, where our equipment</P>
<P>purchases were offset, in part, by cash acquired in</P>
<P>acquisitions. Because we lack working capital, we cannot</P>
<P>predict our cash flows from investing activities for the</P>
<P>remainder of 2001.</P>

<P>&nbsp;</P>
<P>Cash Flows from Financing Activities. For the first</P>
<P>quarter of 2001, our financing activities provided $287,090</P>
<P>in cash. Of this amount, $26,090 is attributable to loans</P>
<P>from our president and $261,000 is attributable to private</P>
<P>sales of securities. For the first quarter of 2000, our</P>
<P>financing activities provided $384,397 in cash, $115,000 of</P>
<P>which is attributable to private sales of our securities and</P>
<P>$286,400 of which is attributable to loans from our</P>
<P>president. We continue to seek capital and cannot,</P>
<P>therefore, predict future levels of cash flows from</P>
<P>financing activities.</P>

<P>&nbsp;</P>
<P>Management's Plans Relating to Future Liquidity</P>

<P>&nbsp;</P>
<P>To sustain our current level of operations for the next</P>
<P>twelve months, we will require additional capital of</P>
<P>approximately $300,000. To accomplish our goals of</P>
<P>expanding our Quick-Cell business, we will require at least</P>
<P>$2.5 million.</P>

<P>&nbsp;</P>
<P>Our best opportunity for obtaining needed funds is pursuant</P>
<P>to the Fusion Capital agreement. The following summarizes</P>
<P>the important terms under the Fusion Capital agreement:</P>

<P>&nbsp;</P>
<P>- Fusion Capital may purchase up to $10 million of our</P>
<P>common stock;</P>

<P>&nbsp;</P>
<P>- The selling price to Fusion Capital will be equal to a</P>
<P>price based upon the future market price of the common stock</P>
<P>without any fixed discount to the market price;</P>

<P>&nbsp;</P>
<P>- We have the right to require Fusion Capital to purchase</P>
<P>up to $20,000 each trading day during the agreement;</P>

<P>&nbsp;</P>
<P>- Should our stock price be $5.00 or higher for five</P>
<P>consecutive trading days, we have the right to require</P>
<P>Fusion Capital to purchase up to the full remaining portion</P>
<P>of the $10 million commitment; and</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>- During the term of the Fusion Capital agreement, we may</P>
<P>not issue, or agree to issue, any variable-priced equity or</P>
<P>variable-priced "equity-like" securities, unless</P>
<P>we have obtained Fusion Capital's prior written consent.</P>

<P>&nbsp;</P>
<P>We may never realize proceeds under the Fusion Capital</P>
<P>agreement.</P>

<P>&nbsp;</P>
<P>Should we obtain at least $2.5 million under the Fusion</P>
<P>Capital agreement, we expect that we will be able to</P>
<P>accomplish our two primary objectives:</P>

<P>&nbsp;</P>
<P>- Placing at least 20,000 customers on our Quick-Cell</P>
<P>systems during the next year; and</P>

<P>&nbsp;</P>
<P>- proving the commercial viability of our Quick-Cell</P>
<P>wireless Internet access service.</P>

<P>&nbsp;</P>
<P>We cannot assure you that we will accomplish these</P>
<P>objectives.</P>

<P>&nbsp;</P>
<P>Currently, we have no other sources for funding on the</P>
<P>scale of the Fusion Capital transaction.</P>

<P>&nbsp;</P>
<P>If we do not obtain the necessary funding, we would be</P>
<P>forced to cease operations.</P>

<P>&nbsp;</P>
<P>Capital Expenditures</P>

<P>&nbsp;</P>
<P>During 2000, we made approximately $195,000 in equipment</P>
<P>purchases, approximately 40% for wireless Internet equipment</P>
<P>and approximately 60% for needed equipment in our network</P>
<P>operations center. We currently have no capital with which</P>
<P>to make any significant capital expenditures. Should we</P>
<P>obtain funding under the Fusion Capital agreement, we will</P>
<P>be able to make major expenditures on Quick-Cell-related</P>
<P>equipment, as described above. However, without additional</P>
<P>capital, we will make no capital expenditures. During</P>
<P>Fiscal 1999, we made $614,193 in equipment purchases.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>CERTAIN STATEMENTS CONTAINED IN THIS</P>
<P>"MANAGEMENT'S DISCUSSION AND ANALYSIS OF</P>
<P>FINANCIAL CONDITION AND RESULTS OF OPERATIONS" ARE</P>
<P>"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING</P>
<P>OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND</P>
<P>ARE, THUS, PROSPECTIVE. THESE FORWARD-LOOKING STATEMENTS</P>
<P>ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH</P>
<P>COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM FUTURE</P>
<P>RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING</P>
<P>STATEMENTS. THE MOST SIGNIFICANT OF SUCH RISKS,</P>
<P>UNCERTAINTIES AND OTHER FACTORS IS OUR ABILITY TO OBTAIN</P>
<P>CAPITAL IN AMOUNTS NECESSARY FOR US TO ACCOMPLISH OUR PLAN</P>
<P>FOR THE EXPLOITATION OF OUR QUICK-CELL WIRELESS INTERNET</P>
<P>ACCESS PRODUCTS, AS WELL AS CONSUMER ACCEPTANCE OF THESE</P>
<P>PRODUCTS.</P>

<P>&nbsp;</P>
<P>                PART II - OTHER INFORMATION</P>

<P>&nbsp;</P>
<P>Item 1. Legal Proceedings.</P>

<P>&nbsp;</P>
<P>CyberHighway Involuntary Bankruptcy</P>

<P>&nbsp;</P>
<P>On September 29, 2000, an involuntary bankruptcy petition</P>
<P>was filed against CyberHighway in the Idaho Federal</P>
<P>Bankruptcy Court, styled In Re: CyberHighway, Inc., Case No.</P>
<P>00-02454. The petitioning creditors were ProPeople</P>
<P>Staffing, CTC Telecom, Inc. and Hawkins-Smith. In December</P>
<P>2000, CyberHighway and the petitioning creditors filed a</P>
<P>joint motion to dismiss this proceeding. The joint motion</P>
<P>to dismiss requires the approval of CyberHighway's</P>
<P>creditors. However, some of CyberHighway's creditors</P>
<P>have objected to the dismissal of the proceeding. The basis</P>
<P>of the creditors' objection is their belief that</P>
<P>CyberHighway's as-yet unasserted damage claims against</P>
<P>the original petitioning creditors and their law firm and a</P>
<P>claim against Dialup USA, Inc. represent</P>
<P>CyberHighway's most valuable assets. These as-yet</P>
<P>unasserted claims include claims for bad faith filing of the</P>
<P>original bankruptcy petition as to the original petitioning</P>
<P>creditors and their law firm, as well as claim for tortious</P>
<P>interference with beneficial business relationships as to</P>
<P>Dialup USA, Inc. The objecting creditors desire that these</P>
<P>claims be adjudicated in the bankruptcy court. It is likely</P>
<P>that, at some time in the future, a final order of</P>
<P>bankruptcy will be entered with respect to CyberHighway, no</P>
<P>prediction of the timing of such an order can be made,</P>
<P>although we believe that such an order would come only after</P>
<P>the final adjudication of the claims described above.</P>

<P>&nbsp;</P>
<P>Other Litigation</P>

<P>&nbsp;</P>
<P>In November 2000, CyberHighway requested and received a</P>
<P>temporary restraining order against Darrell Davis, formerly</P>
<P>one of our officers, and his wife, Deanna Davis. We have</P>
<P>alleged that the Davises have diverted dial-up customers</P>
<P>from CyberHighway to a company controlled by him, all while</P>
<P>he was an employee of USURF America. We expect that a</P>
<P>hearing for our motion for a permanent injunction will occur</P>
<P>in the very near future. In addition, we are seeking</P>
<P>monetary damages in this action. This case is in its early</P>
<P>stages and no prediction as to its final outcome can be</P>
<P>made. This case is styled: CyberHighway, Inc. versus Deanna</P>
<P>Davis, individually and d/b/a Cyber-Trail, Inc., and Darrell</P>
<P>D. Davis, 19th Judicial District Court, Parish of East Baton</P>
<P>Rouge, State of Louisiana.</P>
<P>+OK Message follows</P>
<P>Return-Path: &lt;sedwards@sabrerealty.com&gt;</P>
<P>Received: from mx5.airmail.net from [209.196.77.102] by mail.airmail.net </P>
<P>        (/\##/\ Smail3.1.30.16 #30.48) with esmtp for &lt;michelle.wiseman@airmail.net&gt; sender: &lt;sedwards@sabrerealty.com&gt;</P>
<P>        id &lt;mO/14zOtm-001hU8O@mail.airmail.net&gt;; Mon, 14 May 2001 15:24:58 -0500 (CDT)</P>
<P>Received: from mail.sabrerealty.com ([64.90.41.194] helo=SABRE400.sabrerealty.com)</P>
<P>        by mx5.airmail.net with smtp (Exim 3.16 #10)</P>
<P>        id 14zOt5-000MfW-00</P>
<P>        for michelle.wiseman@airmail.net; Mon, 14 May 2001 15:24:15 -0500</P>
<P>Received: from C156([207.158.96.156]) by SABRE400.SABREREALTY.COM (IBM OS/400 SMTP V04R05M00) with TCP; Mon, 14 May 2001 15:21:45 -0500</P>
<P>Received: by C156 with Microsoft Mail</P>
<P>        id &lt;01C0DC89.7757D8D0@C156&gt;; Mon, 14 May 2001 15:20:53 -0500</P>
<P>Message-ID: &lt;01C0DC89.7757D8D0@C156&gt;</P>
<P>From: Stephanie Edwards &lt;sedwards@sabrerealty.com&gt;</P>
<P>To: "'Michelle \"Roni\"  Wiseman'" &lt;michelle.wiseman@airmail.net&gt;</P>
<P>Subject: Super Staples</P>
<P>Date: Mon, 14 May 2001 15:20:52 -0500</P>
<P>MIME-Version: 1.0</P>
<P>Content-Type: text/plain; charset="us-ascii"</P>
<P>Content-Transfer-Encoding: quoted-printable</P>
<P>X-Airmail-Delivered: Mon, 14 May 2001 16:01:52 -0500 (CDT)</P>
<P>X-Airmail-Spooled:   Mon, 14 May 2001 15:24:58 -0500 (CDT)</P>

<P>&nbsp;</P>
<P>Hey, so remind me---which brand of staples were our "super staples?"  I =</P>
<P>am in dire need...</P>

<P>&nbsp;</P>
<P>Also, on an unrelated subject, check out this website:</P>

<P>&nbsp;</P>
<P>www.tenayas.com</P>

<P>&nbsp;</P>
<P>They have a new location at Park &amp; the Tollway &amp; they take reservations =</P>
<P>for weekday lunches.  I'm going tomorrow &amp; will let you know how it is.  =</P>
<P>The menu looks interesting!</P>

<P>&nbsp;</P>
<P>R</P>
<P>During the three months ended March 31, 2001, we issued</P>
<P>securities as follows:</P>

<P>&nbsp;</P>
<P>     1.(a) Securities Sold. In January 2000, we issued</P>
<P>800,000 shares of Common Stock.</P>
<P>       (b) Underwriters and Other Purchasers. Such shares</P>
<P>were issued to Fusion Capital Fund II, LLC.</P>
<P>       (c) Consideration. Such shares were issued as a</P>
<P>commitment fee under a common stock purchase agreement and</P>
<P>were valued at $.31 per share.</P>
<P>       (d) Exemption from Registration Claimed. The Company</P>
<P>relied upon the exemption from registration afforded by</P>
<P>Section 4(2) of the Securities Act of 1933, as amended, but</P>
<P>this exemption may not have been available</P>
<P>       (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  2. (a) Securities Sold. In January 2001, 200,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Fair Market, Inc.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a letter agreement, at a price of $.375</P>
<P>per share.</P>
<P>     (d) Exemption from Registration Claimed. The Company</P>
<P>relied upon the exemption from registration afforded by</P>
<P>Section 4(2) of the Securities Act of 1933, as amended, but</P>
<P>this exemption may not have been available.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  3. (a) Securities Sold. In January 2001, 120,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Nostas/Faessel Group.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a letter agreement, at a price of $.375</P>
<P>per share.</P>
<P>     (d) Exemption from Registration Claimed. The Company</P>
<P>relied upon the exemption from registration afforded by</P>
<P>Section 4(2) of the Securities Act of 1933, as amended, but</P>
<P>this exemption may not have been available.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  4. (a) Securities Sold. In January 2001, 20,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to CyberHighway of North Georgia.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a letter agreement, at a price of $.375</P>
<P>per share.</P>
<P>     (d) Exemption from Registration Claimed. The Company</P>
<P>relied upon the exemption from registration afforded by</P>
<P>Section 4(2) of the Securities Act of 1933, as amended, but</P>
<P>this exemption may not have been available.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  5. (a) Securities Sold. In January 2001, 10,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Fusion Capital Fund II, LLC.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a letter agreement, at a price of $.375</P>
<P>per share.</P>
<P>     (d) Exemption from Registration Claimed. The Company</P>
<P>relied upon the exemption from registration afforded by</P>
<P>Section 4(2) of the Securities Act of 1933, as amended, but</P>
<P>this exemption may not have been available.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  6. (a) Securities Sold. In February 2001, 840,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Claymore Asset Management Group</P>
<P>Ltd.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a securities purchase agreement, at a</P>
<P>price of $.15 per share.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  7. (a) Securities Sold. In February 2001, 840,000 common</P>
<P>stock purchase warrants of the Company were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such warrants</P>
<P>were issued to Claymore Asset Management Group Ltd.</P>
<P>     (c) Consideration. Such warrants were issued for no</P>
<P>additional consideration pursuant to a securities purchase</P>
<P>agreement.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>      (e) Terms of Conversion or Exercise. Exercise price</P>
<P>of the warrants is $.15 per share and exercisable for a</P>
<P>period of three years from issuance.</P>

<P>&nbsp;</P>
<P>  8. (a) Securities Sold. In February 2001, 84,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Shelter Capital Ltd.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a finder's fee agreement, at a</P>
<P>price of $.15 per share.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  9. (a) Securities Sold. In February 2001, 336,000 common</P>
<P>stock purchase warrants of the Company were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such warrants</P>
<P>were issued to Shelter Capital Ltd.</P>
<P>     (c) Consideration. Such warrants were issued for no</P>
<P>additional consideration pursuant to a finder's fee</P>
<P>agreement.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>      (e) Terms of Conversion or Exercise. Exercise price</P>
<P>of the warrants is $.15 per share and exercisable for a</P>
<P>period of three years from issuance.</P>

<P>&nbsp;</P>
<P>  10. (a) Securities Sold. In March 2001, 500,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Atlas Securities Inc.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a securities purchase agreement, at a</P>
<P>price of $.25 per share.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  11. (a) Securities Sold. In March 2001, 500,000 common</P>
<P>stock purchase warrants of the Company were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such warrants</P>
<P>were issued to Atlas Securities Inc.</P>
<P>     (c) Consideration. Such warrants were issued for no</P>
<P>additional consideration pursuant to a securities purchase</P>
<P>agreement.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>     (e) Terms of Conversion or Exercise. Exercise price of</P>
<P>the warrants is $.25 per share and exercisable for a period</P>
<P>of three years from issuance.</P>

<P>&nbsp;</P>
<P>  12. (a) Securities Sold. In December 2000, 50,000 shares</P>
<P>of Company Common Stock were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such shares of</P>
<P>Common Stock were issued to Shelter Capital Ltd.</P>
<P>     (c) Consideration. Such shares of Common Stock were</P>
<P>issued pursuant to a finder's fee agreement, at a</P>
<P>price of $.25 per share.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>     (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>  13. (a) Securities Sold. In December 2000, 200,000</P>
<P>common stock purchase warrants of the Company were issued.</P>
<P>     (b) Underwriter or Other Purchasers. Such warrants</P>
<P>were issued to Shelter Capital Ltd.</P>
<P>     (c) Consideration. Such warrants were issued for no</P>
<P>additional consideration pursuant to a finder's fee</P>
<P>agreement.</P>
<P>     (d) Exemption from Registration Claimed. These</P>
<P>securities are exempt from registration under the Securities</P>
<P>Act of 1933, as amended, pursuant to the provisions of</P>
<P>Regulation S thereunder.</P>
<P>      (e) Terms of Conversion or Exercise. Exercise price</P>
<P>of the warrants is $.25 per share and exercisable for a</P>
<P>period of three years from issuance.</P>

<P>&nbsp;</P>
<P>Subsequent to March 31, 2001, the Company has issued</P>
<P>unregistered securities, as follows:</P>

<P>&nbsp;</P>
<P>     1.(a) Securities Sold. In April 2000, we issued</P>
<P>300,000 shares of Common Stock.</P>
<P>       (b) Underwriters and Other Purchasers. Such shares</P>
<P>were issued to IBC.TV, LLC.</P>
<P>       (c) Consideration. Such shares were sold for cash in</P>
<P>the amount of $.50 per share.</P>
<P>       (d) Exemption from Registration Claimed. The Company</P>
<P>relied upon the exemption from registration afforded by</P>
<P>Section 4(2) of the Securities Act of 1933, as amended, but</P>
<P>this exemption may not have been available.</P>
<P>       (e) Terms of Conversion or Exercise. Not applicable.</P>

<P>&nbsp;</P>
<P>Item 3. Defaults upon Senior Securities.</P>

<P>&nbsp;</P>
<P>     None.</P>

<P>&nbsp;</P>
<P>Item 4. Submission of Matters to a Vote</P>
<P>          of Security Holders.</P>

<P>&nbsp;</P>
<P>     None.</P>

<P>&nbsp;</P>
<P>Item 5. Other Information.</P>

<P>&nbsp;</P>
<P>     None.</P>

<P>&nbsp;</P>
<P>Item 6. Exhibits and Reports on Form 8-K.</P>

<P>&nbsp;</P>
<P>     (a) Exhibits.</P>

<P>&nbsp;</P>
<P>          None.</P>

<P>&nbsp;</P>
<P>     (b) Reports on From 8-K.</P>

<P>&nbsp;</P>
<P>          During the three months ended March 31, 2001, on</P>
<P>          or about March 14, 2001, we filed a Current</P>
<P>          Report on Form 8-K in which we reported the</P>
<P>          resignation of one of our directors.</P>

<P>&nbsp;</P>
<P>          Subsequent to March 31, 2001, on or about April</P>
<P>          5, 2001, we filed a Current Report on Form 8-K</P>
<P>          in which we made disclosure pursuant to</P>
<P>          Regulation FD.</P>

<P>&nbsp;</P>
<P>                          SIGNATURES</P>

<P>&nbsp;</P>
<P>In accordance with the requirements of the Securities</P>
<P>Exchange Act of 1934, Registrant has duly caused this report</P>
<P>to be signed on its behalf by the undersigned, thereunto</P>
<P>duly authorized.</P>

<P>&nbsp;</P>
<P>      Dated: May 14, 2001.</P>

<P>&nbsp;</P>
<P>                        USURF AMERICA, INC.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<P>                        By: /s/ David M. Loflin</P>
<P>                              David M. Loflin</P>
<P>                              President and Acting</P>
<P>                              Principal Financial Officer</P></FONT></BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>2
<FILENAME>ex27.xfd
<TEXT>

<TABLE> <S> <C>

<ARTICLE>    5

<S>                                                      <C>
<PERIOD-TYPE>                                          3-MOS
<FISCAL-YEAR-END>                                Dec-31-2000
<PERIOD-END>                                     Mar-31-2001
<CASH>                                               125,494
<SECURITIES>                                               0
<RECEIVABLES>                                            384
<ALLOWANCES>                                               0
<INVENTORY>                                          246,721
<CURRENT-ASSETS>                                     372,599
<PP&E>                                               138,954
<DEPRECIATION>                                        81,056
<TOTAL-ASSETS>                                       523,526
<CURRENT-LIABILITIES>                              1,844,743
<BONDS>                                                    0
<PREFERRED-MANDATORY>                                      0
<PREFERRED>                                                0
<COMMON>                                               1,805
<OTHER-SE>                                       (1,323,022)
<TOTAL-LIABILITY-AND-EQUITY>                         523,526
<SALES>                                                  384
<TOTAL-REVENUES>                                         384
<CGS>                                                      0
<TOTAL-COSTS>                                        901,643
<OTHER-EXPENSES>                                           0
<LOSS-PROVISION>                                           0
<INTEREST-EXPENSE>                                         0
<INCOME-PRETAX>                                    (901,259)
<INCOME-TAX>                                               0
<INCOME-CONTINUING>                                (901,259)
<DISCONTINUED>                                             0
<EXTRAORDINARY>                                            0
<CHANGES>                                                  0
<NET-INCOME>                                       (901,259)
<EPS-BASIC>                                           (0.05)
<EPS-DILUTED>                                         (0.05)
<FN>
</FN>


</TABLE>
</TEXT>
</DOCUMENT>
</SUBMISSION>
